Hello Sir,
I was reviewing Question 2 in Section A of the ACCA PM Specimen Exam (the target profit question regarding Product P1 and P2) and wanted to check my understanding regarding rounding and exam marking.
The Context of the Question
The question asks for the number of units of Product P1 required to achieve a profit of $60,000.
Total relevant fixed costs = $22,000
Contribution per unit of P1 = $4.40
Mathematical calculation: $(\$22,000 + \$60,000) / \$4.40 = 18,636.36$ units.
My Thinking & Answer
The official specimen answer gives 18,636 units. However, I calculated that:
Selling 18,636 units gives a total contribution of $18,636 \times \$4.40 = \$81,998.40$.
After subtracting fixed costs ($\$22,000$), the net profit is $\$59,998.40$—which falls $\$1.60$ short of the $\$60,000$ target.
Therefore, in business reality, to achieve the target profit, the company must produce and sell 18,637 units (which yields a profit of $\$60,002.80$).
My Questions for You:
Is my commercial logic correct? Does rounding down actually cause a failure to meet the target profit?
How will this be treated in the ACCA PM exam? Since Section A uses number-entry or automated multiple-choice questions, will the computer system only accept the strict mathematical round-down (18,636), or do ACCA number-entry questions usually build a tolerance range into the marking system to account for rounding up?
What should I do in the future? If an exam question asks for a whole unit to achieve a target profit, should I always round up regardless of the decimal, or should I follow standard mathematical rounding rules based on the platform?
Thank you for your guidance!