CVP analysis

Hi Sir John,

I have a question about multiple question No. 53 in Kaplan Kit 2015.
the question. The management accountant of Caroline plc has calculated the firm’s breakeven point from the following data:

Selling price per unit: $20
Variable costs per unit: $8
Fixed overheads for next year: $79,104.

It is now expected that the product’s selling price and variable cost will increase by 8% AND 5.2 % RESPECTIVELY.

These changes will cause Caroline’s breakeven point for next year to:
A) Rise by 9.0%
B Rise by 2.8%
C) Fall by 2.8%
D) Fall by 9%

I did my computation: Break-even point = FC/ Contribution per unit= $79,104/$12= 6,592.
Contribution now: SP-VC=$20-$8= $12.

PS: this is same result like the examinator has, but following revised contribution, I got lost,
because I multiply = 8%-5.2%=2.8% and I got answer B) Rise be 2.8% – which is wrong.

Query:They have D) correct. I don’t understand how examinator calculated the revised contribution?
Can you please tell me how he arrived to figure $21,600 and $8,416 , and $13,184?

Next question 51Multiple/ Kaplan 2015 June Kit.
A company manufactures and sells a single product with a variable cost per unit of $36. It has a contribution ratio of 25%. The company has weekly fixed costs of $18,000.
What is the weekly breakeven point, in units?
A) 1,500
B) 1,600
C) 1,800
D) 2,000.

Sir, I don’t understand how he arrived to 0.75?? And it is first time I see contribution in percentage, such as 25%? Is it normal?

In answer: he has: Selling price per unit($36-$0.75)= $48
Contribution per unit $48 – $$36= $42. Here I think it is typo , it should be $ 12?
Fixed costs $18,000.
Therefore. breakeven point (units) is $ 18,000/$12= 1,500.

Next Q.48 Betis Limited is considering changing the way it is structured by asking its employed staff to became freelance. Staff are currently paid a fixed salary of $240,000. pa but would instead be paid $200 per working day. On a typical working day, staff can produce 40 units. other fixed costs are $400,000pa.

The selling price of a unit is $60 and material costs are$ 20 per unit. What will be the effect of the change on the breakeven point of the business and the level of operating risk?
A) The Breakeven point reduces by 6,000 units and the operating risk goes down.
B) The Breakeven point reduces by 4,571 units and the operating risk goes down
C) The Breakeven point reduces by 4,571 units and the opearating risk goes up
D) The Breakeven point reduces by 6,000 units and the opeating risk goes up.

Sir, I do’t understand the new breakeven point is: $400,000/35= 11,429 units.
How he arrived to 35??
And also how is the part of $5 contribution made from ? Is it = $200Labour/40 units ?
He has in the answer: new contribution is $ 60-$20-$5=$35?

Thank you for your answer.