COST ACCOUNTING
COST VOLUME PROFIT ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Perla Company has a projected cost of goods sold of P 4, 000, 000 including fixed cost of P 800, 000. Variable costs are expected to be 75% of net sales. What will be the projected net sales?
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P 4, 266, 667
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P 4, 800, 000
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P 5, 333, 333
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P 6, 400, 000
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Explanation:
Detailed explanation-1: -90000 and variable cost to sales is 75%, contribution is: Rs. 67500 Rs.
Detailed explanation-2: -The key CVP formula is as follows: profit = revenue – costs. Of course, to be able to apply this formula, you need to know how to work out your revenue: (retail price x number of units). Plus, you need to know how to work out your costs: fixed costs + (unit variable cost x number of units).
Detailed explanation-3: -Fixed cost = Total cost of production-(Variable cost per unit x number of units produced)
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