ICAEW BIP · Chapter 11 · Question 3 of 10
Budgeted sales are 15,000 units and the breakeven point is 12,000 units. What is the margin of safety as a percentage of budgeted sales?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) 20%
Explanation
Margin of safety = budgeted sales - breakeven sales = 15,000 - 12,000 = 3,000 units. As a percentage of budgeted sales: 3,000 / 15,000 = 20%. This shows how far sales could fall below budget before a loss is made.
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