The summarized profit and loss statement for Exeter plc for the year 2021 is as follows:

	000	000
Sales (100,000 units)		2,000
Direct costs	1,100
Fixed production overhead	400
Variable production overhead	100
Administration overhead	360
Selling and distribution overhead	240	(2200)
Profit/(loss)		(200)

At a recent board meeting, you are required as management accountant, to evaluate the following alternative proposals and to comment briefly on each:

1. Pay salesmen a commission of 10% of sales in order to increase sales volume
2. Increase sales by additional advertising of 600,000, with an increased selling price of 20%, setting a profit margin of 10%.

Exeter is considering to make new purses. It has drawn up the following budget for its next financial year:

Sales per unit	23.20
Variable production cost per unit	6.80
Fixed production costs	861,000
Fixed selling and administration costs	396,300

The budgeted sales commission is 5% of selling price and budgeted sales is 90,000 units.

3. Calculate the margin of safety as a percentage.