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Hi, I’d like to ask how to calculate the Total contribution of lost sales because what I understand is that where there’s idle capacity then the lost in sales will be zero in such cases.
I’m now sorted I managed to break down the contribution margin lost contribution margin per unit (sales less VC) the got CM of lost sales per unit since it’s total then multiply by the number of units transferred to the segment of the other entity as this only occur where there’s the idle capacity because we operating at full capacity
Glad you are sorted.
Transfer pricing not part of CIMA P1 subject though ( you wont see that until CIMA P2).
Good luck with your studies & thanks for your question anyway