If the budgeted revenue is $50000 and the breakeven revenue is $35000, then the margin of safety would be ____________?
Correct answer: C. $15,000
- A. $12,000
- B. $14,000
- C. $15,000
- D. $16,000
Explanation
Margin of safety is budgeted revenue minus breakeven revenue: $50,000 − $35,000 = $15,000. It shows how far sales may fall before the business reaches break-even.
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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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