If the budgeted revenue is $20000 and the breakeven revenue is $15000, then the margin of safety will be __________?
Correct answer: C. $5,000
- A. $35,000
- B. $13,000
- C. $5,000
- D. $10,000
Explanation
Margin of safety equals budgeted revenue minus break-even revenue: $20,000 − $15,000 = $5,000. The difference, not the total revenue, is required.
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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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