In cost accounting, if the 'Margin of Safety' is 20% of actual sales, and the actual sales are ₹5,00,000, what is the break-even sales? MCQ with Answer and Explanation

Question

In cost accounting, if the 'Margin of Safety' is 20% of actual sales, and the actual sales are ₹5,00,000, what is the break-even sales?

A. ₹5,00,000

B. ₹1,00,000

C. ₹3,00,000

D. ₹4,00,000

Answer: Option D

Solution (By JKSSB Mock Tests)

Margin of Safety = Actual Sales - BEP Sales. 20% of 5,00,000 = 1,00,000. Therefore, BEP Sales = Actual Sales - MOS = 5,00,000 - 1,00,000 = ₹4,00,000.

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