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On page 17 there is a question 4.10
A company makes and sells 3 products R,S and T. Extracts from the weekly profit statements are:
R S T Total
$ $ $ $
Sales 10,000 15,000 20,000 45,000
VC 4,000 9,000 10,000 23,000
FC 3,000 3,000 3,000 9,000
Profit 3,000 3,000 7,000 13,000If the mix of products produced and sold is changed to: R 20%, S 50%, T 30% what impact would this have on the weighted average contribution to sales ratio?
My question is how to calculate contribution after the change in production?
Thanks.You know the CS ratio for each product individually (R is 0.4; S is 0.6; T is 0.5), and these will not change.
For the weighted average contribution, simply multiply each of these by the relevant % and add them up 🙂
(I don’t have the Becker book – only the BPP Revision Kit – but do they not provide answers in the book? 🙂 )
Do watch my free lectures – they are a complete free course for Paper F5 and cover everything needed to be able to pass the exam well.
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