Margin of Safety Measures Excess Revenue Over Break-Even Point Steps:

• Recall margin of safety formula: actual revenue minus break-even revenue.
• Substitute actual revenue of $390,000 and break-even revenue of$450,000.
• Subtract: $390,000 -$450,000 = -$60,000.
• Interpret negative result as shortfall below break-even, indicating losses.

Why B is correct:

• Margin of safety equals actual revenue minus break-even revenue; negative value shows $60,000 below break-even, per standard managerial accounting definition.

Why the others are wrong:

• A. $50,000 reflects budgeted revenue minus break-even ($500,000 - $450,000), not actual.

Final answer: B