Margin of safety is ______ the BEP. • Margin of safety the difference
| Margin of safety is ______ the BEP.
A. below
B. above
C. at par with
D. negative of
Right Answer is: B
SOLUTION
• Margin of safety the difference between the actual or budgeted sales and Break Even level of sales.
• Margin of safety= ((Current Sales level-Break Even Point)/ Current Sales level)*100.
• Hence the Margin of safety is above the Break Even Point.
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