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- This topic has 3 replies, 2 voices, and was last updated 7 years ago by John Moffat.
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- February 22, 2017 at 3:04 pm #373688
76)Hello sir.
Please help to be ensured: Is the BE sales= Budget sales – margin of safety?
Cause i didnt see this formula in the lectures. You gave us only Margin of safety=Budget sales – BE sales/Budget sales
As i get it, the first is in “unit” terms the other is in “% of Budget sales” terms?
February 22, 2017 at 3:42 pm #373694and Are there any other formulae, except the ones I know:
BREAKEVEN SALES= FIXED COSTS/CS RATIO
BREAKEVEN VOLUME=FIXED COSTS/CONTRIBUTION PER UNIT
MARGIN OF SAFETY(%)=BUDGET SALES-BE SALES/BUDGET SALES
CONTRIBUTION=C/S RATIO*SALES
VARIABLE COST=(1-C/S) *SALES
AVERAGE C/S RATIO=TOTAL CONTRIBUTION OF ALL PRODUCTS / TOTAL SALES OF ALL PRODUCTSFebruary 22, 2017 at 3:48 pm #373697I do say in the lectures that the margin of safety can be calculated in units (budget sales – breakeven sales), but I also explain why. it is more sensible (and more common) to express it as a % of budget sales.
February 22, 2017 at 3:50 pm #373700I don’t learn things as formulae because I find it too dangerous – the examiner deliberately tries to test that you understand what is happening rather then having just learned rules.
You seem to have listed everything I can think of 🙂
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