Costs & Revenues - Budgeted Contribution

SammyRPA

Me again with another blank moment :blushing:

Can anyone help me with task 2.2 on the 2nd pracrtise CBA from AAT website please?
Again my notes on this area are just not making sense or sinking in feel like such a numpty :glare:

Just a general run through of the process would be much appreciated :thumbup1:

Many thanks

Sammy

mentorkeith

SammyRPA wrote: »

Me again with another blank moment :blushing:

Can anyone help me with task 2.2 on the 2nd pracrtise CBA from AAT website please?
Again my notes on this area are just not making sense or sinking in feel like such a numpty :glare:

Just a general run through of the process would be much appreciated :thumbup1:

Many thanks

Sammy

Hi Sammy

This question looks complicated but is actually very easy. The key is to remember you have plenty of time and keep calm. Read the whole thing through a couple of times first so that you know exactly what they are asking for.

The first table gives all the info we need. The budgeted Units expected to be sold and expected sales revenue for each column is sufficient to calculate the budgeted sales price per unit. For column 1 we have £75000 divided by 50000 units. Calculate the value per unit. Then do the same thing with each cost: £20,000, £30,000, £5000 again dividing by the units sold. Once you have the sales price per unit, then deduct all the direct costs per unit (which are variable) and all other variable costs per unit. The net figure after the deductions will be the budgeted contribution per unit. You then multiply the contribution per unit by the number of units budgeted to be sold to get the total contribution figure.

Do the same thing for both columns. Finally add the fixed costs figure in the final column to calculate the overall profit or loss figure.

SammyRPA

Thank you sooooo much you have saved me from thinking I was going insane haa!!

I will go over it tomorrow or Monday and let you know if it all clicked into place!

Thank you again :001_smile:

mentorkeith

I should have said "enter" not "add" the fixed costs figure. Obviously you will need to DEDUCT the fixed costs figure from the total contribution