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Hi John,
I got a bit confused when I was trying to work out the answers to the test of chapter 8.In test 2(Margin of safety).
I worked out my answer like this:
MOS= Budgeted sale- Breakeven/budgeted sales
Break Even = Fixed cost/contribution per unit.
therefore to get the selling price:12/60%=20,
to get contribution,: 20-12=8
to get break even, fixed cost/contribution=80,000/8 =10,000The Margin of safety is therefore 12,000-2000/12000*100=16.7
Your answer seem to be quit different, kindly tell e what is wrong with my answer, like why am i wrong?
It was a mistake – the answer is indeed 16.7%
The error was corrected in the lecture notes a couple of weeks ago – it you download the current version then you will see that the correct answer is 16.7%
Sorry 🙁
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