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ACCA F5 Multi-product Cost Volume Profit analysis

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  5. Thanks for every sacrifice you have paid for us, and I don’t know ho to thank for you .

    Sir i have a question and i feel confused for calculating it, and i wish you will help me to understand this question, it’s not on ur notes, i pick up it while i was working on BPP revision kit .

    A company makes and sells a single product. When sales per month are $6.8Million, total costs are $6.56 Million. When sales per month are $ 5.2Million, total costs are $5.44 Millions. There is a step cost increases of $400000 in fixed costs when sales are 6.0 Million, but variable unit costs are constant at all levels of output and sales.

    What is breakeven point for sales revenue per month?

    A: $6.0 Million
    B: There are two breakeven points: $5.64 million and $6.36 million.
    C: $5.64 million only.
    D: $6.36 million only.

    Thank you sir, wish u will help me.

      • Great lectures. Probably not the right place for this question, but I saw the problem Abdulkadir had posted.

        If costs are on y axis (dependent) and sales on x – Ignoring all step increases, the slope between two points would be …..??? Percentage sales atributable to variable cost ?

        Eg. if change in sales of 10 leads to change of costs of 2( slope of .2), wouldn’t that mean variable costs are .2 ie 20% of sales ?

        Sorry, I am little fuzzy on my fourth grade geometry

      • Sorry,just one more question ; previous setup x- sales y-costs and we have 2 data points.
        Wouldn’t C/S ratio be 1- the slope, assuming sales grow faster than costs ( ie slope is between 0 and 1) ?

      • Again, please ask in the Ask the Tutor Forum and not as a comment on a lecture. (The CS ratio cannot possibly be 1 unless there are no costs at all, which would be ridiculous)

      • Yeah, I get that. What I meant to write more clearly is 1 MINUS the slope (ie variable costs). These questions are based on the problem Abdulkadir’s posted.

        I will ask it in the Forum.

        Thank you for the response and for being awesome 馃檪

  8. The previous lecture where you calculated the break even revenue , you did used break even units * selling price

    Which 250units * $6= $1500
    Is this different in any way using this formular here?

  9. I am having a hard time thinking how we should round off the values. If we round off the average C/s ratio in part b) to 3 decimal places it is giving a value in part c) of $26,402. However, if we use the calculator answer or 5 decimal places in part b) like you used in the previous lecture, it is giving a value in part c) of 26,434.
    So which way is correct and which way would you suggest for us to do? Also which way is acceptable in the exam?
    Thank you so much for the lectures.

  10. Hello Sir,

    To calculate Breakeven Revenue, you’ve used the equation Fixed Cost/ Avg CS ratio. Seen the lecture couple of times, but unable to figure out why use avg cs ratio in the equation.

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