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break even point

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › break even point

  • This topic has 5 replies, 2 voices, and was last updated 6 years ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • April 4, 2019 at 11:29 am #511188
    nsrin
    Member
    • Topics: 25
    • Replies: 13
    • ☆

    hi

    can i ask you to explain the calculation of break even point in following question :
    sutton company produce 4 products
    m a r p
    c/s ratio 5% 10% 15% 20%

    max. salse 200$ 120$ 200$ 180$
    min.salse 50$ 50$ 20$ 10$

    budgeted fixed cost = 60$
    the lowest break sales to meet the minimum salse value constraint.

    thanks

    April 5, 2019 at 8:16 am #511261
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    You surely have an answer to this question in the same book in which you found the question.

    Ask about whatever it is in the answer that you are not clear about and then I will explain.

    April 6, 2019 at 5:19 pm #511358
    nsrin
    Member
    • Topics: 25
    • Replies: 13
    • ☆

    hi
    in the answer at first calculate the contributin at lowest sales = 60.000 $

    then contribution P due to it has the highest c/s ratio , after that for calculation contribution R =
    60000-12500-34000=13500
    I can’t understand why should reduce 12500 ?

    thanks

    April 7, 2019 at 9:28 am #511375
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    At the minimum sales the contribution is (5% x 50,000) + (10% x 50,000) + (15% x 20,000) + (20% x 10,000) = 12,500.

    So for breakeven, they need an extra 60,000 – 12,500 = 47,500 contribution.

    The best to go for first is P. They can have extra sales of 180,000 – 10,000 = 170,000, which will give extra contribution of 20% x 170,000 = 34,000.

    For breakeven they therefore still need an extra 47,500 – 34,000 = 13,500.

    April 7, 2019 at 4:08 pm #511394
    nsrin
    Member
    • Topics: 25
    • Replies: 13
    • ☆

    thanks a lot

    April 7, 2019 at 5:42 pm #511401
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 6 posts - 1 through 6 (of 6 total)
  • The topic ‘break even point’ is closed to new replies.

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