What is the term for the units sold or expected to be sold,or the sales revenue earned or expected to be earned,above the break-even volume?

Question

Quizplus · Accepted Answer

Margin of safety is the term used to describe the units sold or expected to be sold or sales revenue earned or expected to be earned above the break-even volume. It represents the amount of sales that can drop before the company incurs losses. Thus, it is a measure of the cushion or buffer that the company has before it starts losing money. Therefore, choice A is the correct answer.

Option B (operating leverage) refers to the degree to which a company uses fixed costs compared to variable costs in its operations. Option C (break-even point) refers to the level of sales at which the company's revenue equals its total cost, and it neither earns a profit nor incurs losses. Option D (contribution margin) is the amount left over after all variable costs have been deducted from sales revenue, and it is used to cover fixed costs and provide a profit for the company. While all of these options are related to the concept of margin of safety, only option A describes it specifically.

What Is the Term for the Units Sold or Expected