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Has anyone know the solution?

Forums › ACCA Forums › ACCA MA Management Accounting Forums › Has anyone know the solution?

  • This topic has 1 reply, 2 voices, and was last updated 11 months ago by mrjonbain.
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  • March 2, 2022 at 2:21 pm #649646
    miguemg02
    Member
    • Topics: 2
    • Replies: 0
    • ☆

    Nixon Limited manufactures and sells a single product. The following data have been extracted from the current year budget.

    Selling Price £20/unit

    Variable Cost £12/unit

    Weekly Profit £22,000

    Total weekly fixed cost £10,000

    Required:

    1. Calculate weekly sales units to generate the profit of £22,000?

    2. Calculate break even sales units?

    3. Calculate margin of safety?

    March 2, 2022 at 4:10 pm #649656
    mrjonbain
    Moderator
    • Topics: 1
    • Replies: 1557
    • ☆☆☆☆☆

    1. Contribution 20-12=8

    Needed to make 22000
    Is £10000+ £220000=£32000

    £32000/8 = 4000 units.

    2.£10000/8 = 1250 units

    3.margin of safety
    Amount of units sales can drop before break even reached is 4000-1250 units= 2750 units.
    Alternatively, £22000/8=2750 units.

    Hope this helps. Not hundred percent sure of these answers, hopefully someone can confirm.

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