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Dear John,
Company X makes two products P1 (Selling price $10 p.u., Contribution $4.4p.u., Fixed o/h $1.2 p.u., sales 10,000 units) & P2 (Selling price $8 p.u., Contribution $2.6p.u., Fixed o/h $1p.u., sales 8,000 units).1 question – If only P1 were made and also note that P2 includes specific fixed o/h $2500. What is the b’even in units to achieve profit $60000?
2 question – Both products were sold, what is b’even revenue?
My calculation:
1 – B’even in units= (12000+8000-2500+60000)/4.4=17614un
2 – B’even reven P1 = 12000/(4.4/10)=$27273
B’even reven P2= 8000/(2.6/8)=$24615
So total is $51888I do not have an official answers for above question, so I would appreciate if you clarify whether I did wrong or correct.
Thank you in advanceWhy are you attempting questions for which you do not have answers? It is wasting your time – you should be using a Revision Kit from one of the ACCA approved publishers. They have answers and explanations!
Your answer to the first question is correct.
Your answer to the second question is correct – you need to calculate the average CS ratio, and then divide the total fixed overheads by the average CS ratio. The approach is explained (with examples) in my lectures on CVP analysis.The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well.
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