The Margin of Safety Is Calculated By

question 118

Multiple Choice

The margin of safety is calculated by:

• A)Dividing fixed costs plus target income by the contribution margin.
• B)Subtracting break-even income from current income.
• C)Subtracting break-even sales from current sales.
• D)Subtracting fixed costs from current contribution margin.

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Definitions:

Kinds of Validity

The extent to which a test or instrument measures what it is supposed to measure, including content, criterion, and construct validity.

Contrast Examples

The use of opposing or differing instances to illustrate a point, highlight differences, or clarify a concept.

High Validity

A measure of how accurately a test or research measures what it intends to measure.

Low Validity

Refers to the extent to which an instrument, test, or study fails to accurately measure what it is intended to measure.