If the sales quantity is 7000 units and the breakeven quantity is 1500 units, then the margin of safety would be __________?
Correct answer: B. 5500 units
- A. 4500 units
- B. 5500 units
- C. 8500 units
- D. 9500 units
Explanation
Margin of safety in units equals actual or expected sales units minus breakeven units: 7,000 − 1,500 = 5,500 units. It measures how far sales can fall before the business reaches break-even.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
Practise Cost Accounting
941 free Cost Accounting MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Accounting questions like this
Accounting is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Cost Accounting questions
If the target net income is $36000 and the tax rate is 40%, then the target operating income will be __________?
The economic results that are predicted for possible combinations of events are classified as _______?
The difference between the flexible budget amount and the corresponding static budget amount is classified as ___________?
If the breakeven revenue is $220000 and the revenue per bundle is $10000, then the number of bundles to be sold to breakeven will be ___________?
If the contribution margin is $3000 and the revenues are $9000, then all the variable costs will be ____________?
If the margin of safety is $35000 and the budgeted revenue is $80000, then the margin of safety in percentage will be _____________?