ecr question

princess246princess246 Feels At HomePosts: 49Registered
Im trying to find the revised target profit for my operating statement but im not sure how i get my rveised profit figure? i have worked out my contribution per unit and break even points in units and margin of safety.

Could anyone point me in the right direction please?

Thanks:confused1:

Comments

  • SandyHoodSandyHood Font Of All Knowledge Posts: 2,034Registered, Moderator
    In an ECR question you would expect to be asked
    1. The number of units that need to be sold to achieve a target profit, or
    2. The sales revenue (turnover) needed to achieve a target profit

    For 1. ...........Total Fixed Costs + Target Profit = Units of sales needed to achieve target profit
    ......................Contribution per unit sold

    For 2. ...........Total Fixed Costs + Target Profit = Sales revenue needed to achieve target profit
    ........... PV ratio (Contribution divided by sales revenue)
    Sandy
    [email protected]
    www.sandyhood.com
  • princess246princess246 Feels At Home Posts: 49Registered
    my contribution is 365,400
    my operating profit is 192,400
    my fixed costs are 173,000

    so do i then add my fixed and operating? and divide by contibution divided by sales revenue?

    my anwser is not looking right cant think where im going wrong
  • SandyHoodSandyHood Font Of All Knowledge Posts: 2,034Registered, Moderator
    We are not yet able to find what you are looking for

    I've copied the formulae and added values where I can but the words in blue need values

    For 1. ...........Total Fixed Costs + Target Profit = Units of sales needed to achieve target profit
    ......................Contribution per unit sold

    For 1. ...........£173,000 + Target Profit = Units of sales needed to achieve target profit
    ......................Contribution per unit sold (£365,400/units sold)

    For 2. ...........Total Fixed Costs + Target Profit = Sales revenue needed to achieve target profit
    ........... PV ratio (Contribution divided by sales revenue)

    For 2. ...........£173,000 + Target Profit = Sales revenue needed to achieve target profit
    ........... PV ratio (Contribution divided by sales revenue) (£365,400/total sales revenue)
    Sandy
    [email protected]
    www.sandyhood.com
  • princess246princess246 Feels At Home Posts: 49Registered
    Thats my problem i dont know how to calculate the target profit.
  • mark130273mark130273 Font Of All Knowledge Posts: 4,234Registered
    well princess ,whos on 25k !!!! target profit is easy ......

    shame ive got no job tho !!!

    just practice the examples in the books !
  • princess246princess246 Feels At Home Posts: 49Registered
    I'm a service charge accountant i dont do costing to that extent, i also dont need a qualification to do my job just expeirence.

    But thankyou i will practice my brain has turned to mush and i can for the life of me remember how to do it.
  • princess246princess246 Feels At Home Posts: 49Registered
    Worked it out realised that i was missing part of the question paper!!!!!!!
  • mark130273mark130273 Font Of All Knowledge Posts: 4,234Registered
    I'm a service charge accountant i dont do costing to that extent, i also dont need a qualification to do my job just expeirence.

    But thankyou i will practice my brain has turned to mush and i can for the life of me remember how to do it.

    i know i sounded a little bitter about that. but its just there was about 15 in our class at the start of this second year and about 8 havee dropeed out because they found it too hard and all of them worked in an accounting area !
    :thumbdown:
  • SandyHoodSandyHood Font Of All Knowledge Posts: 2,034Registered, Moderator
    princess246
    Member Join Date: Dec 2007
    Posts: 18





    Worked it out realised that i was missing part of the question paper!!!!!!!

    If you still need some help after you find it, I'm sure I'm not alone in being willing to help.
    Sandy
    [email protected]
    www.sandyhood.com
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