Help with ECR PAPER

debbieh
debbieh Settling In NicelyRegistered Posts: 17
Can any one help with pass paper dec07, section 2

Task 2.2
Calculate the budgeted break even sales in litres,

I thought that you take the fixed cost of 2,300/ 0.88

Why in the answer does it show 0.88-0.38, where does the 0.38 come from??

Comments

  • Freddie
    Freddie Just Joined Registered Posts: 2
    Debbie

    To find your breakeven point (BEP) you need to divide Fixed Costs by Contribution, to find the Contribution you need to do work out Selling Price - Variable Costs - does that help (without giving you the actual answer!?). If not let me know and I'll break it down further.
  • firefox
    firefox Just Joined Registered Posts: 1
    help with ECR paper

    Hi,

    The 0.38 is the total variable cost per unit. To calculate break even you divide fixed costs by selling price less variable costs
  • debbieh
    debbieh Settling In Nicely Registered Posts: 17
    Thanks guys, I didnt think that you had to refer back to task 2.1 for some of the figures.

    I have already failed section 2 twice, in 2006, so trying again. Already passed FRA, and DFS of level 4, I find costing so much harder.

    Also need help on Task 2.4, how do you work out the allocated machine hours as 4,000 to product S782 and 2,000 to product S893, THEN HOW DO YOU WORK OUT THE THOUSAND LITRES MADE FIGURE?

    Thanks
  • Freddie
    Freddie Just Joined Registered Posts: 2
    Debbie

    Task 2.4

    You need to work out how much the contribution will be for each product, once you've done this you can rank each product by the amount of contribution generated (ie the more contribution generated the ranking would be higher). So product S782 would generate £200 of contribution per machine hour and is therefore ranked as 1.

    You have a total of 6,000 hours for both products. The table above 2.4 (additional data) shows the machine hours per thousand litres (2) and that the demand is 2000 therefore multiply the 2 by the 2000 to get 4000 litres. This means you can make all of product S782 (4000 hours) and the remainder 2000 hours is allocated to the other product making a total of 6000.

    Does that help? I'm not very good at explaning what I mean unfortunately. Give me a shout if it's not clear, I'm sure someone else can explain better!
  • debbieh
    debbieh Settling In Nicely Registered Posts: 17
    Got that bit, how do you get the figure of 400 thousands litres made for produce s893?
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