The Margin of Safety Ratio Can Be Defined as The

question 22

Multiple Choice

The margin of safety ratio can be defined as the:

• A) Excess of budgeted sales over break-even sales divided by break-even sales.
• B) Excess of budgeted sales over break-even sales divided by budgeted sales.
• C) Excess of budgeted sales over fixed costs divided by budgeted sales.
• D) Excess of budgeted sales over variable costs divided by budgeted sales.

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Definitions:

Monopolistic Competition

A market structure where many firms sell products that are similar but not identical, allowing for competition based on product differentiation.

Market Structure

The interconnected characteristics of a market, including the number and relative strength of buyers and sellers and degree of collusion among them, level and forms of competition, extent of product differentiation, and ease of entry into and exit from the market.

Profit Rewards

The financial gains that accrue to entrepreneurs or investors as a result of taking a risk in the marketplace.

Pure Competition

A market structure characterized by a large number of small firms, a homogeneous product, and no single firm having market control.