MGT402 GDB2 Idea Solution For Discussion 12 July 2010

[viki]

Part 1)

BEP Sales = Fixed/Contribution margin ratio

150000 = Fixed /84%

150000 = Fixed /0.84

Fixed = 150000 x 0.84

Fixed = 126000



Part 2)

Target contribution = Target profit + Fixed cost

Target contribution = 42000 + 126000

Target contribution = 168000



Part 3)

Contribution margin ration = Contribution margin / sales

0.84 = 168000/sales

Sales = 168000/0.84

Sales = 200000



Sales 200000

Less: Variable (3200)

Contribution margin 168000

Less: Fixed Cost (126000)

Profit 42000

[ahsan_ali]

Here Below My Solved Solution:

A. Fixed Cost = BEP sales * Contribution margin ratio
= Rs.150, 000 * 84%
= Rs.150, 000 * 0.84
= Rs.126, 000
B. Target Contribution Margin = Fixed Cost + Target Profit
= Rs.126, 000 + Rs.42, 000
= Rs.168, 000
C. Sales = Target Contribution margin / Contribution margin ratio
= Rs.168, 000 / 84%
= Rs.168, 000 * 0.84
= Rs.200, 000

Sales 200,000
Less: Variable Cost (200,000 – 168,000) 32,000
Contribution Margin 168,000
Less: Fixed Cost 126,000
Profit 42,000
Amount of Actual Sales = Rs.200, 000

I got Marks 2.000
Grade:Excellent