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Chapter 10 eg 1

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Chapter 10 eg 1

  • This topic has 2 replies, 2 voices, and was last updated 1 year ago by LMR1006.
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  • February 18, 2024 at 5:53 am #700574
    Anonymous
    Inactive
    • Topics: 53
    • Replies: 46
    • ☆☆

    Hi
    Hi, Why are we referring to “contribution” in sales volume and not change in units. As for Units, it should 12.9% change. because 2.21 % of 15000 is 331.5 units and 331.5 * 2.75 (contribution) 911.6 in contribution, not the figure we require for NPV to fall to 0.

    February 18, 2024 at 5:55 am #700575
    Anonymous
    Inactive
    • Topics: 53
    • Replies: 46
    • ☆☆

    5328/2.75= 1937 units, a change about 13% of 15000 units , ?

    February 18, 2024 at 8:38 am #700581
    LMR1006
    Keymaster
    • Topics: 4
    • Replies: 1508
    • ☆☆☆☆☆

    Sales volume is another way of saying sales units

    NPV /PV of what is uncertain

    So I agree

    It’s 5328 NPV

    But what are we uncertain about is volume, so what cash flows are affected by volume – that is revenue and variable costs
    So we need PV of contribution

    So 5328/ 241189 * 100 = 2.21%

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