Q10. Table 1 contains information about a small business for one month. Number of sales & 2,700 Variable costs (per unit) & £6 Sales price (per unit) & £20 Break even level of output & 1,500 Table 1 Using the information in Table 1, calculate the margin of safety. You are advised to show your workings.

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Q10. Table 1 contains information about a small business for one month. Number of sales & 2,700 Variable costs (per unit) & £6 Sales price (per unit) & £20 Break even level of output & 1,500 Table 1 Using the information in Table 1, calculate the margin of safety. You are advised to show your workings.

Answer 1

## Step1: Actual sales = Number of sales * Sales price per unit = 2,700 * £20 = £54,000## Step2: Break-even sales = Break-even level of output * Sales price per unit = 1,500 * £20 = £30,000## Step3: Margin of Safety = Actual sales - Break-even sales = £54,000 - £30,000 = £24,000So, the margin of safety is £24,000.

Answer 2

## Step1: First, we need to calculate the actual sales. This is done by multiplying the number of sales by the sales price per unit.## Step2: Next, we calculate the break-even sales. This is done by multiplying the break-even level of output by the sales price per unit.## Step3: Finally, we calculate the margin of safety. This is done by subtracting the break-even sales from the actual sales.

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