The budgeted sales for Fittler Ltd this year are 20,000 units and it must sell 12,000 units to break even. It therefore has a margin of safety, expressed as a percentage, closest to:
Margin of safety as a percentage equals (budgeted sales – breakeven sales)/budgeted sales x 100%. So percentage will be equal to (20000-12000)/20000*100% = 40%.