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John Moffat.
John Moffat.-
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bigty
- Topics: 11
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Hi John,
I’m failing to understand q3 on CVP. Especially this statement “P2 also included specific fixed overheads totalling $2,500”.Assist clarifying.
John Moffat
- Topics: 57
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The total fixed overheads are (10,000 x 1.20) + (12,500 x 1) = 24,500
Of this total, 2,500 will only be incurred if P2 is produced. The remaining 22,000 will occur whatever is produced.
bigty
- Topics: 11
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This is well understood John. Many thanks.
John Moffat
- Topics: 57
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You are welcome 🙂
numera
- Topics: 30
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hi
in the same question can you please explain wherein the answer contribution per unit of P is coming as 3.20+1.20=4.40
when im calculating contribution its coming as 4.4+2.6=7
maybe im missing something here could you help please.thanks
John Moffat
- Topics: 57
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I have no idea where you are getting your figures from!
Contribution is sales less variable costs: 10 – (3.50 + 1.50 + 0.60) = 4.40
(and is always the same as the profit before fixed costs: 3.20 + 1.20 = 4.40.numera
- Topics: 30
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ya 4.4 exactly.
ok sorry got it. i forgot the profit before fixed cost. so i thought maybe they are adding contribution for p2 as well.
sory for the confusion
thanks
John Moffat
- Topics: 57
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No problem 🙂
bigty
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