# Practice assessment 2 - Task 8 a & b

Zana
AAT Student Posts:

**27**
Hi,

Can someone please help me with the task in the attachment?

Any help would be much appreciated! Thanks you!

Can someone please help me with the task in the attachment?

Any help would be much appreciated! Thanks you!

0

## Comments

117Total anticipated sales revenue will be £18.00 x 20,000 units = £360,000

Target total operating profit will be £360,000 x 25% = 90,000

Target total costs will be £360,000 - £90,000 = £270,000

Target cost per unit (to 2 decimal places) will be £270,000 / 20,000 units = £13.50

For part B you follow the same principles:

Target operating profit will be 17.00 x 25% = £4.25

Target total cost per unit will be £17.00 - £4.25 - £12.75

Target fixed costs will be £12.75 - £7.00 = £5.75

(in case you need to enter the figure for manufacturing costs in any other practice papers, use the £140,000 (provided in the table at the top under variable manufacturing costs) and divide it by the number of units - so £140,000 / 20,000 units = £7)

For the last part, use the figures given in the table at the top.

You need to know the total costs for the production of 20,000 so 65,000 + 140,000 + 45,000 + 35,000 = £285,000

Less the variable costs (also in the table) will be £285,000 - £140,000 = £145,000 fixed costs

You need to divide the fixed costs by the number of units so £145,000 / 20,000 = £7.25 per unit

You can now complete the calculation by taking £145,000 / 5.75 (from first part of answer = 25217.39 rounded to 25217 as you need to show full units not parts of units.

Hope that helps.

272136117The question asks what the sales volume will need to be.

You know that overall fixed costs are £145,000 and you also know that the target fixed costs are £5.75 per unit. Therefore, how many units will need to be sold at a target fixed costs of £5.75 to cover the actual fixed costs of £145,000.

Does that help?

3THANKYOU !!!@Cornish Pixie, that makes soooooo much sense, I got the rest of the question spot on but was about to loose a Sunday afternoon and my state of mind to a 1 point question.117