Accounting Multiple Choice Question – 16 October 2021

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

apple devices books business coffee
Photo by Serpstat on Pexels.com

The information relates to the production of 50,000 units of a product.

  • selling price  —  £25 per unit
  • variable costs  —  £15 per unit
  • contribution  —  £10 per unit


The fixed costs are £300,000.

The unit selling price is increased by 10%.

What is the increase in the margin of safety? 

Select ONE answer:

  1. 13.6%
  2. 20%
  3. 24.2%
  4. 30%

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

  1. Not correct
  2. Not correct
  3. Not correct
  4. Correct – £300,000 / £10 = 30,000 units ==> SP £25 * 10% = £27.50 ==> CM £12.5 ==> £300,000 / 12.5 = 24,000 units ==> (50-24 / 50) = 0.52 / (50-30 / 50) = 0.4 ==> 0.52 / 0.4 = 30%

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

%d bloggers like this: