Forecast contribution

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:30AM in AAT student discussion
im just doing the dec 2004 costing paper and im a bit stuck, how do they work out the total forcast contribution table on task 2.1?<BR><BR>Any help would be appricated

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Forecast contribution

    Contribution = sales revenue minus variable costs<BR><BR>So for the contribution in that table would be:<BR><BR>sales revenue <BR>minus <BR>( direct materials + direct labour (moulding) + direct labour (glazing) )
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Forecast contribution

    Not sure which bit you are stuck on but i will try and help.<BR><BR>Sales revenue = sales in units x selling price per unit.<BR>Direct materials = direct materials per unit x sales<BR>Direct labour - moulding = labour hours (moulding) x rate per hour (moudling) x sales<BR>Direct labour - glazing = labour hours (glazing) x rate per hour (glazing) x sales<BR>Contribution = selling price - variable cost per unit<BR>Fixed overheads = stated in the question<BR>Profit = total contribution - fixed overhead<BR><BR>Hope this helps.<BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Forecast contribution

    Just wanted to add something that I keep forgetting myself. The variable costs is the variable cost of sales. So if the data quotes variable selling cost, then you need to deduct this of the sales revenue as well.

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