In evaluating the margin of safety, the A. Break even point is not relevant B. H

Question

In evaluating the margin of safety, the A. Break even point is not relevant B. Higher the margin of safety ratio; the greater the margin of safety C. Higher the dollar amount, the lower the margin of safety D. Higher the margin of safety ratio; the lower the fixed costs In evaluating the margin of safety, the A. Break even point is not relevant B. Higher the margin of safety ratio; the greater the margin of safety C. Higher the dollar amount, the lower the margin of safety D. Higher the margin of safety ratio; the lower the fixed costs A. Break even point is not relevant B. Higher the margin of safety ratio; the greater the margin of safety C. Higher the dollar amount, the lower the margin of safety D. Higher the margin of safety ratio; the lower the fixed costs

Explanation / Answer

Margin of safety Sales = Actual sales-Break even sales

Margin of safety ratio = Margin of safety sales/actual sales

so answer is b) Higher the margin of safety ratio; the greater the margin of safety

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