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cost volume analysis mock exam

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › cost volume analysis mock exam

  • This topic has 3 replies, 2 voices, and was last updated 8 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • August 7, 2016 at 8:41 pm #331860
    peshy
    Participant
    • Topics: 21
    • Replies: 29
    • ☆☆

    hie
    help me with this question

    A COMPANY MANUFACTURES AND SELLS A SINGLE PRODUCT FOR WHICH THE VARIABLE COST IS $28 PER UNIT.
    THE CS RATIO IS 30%,AND THE COMPANY HAS FIXED COSTS OF $21 600 PER YEAR.
    HOW MANY UNITS DOES THE COMPANY NEED TO SELL TO ARCHIEVE A TARGET PROFIT OF $60 000 (TO THE NEAREST UNIT)?

    A 32 281 UNITS
    B 6 800 UNITS
    C 1 300 UNITS
    D 5 500 UNITS

    August 8, 2016 at 8:39 am #331915
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54680
    • ☆☆☆☆☆

    Please don’t type in capital letters.

    If the CS ratio is 30% then the variable cost must be 70% of selling price, and therefore the selling price must be 28/70% = $40 per unit.

    For a profit of $60,000, the revenue must be (fixed cost + target profit) / CS ratio
    which is: (21,600 + 60,000) / 30% = $272,000

    Since the selling price is $40 per unit, then need to sell 272,000 / 40 = 6,800 units.

    (I assume that you have watched my free lectures on CVP analysis. The lectures are a complete free course for Paper F5 and cover everything needed to be able to pass the exam well.)

    August 8, 2016 at 11:30 am #332013
    peshy
    Participant
    • Topics: 21
    • Replies: 29
    • ☆☆

    thank you
    im sorry for typing in caps

    August 8, 2016 at 4:08 pm #332058
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54680
    • ☆☆☆☆☆

    You are welcome, and no problem 🙂

  • Author
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