Question
A company manufactures a single product for which cost
and selling price data are as follows: Selling price per unit - Rs. 12 Variable cost per unit - Rs. 8 Fixed cost for a period - Rs. 98,000 Budgeted sales for a period - 30,000 units The margin of safety, expressed as a percentage of budgeted sales is close to:Solution
Sales – VC = contribution 12-8 = 4 rs per unit Contribution 30,000*4 = 1,20,000 Less FC: (98,000) Profit: 22,000 MOS Units: 22000/4 = 5500 units MOS as % of budgeted units = 5500 / 30000 * 100 18.33%.
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