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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA APM Exams › Cost volume profit analysis

- This topic has 2 replies, 2 voices, and was last updated 4 years ago by arowosegbemassive.

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- March 31, 2020 at 8:36 pm #566265
Good evening sir,a question is been giving me problem, pls how do I calculate: level of revenue needed to yield an after tax income equal to a given percentage on sales?

2..how to calculate percentage changein the profit if sales is increased by a given percentage….

Thanks in anticipation.April 1, 2020 at 9:18 am #5662891 Profit before tax = SPv – VCv – FC where SP – sales oprice per unit, VC = variable cost per unit and v = volume in units.

If the tax rate is t, then profit after tax is (1 – t)(SPv – VCv – FC)

If you require after tax profit to be p% of revenue, then:

p xSPv = (1 – t)(SPv – VCv – FC)

You would put in the figures you are given and solve for v. Hence the required revenue is SPv

2 Profit before tax = SPv – VCv – FC

Work out the starting profit, then increase the sales volume by whatever % you are given and work out the new profit. The % increase in the two profits is then easily worked out.

2

April 2, 2020 at 9:11 pm #566394Thank u sir..really helpful

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