CSS Forums - Solution 7(a) paper 1 2016

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Solution 7(a) paper 1 2016

Q.7 (a) Audit & Accountancy (Paper1.CSS 206) Solution
First Step is to find Contribution for each product
Formula =P/V ratio= Contribution / Sales
= (Sales – Variable cost)/Sales

(Rs.000)
Oxygen=> 50% = (1250-x)/1250
X= 625
Nitrogen=> 40 %=( 2000-x)/2000
X= 1200
Accetlyne=> 30 %=( 3000-x)/3000
X= 2100
Second step is Cumulative PV ratio
Formula is Combined Contribution/Combined sales*100
Combined Contribution= (625+800+900)
Combined Sales= (1250+2000+3000)
Cumulative PV Ratio= 2325/6250*100=37.2%
To find out Profit/loss of the budgeted results
PV ratio=Fixed + (profit/loss)/sales
37.2%=2511+x/6250
X= (186) loss
Second half of question is to eliminate loss implying break even
Break-even Sales = Sales * P/V ratio= Fixed cost
X*37.2%=2511
X=6750
Sales value of each product according to the sales mix
Oxygen=6750*20% =1350
Nitrogen=6750*32% =2160
Acetylene=6750*48% =3240
I hope all my effort paid off.
Kind Regards (aly.syyed@gmail.com) :)

Accounts & auditing

Muhammad Irfan
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from which book you covered this topic?

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Your first part is right but second part goes like this:

[IMG]http://uploads.tapatalk-cdn.com/20170107/1f4c8c64dd14a761d1a5b13c7b10f085.jpg[/IMG]

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[IMG]http://uploads.tapatalk-cdn.com/20170107/c7e52c9d1dc4c12ec6164b438ddf3d2b.jpg[/IMG][IMG]http://uploads.tapatalk-cdn.com/20170107/9191fa6fcfafed3626b7d74b3576402a.jpg[/IMG]

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Sorry for duplication..

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He has asked about total sales value.you have worked out the increase in sales value.revisit it

Please u revisit it again.

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aviod netspeak.refrain from using [B][U]u[/U][/B] again