• Skip to primary navigation
  • Skip to main content
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA PM:
  • PM Notes
  • PM Lectures
  • Practice Questions
  • PM Flashcards
  • Revision Lectures
  • PM Mock Exam
  • PM Forums
  • Ask the Tutor

New BPP books are now available for September 2023 ACCA & FIA exams - get your discount code >>

PM Chapter 8 Questions Cost Volume Profit Analysis

聽

Reader Interactions

Comments

  1. Behram says

    May 23, 2023 at 8:28 am

    Question

    To achieve a target profit, we will use contribution in formula or C/S ratio.

    target profit = Fixed cost + target profit / contribution or c/s ratio?

    for both single product and multi product.

    Appreciate your feedback.

    Log in to Reply
    • John Moffat says

      May 23, 2023 at 4:24 pm

      I don’t know which formula you are referring to, but it depends on the information given in the question.

      For multi-product CVP it depends on whether or not the products are to be made in the same ratio as budgeted.

      Have you watched my free lectures on all of this?

      Log in to Reply
  2. kvz911 says

    August 23, 2022 at 7:31 am

    Great Test questions Sir ! I got 100%. The most tricky part of the questions are, If we are given the C/S ratio Like 30% & the variable cost is 28, the variable cost will always be the remainder of the % of C/S ratio. In this example the VC should be 70%. This is how I solved the 2 tricky questions. But great Test to learn. Thanks ! ????

    Log in to Reply
  3. hermela says

    March 3, 2022 at 7:11 pm

    sorry sir, can you tell me what product sale mix is?

    Log in to Reply
    • John Moffat says

      March 4, 2022 at 7:34 am

      The way the total sales are mixed between the different products.

      Log in to Reply
  4. hermela says

    March 2, 2022 at 9:25 am

    i dont get the point of number 3 . why we cant do individual product profit volume chart against the breakeven sales volume ? we have done on the lecture the breakeven chart with out sell mix, which we do ithe graph by using individual product,

    Log in to Reply
    • John Moffat says

      March 2, 2022 at 5:36 pm

      That was a breakeven chart – not a profit volume chart,

      Log in to Reply
  5. hechosen says

    January 23, 2022 at 9:01 pm

    Hello Sir. my question is related to question number 4. Why did we remove the 6,000 fixed OH? Since its fixed, isn’t it supposed to be accounted for?
    And why did we add the 2.88 to the contribution?

    Log in to Reply
    • John Moffat says

      January 24, 2022 at 6:39 am

      I assume that you are referring to the last part of the question (when we are making the products in order of their CS ratios).

      If so, we didn’t subtract 6,000 anywhere. We subtracted 8,000 fixed overheads to arrive at the contribution as soon as we made the first product. We didn’t subtract any more fixed overheads but just increased the contribution as we made further products.

      We did not add 28,800 to the contribution. When we made the third product (V) we added the extra contribution of 33,400 (0.87 per unit). The 28,800 was the extra sales revenue (6.00 per unit) because the question also wanted to know the revenue.

      Log in to Reply
  6. arishk098 says

    December 6, 2021 at 8:26 am

    Respected Sir ,

    Thank you
    I love the way you are teaching and support.

    I did not understand point number 1.
    What its means by saying (against breakeven sale volume)?

    Log in to Reply
    • John Moffat says

      December 6, 2021 at 8:35 am

      I assume that you are referring to question 3.

      All of the first statement does not really make any sense, which is why it is untrue 馃檪

      Log in to Reply
  7. Adeniba says

    October 20, 2021 at 10:34 pm

    Sir, my knowledge is that Margin of Safety = Budgeted sales-BREAKEVEN POINT/Budgeted sales. Where BREAKEVEN POINT =Total fixed cost/contribution
    Why did you use BREAKEVEN sales revenue(fixed cost/CSratio) instead of BREAKEVEN POINT?

    Log in to Reply
    • Adeniba says

      October 20, 2021 at 10:56 pm

      I’m referring to question 5

      Log in to Reply
      • John Moffat says

        October 21, 2021 at 4:32 am

        You will get exactly the same answer for the margin of safety whether you use units or $’s revenue. Since the question asked for the breakeven revenue it is faster to calculate the margin of safety on the revenue instead of on the units.

  8. adukwaku1 says

    September 27, 2021 at 11:26 am

    Sir please can you help me with Question 1. i don’t understand why the variable cost per unit was divided by the 70% of sales to get the selling price per unit.

    Log in to Reply
    • John Moffat says

      September 27, 2021 at 5:23 pm

      The contribution is 30% of the sales. Given that the contribution is the sales less the variable costs, it means that the variable costs must be 70% of the sales.

      Log in to Reply
  9. shram says

    April 28, 2020 at 4:33 am

    In question 2 , Is there a missing of per unit in variable cost ?
    Otherwise it may then refer to total variable cost.

    Log in to Reply
    • John Moffat says

      April 28, 2020 at 9:19 am

      It is per unit (it could not possibly be the total cost 馃檪 )

      Log in to Reply
  10. onel says

    February 21, 2019 at 10:04 am

    hi sir ,
    in question 4, i used a different approach but i arrived at the same answer. kindly advice if it right to use this.
    1. found total Total variable cost= 8.40 +3.60+ 1.44= 13.44
    2. contribution for x , which is sales less total variable cost = 24-13.44 = 10.56
    3.found budgeted fixed cost for both x and y = (2.88×10,000) +(2.4 x 12500) = 58800
    4 Fixed cost when producing x only is 58800 – 6000 = 52800
    5.if b represents the total number of units that is needed to be produced inorder to get a target profit of 144,000
    then
    (10.56 x b) – 52800 = 144000
    10.56b = 144000+ 52800
    10.56b= 196800
    b = 196800/10.56
    b=18636.6 units of x produced

    Log in to Reply
    • John Moffat says

      February 21, 2019 at 4:04 pm

      Yes – your approach is fine 馃檪

      Log in to Reply
      • onel says

        February 21, 2019 at 4:45 pm

        Thanks soo much.

  11. kweediie says

    February 12, 2019 at 8:36 pm

    hi john
    in question 5.
    we see that the solutions says (25 X 100,000) gives 2,500,000 how possible is that sir

    Log in to Reply
    • John Moffat says

      February 13, 2019 at 8:47 am

      But 100,000 x $25 does equal $2,500,000 !!

      Log in to Reply
      • kweediie says

        February 13, 2019 at 10:17 am

        apologies my error

« Older Comments

Leave a Reply Cancel reply

You must be logged in to post a comment.

Copyright © 2023 路 Support 路 Contact 路 Advertising 路 OpenLicense 路 About 路 Sitemap 路 Comments 路 Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy 路 Cookie Policy