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Good day a Sir/Madam,
Could you assist with the workings shown in appendix 2 of question 1 of the P5 Pilot Paper?
Thanks.
Just looking at the 500 column:
Variable costs = 500 x(9.4 x $1214 + 9500 + 8450 + 4810 + 13800) = 23,985,800
Fixed costs are as given in Appendix A, depending on the package.eg 7,500,000 for package 1.
Total costs package 1 = 31,485,800
Cost per package unit = 31,485,800/500 = 62,972Revenue = $7.5m towards development and then a 19% mark-up on budgeted variable costs = 7,500,000 + 1.19 x 23,985,000 = 36,043,102
Profit = 36,043,102 – 31,485,800 = 4,557,302
To get expected profits multiply the profits by the probabilities relating to the demands.
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