• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

C/s Ratio & Break-even

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › C/s Ratio & Break-even

  • This topic has 3 replies, 2 voices, and was last updated 13 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • April 9, 2012 at 2:53 pm #52154
    namarsh
    Participant
    • Topics: 2
    • Replies: 2
    • ☆

    Beauty Co makes two products, nail polish and lipsticks. Nail polish sales make up 30% of total sales and their variable costs are 45% as a percentage of sales value.
    Lipsticks sales are 70% of the total sales and their variable costs are 40% as a percentage of sales value.
    Total fixed costs are $400,000 for the company.

    Required:
    What is the break-even level of sales revenues for the company?

    I’m really at a loss as to how I should approach this question. Can you please give me some guidance?

    April 9, 2012 at 4:34 pm #96156
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    I think the easiest way is as follows.

    Suppose that the total sales were $100.

    Then nail polish sales will be $30, and var costs will be 45% x $30 = $13.5
    So the contribution will be 30 – 13.5 = $16.50.

    Lipstick sales will be $70, and var costs will be 40% x 70 = $28
    So the contribution will be 70 – 28 = $42

    So……for total sales of $100, the total contribution will be 16.50 + 42 = $58.50

    Which means that the CS ratio is 58.50 / 100 = 0.585 (or 58.5%)

    Assuming they keep selling in the same ratio, the break-even sales will be fixed costs / CS ratio = 400,000 / 0.585 = $683,761 🙂

    Hope that all makes sense 🙂

    April 11, 2012 at 12:41 pm #96157
    namarsh
    Participant
    • Topics: 2
    • Replies: 2
    • ☆

    It makes perfect sense….thank you so very much.

    April 11, 2012 at 5:00 pm #96158
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • o1lim on Discounted Cash Flow Further Aspects, Replacement – ACCA Financial Management (FM)
  • julio99 on Impairments – Impairment (CGU) – ACCA Financial Reporting (FR)
  • effy.sithole@gmail.com on EPS – diluted EPS Example – ACCA Financial Reporting (FR)
  • Ken Garrett on The Finance Function in the Digital Age – CIMA E1
  • DeborahProspect on ACCA SBR Specimen Exam 2 Question 1

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in