Question

Q1l Profit Rs.30,000, Marginal cost per unit Rs 8,
selling price per unit Rs. 10. The Margin of Safety will
be​

Answer 1

Given :- Profit Rs.30,000, Marginal cost per unit Rs 8,

selling price per unit Rs. 10. The Margin of Safety will

be ?

Answer :-

we have,

→ Marginal cost = Rs.8/unit.

→ Selling Price = Rs.10 / unit .

so,

→ Profit = SP - Marginal cost = 10 - 2 = Rs.2 / unit .

then,

→ Profit Volume ratio = (2/8) * 100 = 25% .

therefore,

→ Margin of Safety = Total Profit / Profit volume ratio = 30000/25% = (30000 * 100)/25 = Rs.120000 (Ans.)

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