Please help me with this question

To start with we get as much info out of the question as possible C/S= 60% Sales price = $10 per unit So Contribution must = $6 per unit ( and variable cost = $4). Next.. we find breakeven sales… Breakeven Sales Revenue = Fixed Cost/ c/s ratio Brkeven Sales Rev = 120,000/ 0.6 = $200,000 NB- this is 20,000 units at $10 each. To confirm- at breakeven: Sales $200000 V Cost $(80000) < 20,000 x 4 Contribution =$120,000 Fixed Cost = ($120000) Profit = £0 < This is correct for profit at Breakeven. If margin of safety is 20% and breakeven revenue is $200,000 - then budgeted revenue must be $250,000 (this is 25,000 units). At this level Sales = $250,000 V.cost = $100,000 i.e. 25,000 x 4 Contribution $150,000 (this is Budgeted contribution) (120000) fixed cost Profit $30,000 Finally to answer the question we need to find what level of variable cost will cause product Y to breakeven at the current budgeted level of 25,000 units. Profit = Sales – Variable cost – fixed cost profit at breakeven will be zero $0 = $250,000 – (25000 * VC) –$ 120,000 VC= $5.20 per unit. Therefore for 25,000 units to be the breakeven figure – Variable costs need to have increased to $5.20 per unit. This is a 0.30 rise from current price of $4 Answer is 30% Hope this helps

Cath, If margin of safety is 20% and breakeven revenue is $200,000, then what will be the budgeted sales? i guess 200000÷0.8=250000 and selling price as described above is $10 then budgeted sales units = 25000 according to my calculation We need to increase variable cost to $5.2 (from 4) in order to achieve breakeven, this represent 30% increase in variable cost.

You are exactly right - Ive updated my answer - please excuse my slip. Thanks for watching out :-) Kindest Regards Cath

Consider the following information for a given business. Sales revenue GHS 40,000 VC per unit = GHS 20 Activity level = 1,000 to break even Required: i. Determine the TFC. (1 mark) ii. Express the contribution as a percentage of sales. (1 mark) iii. The company plans to sell 1,500 units in the next period. What will be the percentage Margin of Safety (MoS)? (1 mark) iv. What margin should the business employ for planning purposes? (1 mark) v. What total profit should the business expect in order to achieve its planned sales? (1 mark) b. SHATTA MOVEMENT Ltd produces a single product. The company’s directors want to explore new markets, and they require an accurate analysis of the firm’s cost structure for both forecasting and pricing purposes. An attempt to provide this analysis from the aggregation of individual costs has produced a poor correspondence between actual and predicted costs. You are an accountant employed by SHATTA MOVEMENT Ltd, and you have been asked to provide a statistical approach to the problem. The financial director has given you the following data: Period Output (units) Average unit cost (GHS) July 9,000 12.8 August 14,000 13 September 11,000 11.4 October 8,000 12 1November 6,000 13 December 12,000 11.7 You obtain the following further information: ? The costs from which the averages have been computed consist of the firm’s entire costs for the relevant month. ? Fixed costs can be assumed to be unaffected by seasonal factors except for harmattan heating. In July and August a supplementary heating system was employed; this cost GHS 10,000 per month to operate.

Hi Kwame7, Thanks for your question - always better to start a new thread for a new question on here to help other CIMA students. However, we are not able to help with questions which are outside of the CIMA syllabus (like this one) Presumably you have an answer in your text book or exam kit - so if you can share this & tell me which part or aspect you cant follow or need explaining that would help? We cant solve students' homework for them ( eg posting long non-CIMA questions that just need a calculated answer supplying) this doesnt help anybody - sorry! Kind Regards Cath ps) If you are a CIMA student then please note that the above question is too lengthy and beyond the scope of CIMA P1 in some aspects.

MALCOM SA, a company operating in the field of general trade, presents the following information to you and asks you to determine the amount of corporation income tax. The transactions carried out in the year 2021 are as follows: • Purchase of goods: 8 000 000 • Sales of goods: 6 000 000 • Stock of goods at 01/01/2021: 2,000,000 • Stock of goods at 31/12/2021: 1 500 000 • Operating subsidy received: 3 000 000 • Cost of services: 3 400 000 • Transportation costs: 700,000 • Land acquisition: 15 000 000 • Reversal of provision: 9 000 000 • Provisions expenses for retirement: 2 000 000 • Financial income: 5,000,000 • Depreciation of assets : 2,500,000, including 800,000 for passenger vehicles • Acquisition of computer equipment: 7,000,000 • Deposit of cash into the bank : 4000 000 • Financial expenses : 2000 000 • Taxes and duties : 800 000 • Staff costs: 1 800 000 • Acquisition of shares : 6000 000 Additional information: The corporate income tax rate is 30%. Provisions for retirement benefits are not deductible. Depreciation of passengers’ cars is 50% deductible. One third of the reversals of provisions concerns provisions that had previously been reinstated. The situation of the losses carried forward is as follows: 2017 loss: 3,400,000 2018 loss: 1,500,000 According to the General Tax Code, loss can be carried forward for three years. Proposed methodology: 1) Determine the accounting profit or loss for 2021 (5 marks) 2) Determine the tax base for 2021 (10 marks) 3) Calculate the amount of tax for 2021 (5marks)

Hi Waka, Thank you for your question, however, I cant help you here. The length and detail of this means this is not a CIMA exam standard question. I can guarantee you will not have to solve anything of this length or detail in your CIMA objective test exam. Also the nature of the question content means it is a financial accounting/ taxation type question, whereas this forum is for CIMA P1 (management accounting topics). Sorry Thanks Cath