- This topic has 5 replies, 2 voices, and was last updated 5 years ago by
.
- Posts
Dear Sir, Could you please help me to explain about sensitive analysis of change in sales volumn by 1 example cacluation? Thank you very much.
Suppose the selling price per unit is $10, the variable cost per unit is $2, and the fixed costs are $20,000. They expect to sell 4,000 units.
Therefore they are expecting a contribution of $32,000 and a profit of $12,000.
For the profit to fall to zero, the contribution will have to fall to $12,000. Therefore the sales will have to fall by (32,000 – 12,000) /8 = 2,500 units.
Therefore the sensitivity to change of the sales volume is 2,500/4,000 = 62.5%
Have you watched my free lectures on CVP analysis?
Dear Sir, I have not watched your lecture.I only read BPP text book but I can not find an example for this matter.Sorry, but as your example, I understand that sales amount will fall 12.000 from 40.000USD to 28.000 USD?I do not understand why it fall from 32.000 USD ?Please kindly help me to explain it.Thank you for your support.
If the sales volume changes then both the total sales revenue and the total variable costs changes.
They are expecting sales revenue of 40,000 and variable costs of 8,000, so a contribution of 32,000 and therefore a profit of 12,000.
For a profit of zero the contribution needs to fall to 12,000. As I explained before, this means sales volume has to fall by 2,500 units which means sales volume of 1,500 units.
With sales of 1,500 units, the sales revenue is 15,000 and the variable costs are 3,000. So a contribution of 12,000 and a profit of zero.I do suggest that you watch my free lectures. They are a complete free course for Paper PM and cover everything needed to be able to pass the exam well. If you are watching the lectures you do not really need the Study Text (although you do of course still need the Revision Kit because question practice is so vital once you have finished studying).
Thank you Sir.I understand.Actually,F5 is the 1st ACCA exam I will take.I am exempted from F1 to F4. There are some contents I am not clear but I do not know ask to whom until some recent days.It is very lucky to know opentuition and be supported by you.And I am not good in English listening skills.So, I am afraid I can not understand all your lecture.I wish there is subtitle in your lecture. I am very much hope that you will continue to help me and other candidates in next exams.
I am sorry but because we offer everything free of charge we do not have the resources to provide subtitles. The same lectures are on YouTube and I think YouTube provides automatic subtitles but I cannot guarantee it (or the quality of them).
Much (but not all) of Paper MA (which used to be called F2) is relevant for Paper PM. Although you were exempt you will presumably have studied those topics at university, but if you do come across anything in Paper PM that you are not sure about then look back at the relevant Paper MA lecture.
I am sure that the more lectures you watch (with the lecture notes printed out in front of you) then the easier you will find them to understand.
- The topic ‘Sensitive analysis’ is closed to new replies.