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CVP Analysis

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › CVP Analysis

  • This topic has 3 replies, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • October 27, 2015 at 7:12 pm #279312
    Shah
    Member
    • Topics: 3
    • Replies: 1
    • ☆

    Dear Sir,

    In test question 1 it is given C/S ratio is 30% and in answers you calculated Selling Price by dividing variable cost by 70% (I guess which is 100% – 30%) , so can you explain us how u arrive at this step , I mean what have you done to the formula “total contribution = C/S ration X Sales revenue” to reach “S.P = V.C / (100% – C/S ratio) ”

    Thank you.

    October 28, 2015 at 7:39 am #279355
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51551
    • ☆☆☆☆☆

    Imagine the sales were 100.
    Then contribution would be 30.

    Contribution = sales – variable costs, so it means the variable costs would be 100 – 30 = 70.

    So for every 70 of variable costs, the sales are 100. i.e. variable costs are 70% of sales.

    So sales = variable costs / 70%

    October 28, 2015 at 8:32 am #279364
    Shah
    Member
    • Topics: 3
    • Replies: 1
    • ☆

    Got it ,

    Thanks a lot Sir.

    October 28, 2015 at 9:09 am #279367
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51551
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
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