CIMA BA2 · Chapter 10 · Question 4 of 12
Budgeted sales are 38,000 units and the breakeven point is 30,000 units. What is the margin of safety as a percentage of budgeted sales, to one decimal place?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) 21.1%
Explanation
Margin of safety = budgeted sales - breakeven sales = 38,000 - 30,000 = 8,000 units. As a percentage of budgeted sales = 8,000 / 38,000 = 21.1%. It shows how far sales could fall below budget before a loss arises.
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