Question No 36:
W Ltd makes leather purses. It has drawn up the following budget for its next financial period:
Selling price per unit $11.60
Variable production cost per unit $3.40
Sales commission 5% of selling price
Fixed production costs $430,500
Fixed selling and administration costs $198,150
Sales 90,000 units
The margin of safety represents
A. 5.6% of budgeted sales
B. 8.3% of budgeted sales
C. 11.6% of budgeted sales
D. 14.8% of budgeted sales
Answer: B
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