The correct answer is: C. Sales income – Sales income at the break even point.
The margin of safety is the amount of sales revenue that a company can lose before it starts to incur a loss. It is calculated by subtracting the break-even point from the company’s current sales revenue. The break-even point is the point at which a company’s total revenue equals its total costs.
The margin of safety is an important measure of a company’s financial health. A high margin of safety indicates that a company has a lot of room to absorb losses before it goes out of business. A low margin of safety, on the other hand, indicates that a company is vulnerable to even small changes in sales revenue.
Option A is incorrect because it includes profit. Profit is not a cost, so it should not be included in the calculation of the margin of safety.
Option B is incorrect because it includes support residue. Support residue is the amount of revenue that a company needs to generate in order to cover its fixed costs. It is not the same as the margin of safety.
Option D is incorrect because it includes variable costs. Variable costs are costs that change in proportion to the level of production. They should not be included in the calculation of the margin of safety.