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Breakeven revenue

NNikita5y ago
Hello Sir, I have the below question: Edward sells two products with selling prices and contributions as follows:   Product F Product G  Selling price $40 $20  Contribution $10 $4  Budgeted sales units 150,000 100,000  Edwards’s fixed costs are $1,400,000 per year.  Edward now anticipates that more customers will buy the cheaper product G and that  budgeted sales will be 150,000 units for each product.  If this happens, what would happen to the breakeven revenue?  A Increase by the extra revenue from G of 50,000 × $20/u or $1,000,000  B Decrease by the extra revenue from G of 50,000 × $20/u or $1,000,000  C Increase by a different amount  D Decrease by a different amount  As per answer it is C.. and as per my understanding it could be A as we will be calculating the extra revenue on the additional sales.. Please help.! Thanks in advance
John MoffatJohn MoffatTutor5y ago#1
The total revenue will increase by $1,000,000, but the question asks for the breakeven revenue - not for the effect on the total revenue.
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