6 the margin of safety is the excess of: multiple choice break - even sales over expected sales. expected…

6 the margin of safety is the excess of: multiple choice break - even sales over expected sales. expected sales over variable costs. expected sales over fixed costs. fixed costs over expected sales. expected sales over break - even sales.

6 the margin of safety is the excess of: multiple choice break - even sales over expected sales. expected sales over variable costs. expected sales over fixed costs. fixed costs over expected sales. expected sales over break - even sales.

Answer

Brief Explanations:

The margin of safety is a key concept in cost - volume - profit analysis. It represents the amount by which actual or expected sales exceed the break - even sales. If sales were to decline, the margin of safety indicates how much sales can drop before the company starts incurring losses.

  • Option 1: Break - even sales over expected sales is incorrect. If break - even sales were greater than expected sales, the company would be operating at a loss, and this is the opposite of what the margin of safety represents.
  • Option 2: Expected sales over variable costs is not the margin of safety. Variable costs are costs that change with the level of production or sales, and this calculation does not relate to the margin of safety concept.
  • Option 3: Expected sales over fixed costs is incorrect. Fixed costs are costs that do not change with the level of production or sales within a relevant range, and this is not the formula for margin of safety.
  • Option 4: Fixed costs over expected sales is an incorrect and non - sensical calculation in the context of margin of safety.
  • Option 5: Expected sales over break - even sales is the correct formula for the margin of safety.

Answer:

Expected sales over break - even sales.