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6-Yilandwe question – rev kit -contribution dollars parts

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › 6-Yilandwe question – rev kit -contribution dollars parts

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • November 24, 2021 at 2:48 am #641416
    mehazia
    Participant
    • Topics: 54
    • Replies: 6
    • ☆☆

    I do not understand how the values of yr 1-18,540 yr2 61,108 yr3 95,723 yr4 48,622 in the contribution of the parts sales have come from. would you please explain the step to have gotten the same with reason.

    November 24, 2021 at 7:26 am #641439
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51567
    • ☆☆☆☆☆

    Currently they are charing $200 and making a contribution of $40. Therefore the cost must be $160.
    They are going to increase the price to $280 per unit, and therefore the contribution will increase to 280 – 160 = $120 per unit.

    The US inflation rate is 3%, and therefore the contribution at time 1 is 150 units x $120 x 1.03 = $18,540. At time 2 it is 480 x $120 x 1.03^2 = $61,108, and so on.

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