Lesson Plan

• Define the margin of safety and explain its importance for business risk management.
• Calculate the margin of safety (both value and percentage) from given break‑even data.
• Interpret margin of safety results to recommend actions that improve financial stability.

• Projector or interactive whiteboard
• Slide deck with formulas and a break‑even chart
• Calculator or spreadsheet software
• Worksheet with a worked example and practice problems
• Printed handout of the margin of safety diagram

Begin with the question, “What would happen to a business if sales suddenly fell?” Allow a few responses, then link the idea to the concept of a safety cushion. Review briefly what students already know about break‑even points, then state that by the end of the lesson they will be able to define, calculate and interpret the margin of safety.

1. Do‑now (5'): Quick written response on the consequences of sales dropping below break‑even; collect for a quick check.
2. Mini‑lecture (10'): Present key concepts (fixed/variable costs, contribution, BEP) and introduce the margin of safety formulas (value and %).
3. Guided calculation (15'): Work through the ABC Ltd example step‑by‑step on the board, highlighting each formula application.
4. Independent practice (10'): Students complete a worksheet calculating MOS for a new scenario while the teacher circulates to offer support.
5. Interpretation discussion (5'): In pairs, students share their MOS percentages and discuss what the results indicate about business risk.
6. Exit ticket (5'): Write one practical action a business could take to increase its margin of safety.

Summarise the steps for calculating the margin of safety and why a larger MOS signals lower risk. Collect exit tickets to gauge understanding, then assign homework: complete the additional MOS problems in the textbook and bring a real‑world example of a company’s margin of safety for the next lesson.