Question

The margin of safety in the Falah Company is L.E.24.000. If the

company's maximum sales are L.E. 120,000 and its variable costs are [.E.
80,000, its fixed costs must her - a. L.E.6000 b. L.E.32,000 c.
I.E.24,000 d. L.E. 16,000

Answer 1

To calculate the fixed costs, we can use the formula:

Fixed Costs = Maximum Sales - Variable Costs - Margin of Safety

Given:

Maximum Sales = L.E. 120,000

Variable Costs = L.E. 80,000

Margin of Safety = L.E. 24,000

Fixed Costs = L.E. 120,000 - L.E. 80,000 - L.E. 24,000

Fixed Costs = L.E. 16,000

Therefore, the correct answer is d. L.E. 16,000.