alleryStart learning →A larger margin of safety shows what about a business?
AGreater strength
BLower contribution
CHeavier fixed costs
DImminent loss
Answer & Solution
Correct answer: A. Greater strength
A wide gap above break-even sales means the business can absorb a sales fall before losing money.
Keep practising Marginal Costing
Browse all Marginal Costing questions for CA Inter, or explore more Cost and Management Accounting topics.
Related questions
Sales Rs 1,00,000, fixed cost Rs 30,000, profit Rs 20,000. What is the P/V ratio?A unit sells for Rs 25 with variable cost Rs 15. What is the P/V ratio?Fixed cost falls from Rs 40,000 to Rs 32,000, contribution Rs 8 a unit. New break-even?Fixed cost Rs 30,000, variable cost Rs 5 a unit, break-even at 3,000 units. Break-even revSales rise Rs 1,00,000 at a 30% P/V ratio, fixed cost unchanged. Profit rises by?A firm sells 200 units beyond break-even at contribution Rs 15. Extra profit?Price is Rs 80 and the P/V ratio is 25%. What is the variable cost per unit?Break-even is 2,500 units and the price is Rs 40. What are break-even sales?