Margin of safety is:

Question

Quizplus · Accepted Answer

Margin of safety is the excess of actual or expected sales over break-even sales, which means the amount of sales that a company can lose before it starts to incur losses. This margin of safety provides a cushion for unexpected events, fluctuation in sales, or other unexpected expenses. Thus, option A is the correct answer. Option B is the definition of contribution margin, while option C is the difference between sales and variable costs. Option D is not the correct definition of margin of safety.

Margin of Safety Is