A)1.25. B)2.5

question 48

Multiple Choice

• A)1.25.
• B)2.5.
• C)0.75.
• D)4/5.

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Definitions:

Margin of Safety

The difference between actual sales and sales at the breakeven point, indicating how much sales can decline before a loss occurs.

Variable Expenses

Costs that change in proportion to the activity or volume of a business operation.

Contribution Margin

The difference between sales revenue and variable costs; used to cover fixed costs and generate profit.

Break-Even Point

The sales level at which the company does not make a profit or incur a loss, denoting a balance between revenue and costs.