ECR June 2009 Question

emma2009emma2009 New MemberRegistered Posts: 7
Hi,

I am struggling to find the answer to task 2.3 a,b+c.

Do you know where you get the 50p from?
Can someone try and explain the answer to me because im confused?

Thank you
Emma

Comments

  • SandyHoodSandyHood Font Of All Knowledge Registered, Moderator Posts: 2,034
    Emma
    Did you make an attempt of your own at the question?

    There are several correct approches to finding
    1. £500,000
    2. £820,000
    3. £375,000 and 75%
    Sandy
    [email protected]
    www.sandyhood.com
  • SandyHoodSandyHood Font Of All Knowledge Registered, Moderator Posts: 2,034
    Did you find (a) the break even value by finding break even unit x price?

    If so, you could get the right answer.
    Sandy
    [email protected]
    www.sandyhood.com
  • emma2009emma2009 New Member Registered Posts: 7
    Hi,

    No i got £80p-30p = 50p 312,500/0.50p=£625,000
  • SandyHoodSandyHood Font Of All Knowledge Registered, Moderator Posts: 2,034
    Just look at that sum:

    Fixed costs of £312,500 divided by the contribution earned every time one unit is sold (£0.50)

    If I had £312,500 and I divided it by £0.50 I could say there are 625,000 50 pences in £312,500

    In other words I must sell 625,000 units if I am to collect enough 50 pences to pay the fixed costs.

    So £312,500/£0.50 = 625,000 units
    and this is not the same as £625,000

    In this exam a large number of candidates then said:
    If I must sell 625,000 units to breakeven then the breakeven sales revenue must be this number of units x the price per unit (£0.80)

    625,000 x £0.80 = £500,000

    and got it right
    Sandy
    [email protected]
    www.sandyhood.com
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