Solution 7(a) paper 1 2016

[ali syyed]

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)

[Irfan ACMA]

Muhammad Irfan
Occupation
ACMA
Expertise in Subjects
Audit & Acccounting
Business Taxation
Marcantile Law
Business Administration

Cell # 0333-4922288

Cell # 0302-4702148

[megamind]

from which book you covered this topic?

Sent from my LG-D800 using Tapatalk

[megamind]

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






Sent from my LG-D800 using Tapatalk

[megamind]

Sorry for duplication..

Sent from my LG-D800 using Tapatalk

[ali syyed]

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

[megamind]

Please u revisit it again.

Sent from my LG-D800 using Tapatalk

[ali syyed]

aviod netspeak.refrain from using u again