Читать книгу Cost Accounting For Dummies - Kenneth W. Boyd - Страница 69

The margin of safety is a cushion. If things don’t go as planned — if sales are lower than your budget — you need to know how low your total sales can go before you hit the breakeven point. The word margin, in this case, refers to the amount (in dollars or units) above the breakeven point.

Consider this example: You’re getting ready to book your tickets for the trade show. You computed a breakeven point of 50 units. To reach your target net income, you need to sell 150 units. Target net income uses your budgeted sales level. The difference between your budgeted level of sales (150 units) and your breakeven sales (50 units) is your margin of safety.

If actual sales were 30 units below your budget, your units sold would be 120 (150 – 30). You’re still way above your breakeven point of 50 units. The question always is if you don’t budget correctly, how far off can you be before your unit sales are below breakeven?