CMA Study Group

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  • 1.  Target income - cvp

    Posted 06-22-2019 03:55 AM


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    Yousuf Syed
    Accountant
    Jeddah
    Saudi Arabia
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  • 2.  RE: Target income - cvp

    Posted 06-23-2019 03:34 AM
    Hi Yousuf, 

    Thank you for your interesting question. Since I'm a beginner to this CMA program, Please don't mistaken me if i make any wrong judgments on my calculation.

    Here is the answer and my supporting calculation. Please correct me if I'm wrong #

    ​Correct answer is A.12,00,000

    IF Sales is 12,00,000 then Variable Cost is ( 12,00,000 - 12,00,000*30%) i.e Sales(12,00,000) - Variable Cost(8,40,000) = Contribution Margin = 3,60,000 (30% of Sales)

    Next, C.M - Fixed cost = 3,60,000 - 2,40,000 = 1,20,000

    1,20,000 - 1,20,000 * 40% (Tax - Tax rate) = 72,000


    72,000 is 6% of Sales

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    JAGAN MANIKANDAN
    Accountant
    DUBAI
    United Arab Emirates
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