If budgeted sales volume is 12,000 units and breakeven sales volume is 8,000 units, what is the margin of safety percentage?

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Multiple Choice

If budgeted sales volume is 12,000 units and breakeven sales volume is 8,000 units, what is the margin of safety percentage?

Explanation:
Margin of safety shows how much sales can drop before you reach the break-even point. It is calculated as (budgeted sales − break-even sales) / budgeted sales × 100%. Here, budgeted sales are 12,000 units and break-even is 8,000 units. The difference is 4,000 units. 4,000 ÷ 12,000 = 0.333..., which is 33.3% when expressed as a percentage. So the margin of safety percentage is 33.3%. The 33% option is a rounded form, but 33.3% is the precise value.

Margin of safety shows how much sales can drop before you reach the break-even point. It is calculated as (budgeted sales − break-even sales) / budgeted sales × 100%.

Here, budgeted sales are 12,000 units and break-even is 8,000 units. The difference is 4,000 units. 4,000 ÷ 12,000 = 0.333..., which is 33.3% when expressed as a percentage.

So the margin of safety percentage is 33.3%. The 33% option is a rounded form, but 33.3% is the precise value.

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