Accounting 9706 · AS & A Level · Costs and cost behaviour

Costs and cost behaviour — practice question

The information below applies to a product. Data per unit: Selling price = $\$25$ Variable costs = $\$15$ Contribution per unit = $\$10$ Output is $50\,000$ units. Fixed costs amount to $\$300\,000$. Margin of safety = $20\,000$ units. The directors plan to raise the unit selling price by $10\%$. What is the percentage increase in the margin of safety?

  • A$13.6\%$
  • B$20\%$
  • C$30\%$
  • D$36.4\%$

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