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Kit Question

Forums › FIA Forums › MA2 Managing Costs and Finance Forums › Kit Question

  • This topic has 1 reply, 1 voice, and was last updated 3 years ago by maximus07.
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    Posts
  • July 29, 2021 at 8:10 pm #629801
    maximus07
    Participant
    • Topics: 446
    • Replies: 437
    • ☆☆☆☆

    Sales units 128,000
    Sales revenue $640,000
    Variable costs $384,000
    Fixed costs $210,000

    What sales revenue is required to earn a profit of $65,000?

    $458,333
    $590,000
    $687,500
    $705,000

    Sir this question is not much difficult. I want to ask one thing.
    Like as we have calculated here sales by first calculating required contribution and then dividing by C/S will give us answer C.

    But why we are unable to calculate by adding all the cost and profit to find sales revenue. Like V.C+F.C+Profit will give us total revenue (Sales Revenue – V.C – F.C = Profit so Sales= V.c+f.c+profit) so 384000+210000+65000=659000.
    Why these two are not equal?

    July 29, 2021 at 8:14 pm #629802
    maximus07
    Participant
    • Topics: 446
    • Replies: 437
    • ☆☆☆☆

    Thank you sir. I came to know the reason. I was not amending the variable cost as per changing units.
    I am unable to delete the question so sorry.

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