COST ACCOUNTING
COST VOLUME PROFIT ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Difference between actual sales and sales at the BEP point
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Difference between actual profit and actual loss
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Difference between actual contribution margin and standard contribution margin
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Difference between actual sales and actual profit
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Detailed explanation-1: -Alternatively, in accounting, the margin of safety, or safety margin, refers to the difference between actual sales and break-even sales. Managers can utilize the margin of safety to know how much sales can decrease before the company or a project becomes unprofitable.
Detailed explanation-2: -Margin of Safety in Accounting In accounting, the margin of safety is the difference between current/forecasted sales and sales at the break-even point.
Detailed explanation-3: -Margin of safety measures the difference between real and break-even sales. Break-even point measures the volume of sales where all costs are covered. Both figures examine risk, but break-even point only goes as far as determining where the risk level is zero.
Detailed explanation-4: -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-5: -Break-even point: It is the point of intersection of the total cost line and total revenue line. There is neither profit nor loss at the break-even point. At the break-even point, the margin of safety ratio is 0.