Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Breakeven revenue
- This topic has 1 reply, 2 voices, and was last updated 3 years ago by John Moffat.
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- November 2, 2020 at 4:35 pm #593871
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 amountAs 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 advanceNovember 3, 2020 at 9:57 am #593914The 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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