Answer (D) is correct . The margin of safety measures the amount by which sales may decline before losses occur. It equals budgeted or actual sales minus sales at the BEP. It may be stated in either units sold or sales revenue.
Answer (A) is incorrect because The sales quantity (volume) variance focuses on the firm’s aggregate results.
Answer (B) is incorrect because The hurdle rate is used in capital budgeting.
Answer (C) is incorrect because “Variable sales ratio” is not a meaningful term in this context.
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