ECONOMICS

Detailed explanation-1: -The margin of safety can be expressed as a dollar amount, a percentage, or a number of units. Actual sales for the month were 8, 000 units. The contribution margin per unit is $50 ($80-$30). The margin of safety is 70%, which gives the company a significant cushion over its breakeven point.

Detailed explanation-2: -In accounting, the margin of safety is calculated by subtracting the break-even point amount from the actual or budgeted sales and then dividing by sales; the result is expressed as a percentage.

Detailed explanation-3: -Margin of safety is calculated as a percentage by subtracting the breakeven point from the current sales level and dividing by the current sales level. It can also be expressed in number of units or dollar amount.

Detailed explanation-4: -Margin of safety = (Actual sales – Break-even sales) ÷ Selling price per unit.

Detailed explanation-5: -Margin of Safety is defined as the extra sales over and above the break even sales. This signifies the safer zone for the organization ensuring that there will be no loss to the organization. Example: Selling Price Rs.10 P/U, No. of units sold 1000.