Page 123 - MAC4861_2 Costing Class Slides Part 1
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TEST 3 - COSTING
Margin of Safety
The amount by which sales can decrease before a loss occurs.
Margin of safety (units) = Sales – Breakeven Sales
• Number of units sales can fall by without a loss being incurred
Margin of safety (%) = Sales – Breakeven Sales / Sales
• % sales can fall by without a loss being incurred
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