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In question b (i) question asks to calculate net profit. in solution the variable cost is calculated on the provided sales unit of 120000 given by the question. why isn’t this calculated on the new demand of 144000 units ?
I am away from home this weekend and so I do not have the Kaplan Kit with me. However from memory, part b asks you to do throughput approach, in which case remember that all variable costs (except for materials) and so the total remians unchanged whatever the level of production.
(If part b was actually something else the lnet me know 🙂
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