An organisation manufactures a single product which is sold for $80 per unit. The organisation’s total monthly fixedcosts are $99,000 and it has a contribution to sales ratio of 45%. This month it plans to manufacture and sell 4,000units.
What is the organisation’s margin of safety this month (in units)?
Contribution to sales ratio = 45/100*80 = 36
Break even points in Units = Fixed cost / contribution to s.r = 99000/36 =2750
Margin of safety in units = Budgeted sales in Units - Break even points in units
= 1250 units
therefore correct answer is A.1250