[amp_mcq option1=”20%” option2=”25%” option3=”73%” option4=”125%” correct=”option1″]<\/p>\n
The correct answer is: A. 20%<\/p>\n
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:<\/p>\n
Margin of safety = Budgeted sales – Break-even sales<\/p>\n
Break-even sales = Fixed costs \/ Contribution margin per unit<\/p>\n
Contribution margin per unit = Selling price per unit – Variable cost per unit<\/p>\n
In this case, the margin of safety is calculated as follows:<\/p>\n
Margin of safety = 30,000 units * Rs 12 per unit – 98,000 units \/ Rs 4 per unit = Rs 60,000<\/p>\n
The margin of safety expressed as a percentage of budgeted sales is calculated as follows:<\/p>\n
Margin of safety percentage = Margin of safety \/ Budgeted sales * 100%<\/p>\n
= Rs 60,000 \/ 30,000 units * 100% = 20%<\/p>\n
Therefore, the margin of safety, expressed as a percentage of budgeted sales, is 20%.<\/p>\n
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%.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”20%” option2=”25%” option3=”73%” option4=”125%” correct=”option1″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[952],"tags":[],"class_list":["post-50711","post","type-post","status-publish","format-standard","hentry","category-costing","no-featured-image-padding"],"yoast_head":"\n