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The margin of safety is the excess of budgeted or actual sales dollars over the break-even volume of sales dollars. It is the amount by which sales can drop before losses are incurred. The higher the margin of safety, the lower the risk of not breaking even and incurring a loss. The formula for the margin of safety is:

Respuesta :

facundobuzzetti

Answer:

Istructions are listed below.

Explanation:

Break-even point= fixed costs/ contribution margin

Break-even point (dollars)= fixed costs/ contribution margin ratio

Maring of safety= current sales level - break-even point

Margin of safety ratio= (current sales level - break-even point)/current sales level

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