A company makes a single product which it sells for $2 per unit.
Fixed costs are $13,000 per month.
The contribution/sales ratio is 40%.
Sales revenue is $62,500.
What is the margin of safety (in units)?
A 15,000
B 16,250
C 30,000
D 31,250
In the answer sheet it is 15000 which i think is wrong. The answer should be 16250 since budgeted sales - break even point (fixed costs / contribution per unit).
Please confirm this. thanks.
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PMF5 - Specimen exam paper Dec 14 - Multiple choice question no 7
Hi the answer is 15000 units. B/E sales revenue = 13000/0.40 = £32500
sales revenue £62500 less B/E sales revenue of £32500 = £30000/2 sales price per unit = 15000 units MOS
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