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Breakeven Sales Revenue

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Breakeven Sales Revenue

  • This topic has 3 replies, 2 voices, and was last updated 5 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • August 25, 2019 at 12:08 am #528709
    annavera
    Participant
    • Topics: 2
    • Replies: 6
    • ☆

    Please can you advise on BPP exam kit question 93

    Fixed Costs is $1,300,000
    Variable costs are 55% of Sales if sales are $1,5 million, but at higher volumes of production and sales, the variable cost for incremental production is 52%
    What is Breakeven point in Sales revenue?

    Contribution is 45% – $675,000
    This leaves $625,000 to cover of Fixed costs.
    The answer in the exam kit states that we should divide $625,000 by 0,48 (which I assume proportion of $625,000 to fixed costs, 625,000/1,300,000)
    The formula for BE revenue is Fixed Costs/ C/S Ratio
    Shouldn’t we divide £625,000 by 0.45?

    Thank you

    August 25, 2019 at 10:13 am #528739
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54655
    • ☆☆☆☆☆

    No – because for the extra production the variable costs are 52% which means that the contribution is 100 – 52 = 48%.

    August 25, 2019 at 11:53 pm #528793
    annavera
    Participant
    • Topics: 2
    • Replies: 6
    • ☆

    Thank you very much !

    August 26, 2019 at 6:26 am #528806
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54655
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Breakeven Sales Revenue’ is closed to new replies.

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