Hi Sir John,
I discovered that we can calcualte the breakeven point in two ways: 1)average contribution to sales ratio or 2) Based on budget sales: computation trough breakeven point in terms of number of mixes, b/even in terms of number of products, b/even in terms of revenue. I must say that the first Average c/S ratio computation seems to me too long!
Question:How is it working at the exam, does examinator let us choose the method?
Next Question on the page 77/BPP Manual - Company PL 5.1 Calculating the ration (see also section 4.1)
My Q: I didn't understant how they arrived to the mixed ration 7/10and 3/10 in step 6: Calculate breakeven sales:
M=$58,442 *7/10=$40,909.
N=$58,442*3/10=$17533.
Q:Why they didn't mulptiply only brakeven point with the number of mixes?
Q: Do I need to follow exactly the Steps as per Manual BPP page 77 1 ) Calculate the revenue per mix until Step 6) Calculate Breakeven Sales in the exam?
Next Q: I watched your video about multiple CVP and I think they you were using the other method, based on Budget Sales , more straight forward, so you didn't use average contribution C/S ratio, did you?
In video you have these following points:
1) Computation of C/S ratio per unit and total C/S ratios.
2) Average C/S ratios - based on budget sales, and total budget contribution
3) Computation of Budget Sales Revenue per product, and total Revenue.
4)Computation C/S ratio.
5) Computation Breakeven and Total revenue=F/C / C/S ratios.
6)P/V chart
7) table
Q: I don't understand how you were drawing the chart for each product. So, do you start with first point on the chart with F/C?, F/c and 0 [0;F/C]? then you were adding the sales volume according Ranking - first P (12,000*$7)=84,000. And on the Y axis: (12,000*$2.65=$31,800)
Q: So, the co-ordinates of P are [84,000;31,800]?
co-ordinates of C are [24,000;6000]
co-ordinates of V are [28,800;3,600]? And then I put these points on the chart and draw a line between them. Is it correct?
Thank you very much for your answer!
Ask the Tutor ACCA PM
CVP analysis multiple products
First question: Yes - it doesn't matter which way you do it
Second question: Sorry but I don;t have the BPP Study Text
Third question: I did use the average CS ratio but I calculated is using total budget contribution and total budget sales
Fourth and fifth questions: correct :-)
Indicate the nature of the violation and the extent to which the CVP chart can be adapted to allow for this violation.
What you have typed makes no sense at all on its own. Presumably it is part of a longer question.
If you are referring to the same question as in Jana's post, then I have already stated that I do not have the BPP Manual and therefore I have no idea whatsoever of what violation you are referring to.
If you are referring to a different question then if it is a past exam question or is in the BPP Revision Kit then tell me which one and then I will explain.
If it is part of a question that you have been given as an exercise, then sorry but we are not here to do your homework for you :-)
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