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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Define the term margin of safety. Explain how it can be used as a crude measure of operating risk.

To determine

Explain the term margin of safety. Also explain its use as a crude measure of operating risk.

Explanation

Margin of Safety:

The number of units sold or the income earned in excess of the break-even sales is known as margin of safety. It is calculated by deducting the break-even sales from the sales revenue.

Operating risk is inversely connected to margin of safety...

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