Price per unit = $7

Total Materials Expense = $40,000 | Percentage of expense which is fixed = 10%

Fixed Material Expense = 10% * 40,000 = $4,000 | Variable Material expense = 40,000 - 4,000 = $36,000

Total Labor Expense = $60,000 | Percentage of expense which is fixed = 30%

Fixed Labor Expense = 30% * 60,000 = $18,000 | Variable Labor expense = 60,000 - 18,000 = $42,000

Total Ovehead Expense = $80,000 | Percentage of expense which is fixed = 30%

Fixed Overhead Expense = 30% * 80,000 = $24,000 | Variable Overhead expense = 80,000 - 24,000 = $56,000

Marketing/Adm = $70,000 | Percentage of expense which is fixed = 50%

Fixed Marketing/Adm Expense = 50% * 70,000 = $35,000 | Variable Marketing/Adm expense = 70,000 - 35,000 = $35,000

Units Sold = 50,000

Now we will find the Total Variable costs and Total Fixed Costs by summing the respective components from each Expense.

Total Fixed Costs = 4,000 + 18,000 + 24,000 + 35,000 = $81,000

Total Variable Costs = 36,000 + 42,000 + 56,000 + 35,000 = $169,000

Variable Sales commission per unit = 20% of Price = 20% * 7 = $1.40

Variable Costs per unit = Total Variable Costs / Units Sold + Variable Selling Expense per unit

= 169,000 / 50,000 + 1.40

Variable Costs per unit = $4.78

Contribution Margin per unit = Price per unit - Variable costs per unit = 7 - 4.78 = $2.22

Break-even Point in Units = Total Fixed Costs / Contribution Margin per unit = 81,000 / 2.22

Break-even Point in Units = 36,486.49 or 36,487 units (rounded up to nearest whole number)

We know, Margin of Safety percentage = (Current Sales units - Break-even Point units) / Current Sales units

Margin of Safety percentage = (50,000 - 36,487) / 50,000 = 13,513 / 50,000

Hence, Margin of Safety percentage = 27.03% which is closest to Option D.

Since no intermediary percentage calculation was required which could be rounded, which is why answer is not exactly as the option.