Margin of safety question

am struggling with a Breakeven then Margin of safety question on ECR

The question is and the answers i have are as follows and i wud be grateful if someone cud let me know if remotely correct :-)

Selling price P/U = £25
Variable cost P/U = £10
Budgeted fixed costs = £150,000
Budgeted sales = 15,000 units

for break even i have 10,000 units
(fixed costs/contribution cost)
(150,000/15 = 10,000)

Margin of safety i have got 5000 units
(sales-breakeven = margin of safety)
(15000-10000 = 5000

to show it as sales revenue i have £250,000
(breakeven units x selling price)
(10,000 x 25 = 250,000)

Please let me know if correct or where ive gone wrong. cheers


  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034
    Well done
    Break even
    10,000 units
    revenue £250,000

    Margin of Safety
    5,000 units
    or 33.3% of the budgeted sales
    [email protected]
  • beavis182
    beavis182 Registered Posts: 130 ? ? ?
    yay... i see hope now and may actually pass! :-)

    thanks for that
Privacy Policy