CMA Study Group

 View Only
  • 1.  CVP- Target Income

    Posted 06-22-2019 03:47 AM




    Why the answer is not 1,095 tons (A)











































































































































































































































































































































































































































































































































































































































    ------------------------------
    Yousuf Syed
    Accountant
    Jeddah
    Saudi Arabia
    ------------------------------


  • 2.  RE: CVP- Target Income
    Best Answer

    Posted 06-23-2019 05:20 AM
    Hello,

    As the question states how many more tons are to be sold to maintain the same profit level, I suppose we take only the additional fixed cost incurred for the new territory ie. 61500+25x, Using this in the formula,

                                                       x   = 61500+25x/225 
                                                       x = 61500/200 = 307.5 Tons
    Hope you find this helpful :)

    ------------------------------
    Faisal Khaleel
    Bangalore
    India
    ------------------------------



  • 3.  RE: CVP- Target Income

    Posted 06-27-2019 10:55 AM
    Hello Yousuf,

    I get 307.5 tons,

    Sale  $ 900,000.00
    Tons         1,800.00
     $        500.00 A Ton
    Variable per ton tons per ton 
     $                          315,000.00 1800  $ 175.00 Manufacturing cost per ton
     $                          180,000.00 1800  $ 100.00 Selling Cost per ton
     $ 275.00 Total
     $   25.00 Extra sales cost
     $ 300.00 Cost per ton for new sales market
    Sale per ton $500
    Cost per ton in new market  $       (300.00)
    $200.00 gross sales
    Overhead addvertising
     $                            61,500.00 307.5 Divided the gross sales by OH Addvertise
    307.5 Tons needed to be sold 

    The taxes shouldn't matter if we are making the same amount of profit.

    I hope this help and if anyone else comes up with something different please explain.

    Regards,
    John Erdmann
    CMA Student

    ------------------------------
    John Erdmann
    Controller
    San Antonio TX
    United States
    ------------------------------