CVP Analysis

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February 4, 2018 at 1:50 am #434953
gangsta1
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Sir in your lecture notes for cvp, example 6 part B. It says to calculate the average c/s ratio.
We already calculated the individual c/s ratio in part a, cant we use these individual c/s ratios to calculate average c/s ratio as follows:

(.25×4800) + (.125×4800) + (.379×12000)/ (4800+4800+12000)=29.39%
February 5, 2018 at 12:07 pm #435240
John Moffat
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No. As I say in the lectures (and is written in the answers in the notes) you can take the weighted average, but you need to weight the CD ratios by the total revenues – then you will arrive at the same result).
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