Introduction of the term Margin of Safety
Provide a brief introduction of the term Margin of Safety?
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Margin of Safety is the quantity of sales that makes profit. In other terms, sales beyond Break Even Point are named as Margin of Safety. It is evaluated as the differentiation between total sales and the break even sales. It can be stated in monetary terms or number of units. It can be stated as below: Margin of Safety = Sales – Break Even Sales = Sales - {(Fixed Cost) / (P/V Ratio)} = ((Sales * (P/V) Ratio) - Fixed Cost) / (P/V) Ratio = (Contribution - Fixed Cost) / (P/V) Ratio = Profit / (P/V) Ratio The size of margin of safety is a very significant guide to the financial power of a business. If margin of safety is huge, that indicates that BEP is much below the real sales, that means business is in a sound condition and decrease in sales will not influence the profit of the business. On the other hand, when margin of safety is low down any loss of sales might be a serious issue. Therefore, efforts require to be made to diminish fixed costs, variable costs or rising the selling price or sales volume to improve contribution and entire P/V Ratio.
Explain the concept of revenue.
When we try to list labor supplies from least elastic to most elastic, in that case the most accurate ranking would most likely be: (1) competitive firm, minute industry, highly skilled occupation. (2) economy, skilled occupation, competitive firm wit
Boris operates a local landscaping company, needs each potential employee to lift a 200 pound tree before being hired whole-time. This obligation is an example of: (1) signaling. (2) discrimination. (3) screening. (4) derived demand. (5) automation. Q : Signaling and Screening Problem Assume Assume that you view a degree as a ticket to a high-paying job along with prospects of quick promotion, and that accumulating human capital by learning and studying valuable material is largely not relevant. Your perception is which a college degree f
Assume that you view a degree as a ticket to a high-paying job along with prospects of quick promotion, and that accumulating human capital by learning and studying valuable material is largely not relevant. Your perception is which a college degree f
A purely competitive firm which hires more workers while the value of the marginal product of labor increases above the competitively set wage rate will absolutely experience increases in its: (i) overhead costs. (ii) profit per unit.
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When the hourly wage rate for workers this purely competitive firm hires is approximately of $13, this will operate at: (1) point a. (2) point b. (3) point c. (4) point d. (5) point e. Q : Wage Rates and Employment An increase An increase in the competitively-set wage tends to cause: (w) firms to reduce the amounts of labor hired. (x) increases in the marginal revenue products of the workers a firm retains. (y) higher marginal factor costs of labor to competitive firms. (z)
An increase in the competitively-set wage tends to cause: (w) firms to reduce the amounts of labor hired. (x) increases in the marginal revenue products of the workers a firm retains. (y) higher marginal factor costs of labor to competitive firms. (z)
A potential employee’s accumulation of certificates and degrees to stimulate interest through a potential employer is termed by economists as: (1) specific training. (2) signaling. (3) general training. (4) screening. (5) ticket-punching. <
When the substitution effect of a wage raise dominates the income effect, in that case the: (1) labor supply curve will be "backward bending." (2) value of the marginal product will exceed the wage rate. (3) labor force participation
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