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. This question tests the candidate's understanding of cvp analysis / decision making within the Accountingsyllabus. The examiner's mark scheme requires...
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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...
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