In a cost-volume-profit graph, the dollar amount by which actual sales exceed break-even sales volume is called the margin of safety. The margin of safety sales volume times the contribution margin ratio equals operating income.

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This statement is true. The margin of safety is the amount of sales that exceed the break-even point, and multiplying this by the contribution margin ratio gives the amount of operating income.

In a Cost-Volume-Profit Graph, the Dollar Amount by Which Actual