ecr question

princess246

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:

SandyHood

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)

princess246

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

SandyHood

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)

princess246

Thats my problem i dont know how to calculate the target profit.

mark130273

well princess ,whos on 25k !!!! target profit is easy ......

shame ive got no job tho !!!

just practice the examples in the books !

princess246

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.

princess246

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

mark130273

princess246 wrote: »

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:

SandyHood

princess246
Member Join Date: Dec 2007
Posts: 18

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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.