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Good day Mr Moffat.
In question 3 I don’t understand how they got the denominator of 152 in the answer and I don’t understand the calculation. Please can you explain how they got about 152?Thank you.
The total budgeted revenue from full marathons is 20,000 x $55 = $1,100,000 and from half marathons is 14,000 x $30 = $420,000.
So the overall total budgeted revenue is 1,100,000 + 420,000 = $1,520,000.When we have calculated the total revenue needed (using the average CS ratio), then since the mix of sales will stay in the same ratio, the revenue from full marathons will be:
1,100,000/1,520,000 x the total revenue, and the revenue from half marathons will be:
420,000 / 1,520,000 x the total revenue.(Have you watched my free lectures on multi-product CVP analysis? 🙂 )
I have watched all your lectures sir.
You explained it so well! I understand now.
Thank you.
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