ecr question

princess246 · July 2008

Im trying to find the revised target profit for my operating statement but im not sure how i get my rveised profit figure? i have worked out my contribution per unit and break even points in units and margin of safety.

Could anyone point me in the right direction please?

Thanks:confused1:

SandyHood · July 2008

In an ECR question you would expect to be asked

The number of units that need to be sold to achieve a target profit, or
The sales revenue (turnover) needed to achieve a target profit

For 1. ...........Total Fixed Costs + Target Profit = Units of sales needed to achieve target profit
......................Contribution per unit sold

For 2. ...........Total Fixed Costs + Target Profit = Sales revenue needed to achieve target profit
........... PV ratio (Contribution divided by sales revenue)

princess246 · July 2008

my contribution is 365,400
my operating profit is 192,400
my fixed costs are 173,000

so do i then add my fixed and operating? and divide by contibution divided by sales revenue?

my anwser is not looking right cant think where im going wrong

SandyHood · July 2008

We are not yet able to find what you are looking for

I've copied the formulae and added values where I can but the words in blue need values

For 1. ...........Total Fixed Costs + Target Profit = Units of sales needed to achieve target profit
......................Contribution per unit sold

For 1. ...........£173,000 + Target Profit = Units of sales needed to achieve target profit
......................Contribution per unit sold (£365,400/units sold)

For 2. ...........Total Fixed Costs + Target Profit = Sales revenue needed to achieve target profit
........... PV ratio (Contribution divided by sales revenue)

For 2. ...........£173,000 + Target Profit = Sales revenue needed to achieve target profit
........... PV ratio (Contribution divided by sales revenue) (£365,400/total sales revenue)

princess246 · July 2008

Thats my problem i dont know how to calculate the target profit.

mark130273 · July 2008

well princess ,whos on 25k !!!! target profit is easy ......

shame ive got no job tho !!!

just practice the examples in the books !

princess246 · July 2008

I'm a service charge accountant i dont do costing to that extent, i also dont need a qualification to do my job just expeirence.

But thankyou i will practice my brain has turned to mush and i can for the life of me remember how to do it.

princess246 · July 2008

Worked it out realised that i was missing part of the question paper!!!!!!!

mark130273 · July 2008

princess246 wrote: »

I'm a service charge accountant i dont do costing to that extent, i also dont need a qualification to do my job just expeirence.

But thankyou i will practice my brain has turned to mush and i can for the life of me remember how to do it.

i know i sounded a little bitter about that. but its just there was about 15 in our class at the start of this second year and about 8 havee dropeed out because they found it too hard and all of them worked in an accounting area !
:thumbdown:

SandyHood · July 2008

princess246
Member Join Date: Dec 2007
Posts: 18

Worked it out realised that i was missing part of the question paper!!!!!!!

If you still need some help after you find it, I'm sure I'm not alone in being willing to help.

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