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Margin of safety
Measures the sensitivity of budgeted sales volume compared with break-even sales volume. The difference between level of sales activity achieved and level of sales activity required to break-even in absolute or percentage terms.
Margin of safety (units)= Budgeted sales volume less Break-even sales volume
Margin of safety (%)= (Budgeted sales less Break-even sales volume/ Budgeted sales volume) x 100 Number of units sold to achieve a target profit= (Fixed cost + Target profit)/Contribution per unit
Budgeted direct labour cost 75000 hours @ $16 per hour Budgeted manufacturing overhead 80 000 hours @ $17.50 per hour Actual direct labour cost $997 500 Budgeted manufa
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advantage of marginal costing
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A process in the industry where a wholesaler needs an amount that is the difference among the manufacturer's price to the wholesaler and the contract price to the resale customer.
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