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CVP_MCQ_Workings - COST-VOLUME-PROFIT-ANALYSIS MCQ...

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COST-VOLUME-PROFIT-ANALYSIS MCQ SOLUTIONS Compiled by Colin C Smith 2013 Page 1 of 2 CVP.01 answer b Sales R600,000 Variable Costs 360,000 Contribution margin 240,000 You can do this calculation the long way but if you are already making profit you break even so any additional contribution margin is profit. R240000 x 30% R72,000 Less additional fixed cost - advertising (50,000) 22,000 CVP.02 answer d Let selling price be SP Target sales = Variable Costs + Fixed Costs + Target net Profit 10,000 units x SP = 10,000 x R12 +R78,0000 + 10% (10,000 X SP) 10,000 SP = R120,0000 + R78,000 + 1000 SP SP = R198,000/9,000 = R22 CVP.03 answer a There may be shorter answers . Existing New Selling price R70.00 R70.00 Variable costs 50.00 Increase 15 % 57.50 Contribution margin R20.00 R12.50 Units sold x 3,000 Decrease by 25% x 2,250 Total CM margin R60,000 R28,125 Less fixed costs 25,000 25,000 R35,000 R 3,125 Difference decrease R31,875 CVP.04 answer a Break-even Sales = Fixed costs / contribution margin ratio 200,000 units x R2 = Fixed costs / 25% Fixed costs = R400,000 x 25% = R100,000 CVP.05 answer b Selling price R50.00 Variable Costs 15.00 Contribution margin 35.00 70% Units sold x 3,600 Total contribution margin R126,000
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