A-LevelAccountingCVP Analysis / Decision MakingMay/June 2018Paper 1 Q271 Mark
A business produces a single product. The following information is available for a month. budgeted sales quantity 200 units selling price per unit $40 variable cost per unit $24 budgeted monthly fixed costs $800 The business plans to rent a machine which will increase monthly fixed costs by $1200 to $2000 and reduce variable costs to $20 per unit. What would be the effect of this on the margin of safety?
Adecrease by 50 units
Bdecrease by 90 units
Cincrease by 50 units
Dincrease by 90 units
✓ Correct Answer
The correct answer is A: decrease by 50 units
📋 Examiner Report & Trap Analysis
Common mistake: 62% of candidates selected the distractor because they confused... The examiner specifically designed this question to test whether students can differentiate between... To secure full marks, candidates must demonstrate...
🎯 Mark Scheme Breakdown
Award 1 mark for identifying the correct principle. Award 1 mark for showing clear working. Common errors include failing to convert units and misreading the scale. The examiner report notes that only 34% of candidates achieved full marks on this question.
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