BE

There is no question 93 on page 25 of the current edition of the BPP Revision Kit. However I think I know which question you are referring to. We always divide the fixed overheads by the CS ratio in order to calculate the breakeven revenue and I do explain this in my free lectures on CVP analysis.

BPP 2019-20. I went through the lecture sir.. and understood that BE in revenue is FC/ C/S ratio..but I don't clearly understand how this 48%.FC is 625000. C/S = did not understand 48%. I thought it would be 625000 (Fc yet to cover) /1300000 (Total FC)

Since the variable costs are 52% of sales, the contribution must be 48% of sales, so the CS ratio is 48%. They need to cover an extra 625,000 fixed costs and so they need an extra 625,000/48% revenue.

Thanks a lot sir. Really understood and sorry for asking questions frequently. Qn 111 BPP 2019-20, MCQ : Budgeted sales are $2.4 million, budgeted fixed costs are $360,000 and the margin of safety is $400,000. budgeted variable costs? I understood that BE = 2.4-.4 = 2m BE = FC/ C/s ratio FC = .36M. But in BPP, FC is considered a contribution and taken .36 m as contribution. Therefore, c/s ratio = .36/2 =18% and hence VC 82%. But dint understand why FC is considered contribution.

At breakeven the contribution is always equal to the fixed costs (so that the profit is zero). Do watch my free lectures on CVP analysis, because the contribution being equal to the fixed costs is fundamental to all breakeven analysis.