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Dear Tutor,
Could you kindly explain how to work out the margin of safety from a given information.
A company manufactures and sells a single product for which the variable cost is $12 and the CS ratio is 40%.
Fixed cost $80,000 per year.
They are budgeting on selling 12,000 units per year.Many thanks,
IrinaIf you want me to answer then you should ask in the Ask the Tutor Forum – this forum is for students to help each other.
However, there is no point in asking if you have not watched our free lectures on CVP analysis. Our lectures are a complete course for Paper F5 and cover everything needed to pass the exam well.
Presumably, the book in which you found the question also shows the answer (if not then you should be using a different book!) and so ask which part of the answer you do not understand.
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