A company's actual sales are Rs. 500,000 and its break-even sales are Rs. 350,000. What is its margin of safety?
Correct answer: D. Rs. 150,000
- A. Rs. 850,000
- B. Rs. 350,000
- C. Rs. 500,000
- D. Rs. 150,000
Explanation
Margin of safety equals actual sales minus break-even sales. Therefore, it is Rs. 500,000 minus Rs. 350,000, or Rs. 150,000.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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