Question
Freddie Fox Ltd sells widgets to the manufacturing industry at a price of 68 per widget. His cost structure is as follows: Material cost per
Freddie Fox Ltd sells widgets to the manufacturing industry at a price of 68 per widget. His cost structure is as follows:
Material cost per unit = 20
Direct labour cost per unit = 14
Other variable overhead cost per unit = 4
Annual fixed manufacturing overhead = 16,000
Annual fixed selling and administrative overhead = 8,000
Freddie Fox's budgeted operating level for the year is to make and sell 1,000 widgets. Based on this level of activity, what is the margin of safety expressed both in of sales and as a percentage of the budgeted position?
a. | 13,000 and 25.0% | |
b. | 13,000 and 20.0% | |
c. | 13,600 and 25.0% | |
d. | 13,600 and 20.0% |
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