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Hi all,
Watching the lecture for Multi-product Cost Volume Profit analysis , and following Example 6, I don’t follow the example solution for part d in the lecture notes: The Profit-Volume graph.
Is there a mistake, the y-intercept appears to cross at -10,000 ?
Given the budgeted fixed overheads are 8,000 for the year, I would expect this to be the y-intercept, at 0 sales revenue?Is it simply a graph drawing issue, as the values calculated for part (e) , do correctly reference fixed costs of 8,000 again (only when selling product P), when calculating the profits.
The answer printed in the lecture notes does appear to wrongly show the intercept as being 10,000 when it should indeed be at 8,000. It’s a visual aid.
However it is explained correctly in the lecture (as being 8,000) and the notes themselves should not be used on their own but only with the lectures.
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