Forecast Profit

Merioneth Registered Posts: 21 Dedicated contributor ? ? ?

I've had a piece of work returned on my coursework.

I've attached the question.

I think I've worked out the overheads incorrectly as I've said they are 19825 as per the results you are given as they are fixed.

But they are asking for a forecast profit for 6 months. The overheads for 19825 are based on 3 months.

So correct my profit statement I need to work out the fixed overheads for 6 months? IS this correct?




  • visha
    visha Registered Posts: 218 ? ? ?
    I am afraid I could not figure out your answer.

    please look at my attched answer and importantly it's lay out.

    It has to be logical and easy to follow.

    look at my workings on the left side of the answers. It tells the examiner how I arrived at my answer. Even if my answer is wrong I will acheive sufficient points to be graded as competent - purely on workings.

    Attachment not found.
  • Merioneth
    Merioneth Registered Posts: 21 Dedicated contributor ? ? ?

    Thanks for doing that.

    But I don't think the overheads are correct? They are fixed that's right so shouldn't change.

    But the actual results your looking at are for three months only. And you need to work out the forecast profit for 6 months so surely you would take the 19825 overhead cost and times it by 2?

    Or work out the overall monthly overhead cost and times by 6?
  • crispy
    crispy Registered Posts: 465 Dedicated contributor ? ? ?

    I've had a look and had a go, although this may not be correct it seems logical: -

    For 2,500 batches:

    Sales 79,125
    V. Costs (32,925)
    Cont. 46,200
    Cont. per batch £ 18.48 (46,200/2,500)

    For 4,800:

    Contribution 88,704 (4800 @ £18.48)
    Fixed Costs (52,750) (26,375 x 2)
    Profit 35,954

    B/even £52,750/£18.48 = 2,855 batches
    2,855 x £31.65 = £90,361

    MOS = 1,945 batches (4,800 - 2,855)
    1,945/4,800 = 40.5%

    Hope this is of some help
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