Margin of safety is:
AVariable sales
BSales below BEP
CTotal sales
DSales above BEP
Answer & Solution
Correct answer: D. Sales above BEP
1. Margin of safety measures how far actual sales exceed the break-even level.
2. It indicates the cushion before the firm slips into loss.
3. Formula: MOS = Actual sales − Break-even sales.
4. Hence MOS is sales above BEP.
_Source: ICAI BoS Inter Paper 3, Ch 14 "Marginal Costing", §14.6 ¶2_
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