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Knowing the current margin of safety is important when we are planning our budget because: If our margin of safety is too low
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Margin of Safety is important because knowing what sales we anticipate, but also where our break even point can help with planning.

Margin of Safety -

Margin of safety we can calculate by Budgeted Sales minus Break even sales divided by Budgeted Sales. It represents the percentage by which a company’s sales can drop before it starts incurring losses. Margin of Safety is the point from where if the sales drop below the margin of safety then there will be loss for the company.

In simple words it is the sale point where sale is over and above the break even point.

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