CVP - Test Question # 01

This topic has 3 replies, 2 voices, and was last updated 6 years ago by John Moffat.

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March 18, 2016 at 2:08 pm #306961
nelvin
- Topics: 43
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Dear Sir, I did this test Q in following way, but it is different way solved in answer sheet.
Is it ok if i do in following way in exam ?

1) Total Contribution = Fixed cost + Profit = 21600 + 60000 = 81,600

2) CS Ration = Contribution / Sales in $

30% = 81600 / Sales

Sales = 272,000

3) Sales = $272000
less: Profit = ($ 60000)
less : Fixed Cost = ($21600)
———————————————
Variable Cost = $190400

V.Cost in unit = $190400 / 28 P.U = Unit 6800

So, Unit Sales = 6800 Units.

Please correct me if i am wrong.

* Could you pls also explain me in answer sheet how it gets Selling price per unit ?

Thanks for reply in advance
March 18, 2016 at 3:41 pm #306977
John Moffat
Keymaster
- Topics: 57
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Please do not ask the same question in two different places! 🙂

You know that you are correct because you get the same answer as the correct answer that appears!!
(How you show your workings is irrelevant because nobody will look at them – a computer marks the MCQ’s).

However your way takes longer and the huge problem with Section A of the exam is the time pressure.

The question says that the contribution is 30% of the sales. Therefore the variable cost must be 70% of sales. Since the variable cost per unit is $28, then selling price per unit must be $28 / 70% = $40.
March 19, 2016 at 9:37 am #307032
nelvin
- Topics: 43
- Replies: 46
Dear Sir, Thanks for clearing the points. and extremely sorry for asking Q in two different places, actually first time when i posted Q it did not appear in forum that’s y i posted it second time. i didn’t notice that it was already there 🙂
March 19, 2016 at 5:33 pm #307081
John Moffat
Keymaster
- Topics: 57
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No problem 🙂
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