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hello
please help me with the following question below. I am failing to understand even the worked answer provided for the very question. Your help will greatly be appreciatedPER plc sells three products. The budgeted fixed cost for the period is $648,000. The budgeted contribution
to sales ratio (C/S ratio) and sales mix are as follows.
Product C/S ratio Mix
P 27% 30%
E 56% 20%
R 38% 50%The breakeven revenue is:
Hello , I try may be I am wrong
so we need finally to have the result as Fixed Costs /(C/S) hence 648000/(C/S)
C/S we know such as 0.27 / 0.56 / 0.38
Sales mix we know as 3:2:5
weighted average contribution is (3*0.27+2*0.56+5*0.38) / total sales (3+2+5) = 0.383 this is C/S coef.Finally we should have 648 000 / 0.383 = 1 691 609 ( please consider decimal numbers, it is really impacting).
please correct me if I am wrong,
thank youHi,
Thanks for your response Alexbelokonshly – this is 99.9% correct but may I remind you that it is the general CIMA forums where your help is most welcomed. The Ask a Tutor forum is designed for tutor’s responses only.Thank you for your help anyway- the calculation is just as you state – except the final figure of $648,000 /0.383 =$ 1,691,906 ( not 1,691,609 as stated).
Hope that helps
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