ECR Simulation

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:30AM in AAT student discussion
I have the simulation for ECR tonight and need help remembering formulae for:<BR><BR>contribution<BR>break-even<BR>margin of safety<BR><BR>Does anyone have hints on how to remember these please? Any tips would be gratefully accepted!<BR><BR>Thanks<BR><BR>G

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    ECR Simulation

    Selling price per unit <BR>less variable cost per unit <BR>equals contribution per unt <BR><BR>Fixed Costs / Contribution per unit = break even<BR><BR>The margin of safety is the amount by which sales exceed the break-even point. <BR>Eg Current output 700 units, break-even 500 units, margin of safety is 200 units <BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ECR Simulation

    But is there an easy way to remember them? Can anyone think of anything?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ECR Simulation

    I always find that when trying to remember Contribution you always think of it as Selling price - variable costs = contribution and this is a contribution towards the fixed costs.<BR>Hope that helps
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ECR Simulation

    There is no other 'EASY' way! Sorry.<BR>I did it briefly as thats they way i remember it!<BR>Good luck
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ECR Simulation

    Oh well it was worth a try. Thanks anyway!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ECR Simulation

    I always think of the contribution as the 'gross profit' that is the amount before expenses are taken out - the purchases being the direct costs.<BR>I dont know if this will help any.

Categories

Privacy Policy