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Kindly assist with the working for Breakeven sales and margin of safety am slightly missing it
Thank you in advance
BEP = FC/Contribution per unit. However, some information is given per unit and some per $m.
The answer has revenue and costs in $m, so material cost = $90 x 1.12m = 101 etc as shown in the answer
For Cheerful: Contribution/unit = (448 – 67 – 45 – ……..)/1.12 = 162/1.12 = 144.64
BEP = 120m/144.64 = 0.83mForecast sales = 1.12 x 1.04 x 1.04 = 1.21m (for two years’ time)
Sales can fall by 1.21 – 0.83 = 0.38m units before break even is reached. The margin of safety is therefore0.38/1.21 = 31% [no idea how ACCA got 26%]
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