{"id":57216,"date":"2024-04-16T00:58:09","date_gmt":"2024-04-16T00:58:09","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=57216"},"modified":"2024-04-16T00:58:09","modified_gmt":"2024-04-16T00:58:09","slug":"the-margin-of-safety-can-be-increased-by","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/the-margin-of-safety-can-be-increased-by\/","title":{"rendered":"The margin of safety can be increased by-"},"content":{"rendered":"

[amp_mcq option1=”reducing the fixed cost” option2=”increasing the selling price” option3=”reducing variable cost” option4=”all the above ways” correct=”option4″]<\/p>\n

The correct answer is D. all the above ways.<\/p>\n

The margin of safety is the difference between sales and break-even sales. It is a measure of how much sales can decline before a company starts to lose money.<\/p>\n

There are three ways to increase the margin of safety:<\/p>\n

    \n
  1. Reduce fixed costs. Fixed costs are costs that do not change with the level of production, such as rent, insurance, and salaries. By reducing fixed costs, a company can lower its break-even point and increase its margin of safety.<\/li>\n
  2. Increase selling price. Selling price is the amount of money that a company charges for its products or services. By increasing selling price, a company can generate more revenue and increase its margin of safety.<\/li>\n
  3. Reduce variable costs. Variable costs are costs that change with the level of production, such as the cost of materials and labor. By reducing variable costs, a company can lower its break-even point and increase its margin of safety.<\/li>\n<\/ol>\n

    It is important to note that increasing the margin of safety does not guarantee that a company will be profitable. However, it does give the company a cushion in case sales decline.<\/p>\n","protected":false},"excerpt":{"rendered":"

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