Mathematics · Financial Mathematics
Consider the following statements regarding the 'Margin of Safety' in cost accounting: Statement 1: The Margin of Safety represents the extent to which a company's actual or projected sales exceed the break-even sales volume. Statement 2: A company with a high Profit Volume (P/V) Ratio and low fixed costs will typically have a high Margin of Safety. Statement 3: The Margin of Safety percentage is calculated by dividing actual sales by net profit earned during the period. Which of the statements given above are correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Only Statement 1 and Statement 2 are correct✓
- 2Only Statement 1 is correct
- 3All three statements are correct
- 4Only Statement 3 is correct
Correct answer
Only Statement 1 and Statement 2 are correct
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