The correct answer is: A. Margin of Safety = $\frac{{{\text{Profit}}}}{{{\text{P/V ratio}}}}$
The margin of safety is the amount of sales that can decline before a company starts to incur a loss. It is calculated by dividing the contribution margin by the selling price per unit.
The P/V ratio is the contribution margin divided by the sales revenue. It is a measure of how much profit a company makes for every dollar of sales.
The break-even point is the point at which a company’s revenue equals its costs. It is calculated by dividing the fixed costs by the contribution margin per unit.
The required sales to earn desired profits is the amount of sales that a company needs to make in order to earn a certain amount of profit. It is calculated by dividing the desired profit by the P/V ratio.
The formula for the margin of safety is incorrect because it divides the profit by the P/V ratio. The profit is not a function of the P/V ratio. The profit is equal to the contribution margin minus the fixed costs. The P/V ratio is a measure of how much profit a company makes for every dollar of sales. It is not a measure of how much profit a company makes in total.