Cottage Industries is a small business producing handmade baskets in rural Yorkshire. The baskets are sold at a price of 12 each and the variable cost of producing each basket is 10. The fixed costs incurred by Cottage Industries are 400 per month. The break-even volume of production per month is:

	a.	100 units per month
	b.	150 units per month
	c.	200 units per month
	d.	250 units per month

In Q.1 above, Cottage Industries is planning to produce and sell 400 units. The margin of safety for Cottage Industries is:

	a.	50%
	b.	75%
	c.	100%
	d.	25%

In Q.1 above, if the price of a basket were to increase to 14, variable costs and fixed costs remaining the same, the break-even volume of production per month will:

	a.	increase
	b.	decrease
	c.	stay the same
	d.	may increase or decrease