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- This topic has 3 replies, 2 voices, and was last updated 2 years ago by John Moffat.
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- January 3, 2022 at 2:59 pm #645233
(1) In budget production mix is constant we assume that all the production units of each product are made and sold in the same ratio which makes C/S ratio remain constant. That means if we sell 10% more or less then we have 10% more or less of all the units made & sold of each product. This means that the C/S ratio remains constant.
We take weighted average figures (i.e total average figures) because since the production mix remains constant and therefore contribution and sales revenue all remains the same due to the production of units made in the same ratio.
(2) If the budget production mix is non-constant which means that each product is produced and sold according to their C/S ratio. The product with a higher C/S ratio is produced and sold first than the second and third.
We take the C/S ratio (i.e individual figures) of each product because the production mix is non-constant and therefore contribution and sales revenue all remains non-constant or changed because as we produced and sold more or less units we would have more or less contribution and sales revenue.
Both of my statements are correct?
I saw your video but could not get the whole picture so I ask you.January 3, 2022 at 3:17 pm #645238(1) is correct
(2) is correct also
🙂
January 3, 2022 at 3:21 pm #645239Much THANKS.
January 3, 2022 at 3:22 pm #645240You are welcome 🙂
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