Margin of safety can be calculated using the formula —

CS Executive · Cost and Management Accounting · PYQS · June 2015
Margin of safety can be calculated using the formula —
(A) Total sales - Break-even sales
(B) Fixed cost ÷ P/V ratio
(C) P/V ratio × Profit
(D) Fixed cost ÷ Contribution.

Answer & Explanation:

Correct Answer: Option (A)

Official answer key: (A).

Topics: Marginal Costing

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