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What is "Margin of safety" in Cost Accounting? What are the steps required to improve the same?

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Question added by VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.
Date Posted: 2014/12/01
Malik Khalid Mahmood
by Malik Khalid Mahmood , Regional Finance Manager , Leosons International FZ LLC

The difference between the intrinsic value of a stock and its market price.

In Break even analysis (accounting), margin of safety is how much output or sales level can fall before a business reaches its breakeven point.

Lesley Lanag CMA CPA
by Lesley Lanag CMA CPA , Senior Accountant , Takaful Emarat Insurance (P.S.C)

Margin of safety is the amount of sales drop that a company can tolerate without incurring loss. Simply put, it is the difference between the actual /projected sales and the break even point. It can be improved by increasing sales units or sales price, or decreasing variable cost.

Asim Azaldeen Abdalrahman Mhammed
by Asim Azaldeen Abdalrahman Mhammed , Property Manager , TAAM PROPERTY

Nice and enough answer lesley thanks too much

georgei assi
by georgei assi , مدير حسابات , المجموعة السورية

Safety margin:

It is the difference between the sales (current) or expected and between breakeven sales (the value of a tie). And refers to the amount of a potential decline in sales that can occur without loss of starting operations.

And is calculated as follows: safety margin = sales - the value of the equalizer.

Or as a percentage of sales: safety margin = (sales - the value of a tie) \\\\ Sales

And notes that: operations = income margin of safety * contribution margin rate

Through the previous equation, we find ways to improve the margin of safety is:

Increase the value of sales

Reduce costs to sell

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