• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for March and June 2025 exams.
Get your discount code >>

Question ACCA Dec 16

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Question ACCA Dec 16

  • This topic has 7 replies, 4 voices, and was last updated 6 years ago by John Moffat.
Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
    Posts
  • December 5, 2017 at 10:20 am #420622
    annemiquel2
    Member
    • Topics: 14
    • Replies: 5
    • ☆

    Dear Sir,
    I came across the following question (truncated text) from Dec 16 ACCA exam:

    Based on the prices it charges for entry to similar events in other locations, Hare Events has decided on an entry fee of $55 for the full marathon and $30 for the half marathon. It expects that the maximum entries will be 20,000 for the full marathon and 14,000 for the half marathon
    Variable costs:
    Full marathon Half marathon
    Race packs 15·80 10·80
    Water stations 2·40 1·20
    Fixed costs:
    Council fees 300,000
    Risk assessment and insurance 50,000
    Marketing 30,000
    Photography 5,000

    QUESTION
    Hare Events wishes to achieve a minimum total profit of $500,000 from the running festival.
    What are the number of entries Hare Events will have to sell for each race in order to achieve this level of profit, assuming a constant sales mix based on the expected race entry numbers applies?
    A Full marathon: 17,915 entries and half marathon: 12,540 entries
    B Full marathon: 14,562 entries and half marathon: 18,688 entries
    C Full marathon: 20,000 entries and half marathon: 8,278 entries
    D Full marathon: 9,500 entries and half marathon: 6,650 entries

    MY ANSWER
    I work with the C/S ratio and find expected revenue to achieve the profit of 500k is $1,361,538.
    Then I apportion based on the mix of 20,000 / 14,000 expected runners:
    Full marathon: $1,361,538/34,000*20,000/$55 = 14,561 runners
    Half marathon: $1,361,538/34,000*14,000/$30 = 18,688 runners
    ANSWER B

    However the correct answer is A:
    Weighted average C/S ratio = 65%
    Revenue to achieve target profit = $885,000/65% = $1,361,538
    Marathon ($110/$152) x $1,361,538 = $985,324/$55 = 17,915 entries
    Half marathon ($42/$152) x $1,361,538 = $376,214/$30 = 12,540 entries

    I do not understand where the $100/$152 and $42/$100 come from. Could you please explain me why my reasoning is wrong?

    Many thanks for your help,

    Anne

    December 5, 2017 at 11:36 am #420635
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54662
    • ☆☆☆☆☆

    The total budgeted revenue from the full marathon is 20,000 x $55 = $110,000, and from the half marathon is 14,000 x $30 = $42,000.
    So a total of $152,000.

    Therefore the actual total revenue needs apportioning in the same ratios, i.e. 110/152 for full marathons and 42/152 for half marathons.

    December 5, 2017 at 11:57 am #420639
    annemiquel2
    Member
    • Topics: 14
    • Replies: 5
    • ☆

    Thanks a lot! Once again for this module, if I pass, this will definitely thanks to your lectures!

    December 5, 2017 at 12:59 pm #420643
    pats
    Member
    • Topics: 0
    • Replies: 1
    • ☆

    Hi

    For question 17 of the question, they are asking “Assuming that the race entries are sold in a constant sales mix based on the expected race entry numbers, what is the sales revenue Hare Events needs to achieve in order to break even (to the nearest $’000)?”

    I understand that you have to calculate the breakeven revenue but when I am calculating the Weighted average contribution per sale I do not understand why they are multiplying the full marathon and half marathon contributions and sales in the equation by 2 and 1.4. Can you please help with this?

    Thank you in advance for your help.

    December 5, 2017 at 1:36 pm #420660
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54662
    • ☆☆☆☆☆

    annemiquel2: You are welcome 🙂

    December 5, 2017 at 1:41 pm #420662
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54662
    • ☆☆☆☆☆

    Pats: They are working in thousands! There are 20,000 full marathons and 14,000 half marathons in the budget. 2:1.4 is the same ratio as 20,000:14,000.

    April 16, 2019 at 4:26 pm #513111
    iza1
    Participant
    • Topics: 115
    • Replies: 112
    • ☆☆☆

    Hi John, 14000*30 should be 420000.
    So shouldn’t we apportion revenue on 110/530

    April 16, 2019 at 6:20 pm #513138
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54662
    • ☆☆☆☆☆

    Yes – it was a silly mistake on my part, but the principle should be clear (and I presume you have the original examiners answer anyway 🙂 )

  • Author
    Posts
Viewing 8 posts - 1 through 8 (of 8 total)
  • The topic ‘Question ACCA Dec 16’ is closed to new replies.

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • Nashra30 on CIMA E1 Chapter 3 Test
  • azubair on Financial Performance Measurement – ACCA Performance Management (PM)
  • j.akshaya on Group SFP – Example (Basic consolidation) – ACCA Financial Reporting (FR)
  • rishitxx on ACCA BT Chapter 1 – The nature and structure of organisations – Questions
  • singhjyoti on Basic group structures – SPLOCI introduction and example – ACCA (SBR) lectures

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in