Margin of Safety Calculator is an online tool that facilitates the calculation of the Margin of safety with a simple click of the user. It is the difference between actual sales and sales at the break-even point. It is the level of revenue reduction before it reaches the break-even point. The Margin of Safety is an important concept under marginal costing. It can be expressed in both money and units.
To calculate the margin of safety, one has to subtract sales at the breakeven point from the actual sales. The formula for calculating the margin of safety is as follows:
Margin of Safety = Actual Sales – Sales at Breakeven Point
Margin of Safety Calculator
How to Calculate MOS using the Calculator
In order to calculate the margin of safety using the calculator, the user only has to insert the following details into the calculator.
Actual Sales – It is the sum of the actual sales (net of returns) made by the Company during the accounting period for which you calculate the margin of safety. In addition, we can obtain the value of the actual sales by multiplying the actual sales unit by the selling price per unit. These details can be taken from the Profit and Loss Account of the company.
Sales at BEP – It is the level of sales at which the company neither makes any profit or loss. In other words, it is a no-profit no-loss situation for the company where it just covers all the variable costs for the product or service from the revenue generated. For calculating breakeven sales, we divide fixed cost from contribution per unit.