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John Moffat.
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ydachlivaya
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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.
John Moffat
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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.
ydachlivaya
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