Margin of Safety is the difference between .a.planned sales and planned expenses.b.planned sales and actual salesc.planned sales and planned profit .d.actual sales and break-even sales.
Question
Margin of Safety is the difference between .a.planned sales and planned expenses.b.planned sales and actual salesc.planned sales and planned profit .d.actual sales and break-even sales.
Solution
The Margin of Safety is the difference between:
d. actual sales and break-even sales.
This means that it is the amount by which sales could decrease before the company would become unprofitable. It provides a measure of risk, showing the extent to which sales could fall before a business starts making a loss.
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