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:

The correct answer is: A. 20%

Margin of safety is the amount of sales revenue that a company can lose before it starts to incur a loss. It is calculated as follows:

Margin of safety = Budgeted sales – Break-even sales

Break-even sales = Fixed costs / Contribution margin per unit

Contribution margin per unit = Selling price per unit – Variable cost per unit

In this case, the margin of safety is calculated as follows:

Margin of safety = 30,000 units * Rs 12 per unit – 98,000 units / Rs 4 per unit = Rs 60,000

The margin of safety expressed as a percentage of budgeted sales is calculated as follows:

Margin of safety percentage = Margin of safety / Budgeted sales * 100%

= Rs 60,000 / 30,000 units * 100% = 20%

Therefore, the margin of safety, expressed as a percentage of budgeted sales, is 20%.

Option A is the correct answer. Option B is incorrect because the margin of safety is not 25%. Option C is incorrect because the margin of safety is not 73%. Option D is incorrect because the margin of safety is not 125%.