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cardio co (sep/dec 15 amended)
For part b) of this question, is there an alternative method to calculating or arriving at breakeven revenue other than dividing fixed costs by the contribution to sales ratio.
What if fixed costs are divided by the average contribution per unit i.e. adding all three contributions and dividing them by 3. Is it correct
For part a) of this question, the contribution to sales ratio is given in percentage. Should it be given in percentage or in decimal.
For part b) of this question, the margin of safety is given as 1577053 but I calculated it to be 1577152.82051282. So which is correct
Breakeven revenue is always the fixed costs divided by the CS ratio.
The average CS ratio is not calculated by adding up the three and then dividing by 3.
They are both correct – the difference is due to rounding and rounding is irrelevant in the exam (just as it is in real life).
You have obviously not watched my free lectures on CVP analysis because I explain multi-product CVP analysis. You really cannot expect me to spend time answering your questions if you cannot be bothered to watch the lectures.
I hope that you are not trying to prepare for the exam by just learning from questions in your Revision Kit. If so, then that will not work. The exam is full university degree level and the Revision Kit is for practice after you have finished studying each topic in detail. The examiner thinks of different ways of examined the topics every exam and only 50% of the exam is calculations – this is deliberately to make sure that students understand the topics and have not just learned rules.
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