AAT Online test number 1 question 4?

BradleyClaridge

Hi All,

I'm a bit stuck on this question I understand how to work out the contribution cost and the marginal cost, I did have to refer to the book though as I didn't feel it was that clear on what figures they wanted from you from the list

The next question I'm stuck on is the question that says would Louise Harding's proposed policy ensures that all new products are profitable? And then you have to explain your answer depending on whether you put yes or no?

How would you go about working out this question? I'm quite confused about what information to add in.

Anybody's help would be greatly appreciated.

Many thanks
Bradley

BradleyClaridge

@lannieloo have you done this exam?

lannieloo

Hi there, yea I'm guessing they haven't changed from when I did them, I'll log on and have a look...

lannieloo

ahh ok... for the first part... its the selling price less the marginal cost mutiplied by the expected volume they would sell at that price...
and for the the second part, the answer is Yes, and its simply because they all have a positive contribution, and any contribution contributes towards fixed costs and in turn contributes towards profit...

BradleyClaridge

> @lannieloo said:
> ahh ok... for the first part... its the selling price less the marginal cost mutiplied by the expected volume they would sell at that price...
> and for the the second part, the answer is Yes, and its simply because they all have a positive contribution, and any contribution contributes towards fixed costs and in turn contributes towards profit...

Thank you for your help

lannieloo

Good luck with the exam! Hope it's a fairer one than mine!