COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The amount by which break even falls to make a loss
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The difference between break even and actual output/number of customers.
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None of these
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Both of these
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Detailed explanation-1: -What is Margin of Safety? The margin of safety is the difference between the amount of expected profitability and the break-even point. The margin of safety formula is equal to current sales minus the breakeven point, divided by current sales.
Detailed explanation-2: -The margin of safety is the amount sales can fall before the break-even point (BEP) is reached and the business makes no profit. This calculation also tells a business how many sales it has made over its BEP.
Detailed explanation-3: -Explanation: Margin of safety: The Margin of safety is the difference between the break-even point and output is produced.
Detailed explanation-4: -The margin of safety is an investment principle where the investor buys stocks when the market price is below their actual value. It is evaluated as the change between the price of a financial instrument and its basic value.
Detailed explanation-5: -You can calculate the margin of safety by deducting the breakeven point from the current or estimated sales. There are different ways to express the margin of safety: as a ratio or percentage or as sales in monetary terms or units to still break even (you can read about it in the break even calculator).