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Question 5 In 20X7, Company E sold its only product for £16 per unit. Variable costs per unit were £7.40. Fixed costs were £750,000. In 20X8, the selling price per unit is expected to fall by 10 per cent, variable costs per unit are expected to rise by 15 per cent, while fixed costs are expected to rise by four per cent. The budgeted sales for 20X7 were 150,000 units and for 20X8 are 160,000 units. What is the margin of safety for 20X8?

Question 5 In 20X7, Company E sold its only product for £16 per unit. Variable costs per unit were £7.40. Fixed costs were £750,000. In 20X8, the selling price per unit is expected to fall by 10 per cent, variable costs per unit are expected to rise by 15 per cent, while fixed costs are expected to rise by four per cent. The budgeted sales for 20X7 were 150,000 units and for 20X8 are 160,000 units. What is the margin of safety for 20X8?

EBK CFIN
EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter15: Managing Short-term Assets
Section: Chapter Questions
Problem 17PROB
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Question 5 In 20X7, Company E sold its only product for £16 per unit. Variable costs per unit were £7.40. Fixed costs were £750,000. In 20X8, the selling price per unit is expected to fall by 10 per cent, variable costs per unit are expected to rise by 15 per cent, while fixed costs are expected to rise by four per cent. The budgeted sales for 20X7 were 150,000 units and for 20X8 are 160,000 units. What is the margin of safety for 20X8?
Transcribed Image Text:Question 5 In 20X7, Company E sold its only product for £16 per unit. Variable costs per unit were £7.40. Fixed costs were £750,000. In 20X8, the selling price per unit is expected to fall by 10 per cent, variable costs per unit are expected to rise by 15 per cent, while fixed costs are expected to rise by four per cent. The budgeted sales for 20X7 were 150,000 units and for 20X8 are 160,000 units. What is the margin of safety for 20X8?
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