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.
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Chapter 8 Example 6 Part d
2y ago#1The 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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