# ECR June 2009 Question

New MemberPosts: 7Registered
Hi,

Do you know where you get the 50p from?
Can someone try and explain the answer to me because im confused?

Thank you
Emma

• Font Of All Knowledge Posts: 2,034Registered, Moderator
Emma
Did you make an attempt of your own at the question?

There are several correct approches to finding
1. £500,000
2. £820,000
3. £375,000 and 75%
Sandy
[email protected]
www.sandyhood.com
• Font Of All Knowledge Posts: 2,034Registered, Moderator
Did you find (a) the break even value by finding break even unit x price?

If so, you could get the right answer.
Sandy
[email protected]
www.sandyhood.com
• New Member Posts: 7Registered
Hi,

No i got £80p-30p = 50p 312,500/0.50p=£625,000
• Font Of All Knowledge Posts: 2,034Registered, Moderator
Just look at that sum:

Fixed costs of £312,500 divided by the contribution earned every time one unit is sold (£0.50)

If I had £312,500 and I divided it by £0.50 I could say there are 625,000 50 pences in £312,500

In other words I must sell 625,000 units if I am to collect enough 50 pences to pay the fixed costs.

So £312,500/£0.50 = 625,000 units
and this is not the same as £625,000

In this exam a large number of candidates then said:
If I must sell 625,000 units to breakeven then the breakeven sales revenue must be this number of units x the price per unit (£0.80)

625,000 x £0.80 = £500,000

and got it right
Sandy
[email protected]
www.sandyhood.com