How often Cost-volume-profit analysis is asked

Where it was asked

What costs marks here

The questions

1. May/Jun 2015, Q1.1(a)3 marks

   Question 1 consists of two independent parts, and both parts must be answered. Unless a sub-question states otherwise, each sub-question is independent of the previous one. Mafikeng Manufacturers (Pty) Ltd manufactures a single product. For the 2016 financial year the company has budgeted the following: a break-even point of 6 000 units, a selling price of R120 per unit and a variable cost of R30 per unit (no opening or closing inventory figures are given). Calculate the budgeted total fixed costs for the 2016 financial year.

2. May/Jun 2015, Q1.1(b)2 marks

   Question 1 consists of two independent parts, and both parts must be answered. Unless a sub-question states otherwise, each sub-question is independent of the previous one. Using the same budgeted data for Mafikeng Manufacturers (Pty) Ltd (break-even point of 6 000 units, selling price of R120 per unit, variable cost of R30 per unit), calculate the actual contribution in Rand if 7 500 units are actually produced and sold during the 2016 financial year.

3. May/Jun 2015, Q1.1(c)1 mark

   Question 1 consists of two independent parts, and both parts must be answered. Unless a sub-question states otherwise, each sub-question is independent of the previous one. For Mafikeng Manufacturers (Pty) Ltd, using the same budgeted figures (break-even point of 6 000 units, selling price of R120, variable cost of R30), calculate the margin of safety in units if 8 000 units are actually produced and sold.

4. May/Jun 2015, Q1.1(d)2 marks

   Question 1 consists of two independent parts, and both parts must be answered. Unless a sub-question states otherwise, each sub-question is independent of the previous one. For Mafikeng Manufacturers (Pty) Ltd, calculate the margin of safety ratio, expressed as a percentage, if 10 000 units are actually produced and sold during the 2016 financial year.

5. May/Jun 2015, Q1.1(e)3 marks

   Question 1 consists of two independent parts, and both parts must be answered. Unless a sub-question states otherwise, each sub-question is independent of the previous one. For Mafikeng Manufacturers (Pty) Ltd, calculate the number of units that would have to be sold to achieve a target (expected) profit of R90 000 for the 2016 financial year, assuming total fixed costs are those calculated in part (a) above.

6. May/Jun 2015, Q1.1(f)3 marks

   Question 1 consists of two independent parts, and both parts must be answered. Unless a sub-question states otherwise, each sub-question is independent of the previous one. For Mafikeng Manufacturers (Pty) Ltd, calculate the new break-even point in Rand if the selling price increases by 25% and the total fixed cost for the 2016 financial year now amounts to R600 000.

7. May/Jun 2015, Q1.2(a)5 marks

   Question 1 consists of two independent parts, and both parts must be answered. Unless a sub-question states otherwise, each sub-question is independent of the previous one. As management accountant of Teamwork Technology Services (Pty) Ltd, you have been given the following estimates for the 2016 financial year: possible outcome 1 has a contribution of R100 000 with a 30% probability; outcome 2 has a contribution of R120 000 with a 20% probability; outcome 3 has a contribution of R220 000 with a 15% probability; outcome 4 has a contribution of R350 000 with a 10% probability; and outcome 5 has a contribution of R60 000 with an unstated probability. There are no other possible outcomes for this scenario. Calculate the expected value of contribution for the 2016 financial year.

8. May/Jun 2015, Q1.2(b)1 mark

   Question 1 consists of two independent parts, and both parts must be answered. Unless a sub-question states otherwise, each sub-question is independent of the previous one. Using the same five possible outcomes for Teamwork Technology Services (Pty) Ltd (contributions of R100 000 at 30% probability, R120 000 at 20%, R220 000 at 15%, R350 000 at 10%, and R60 000 at the remaining probability, with no other possible outcomes), determine which contribution value is most likely to occur in the 2016 financial year.

9. Oct/Nov 2014, Q1.42.5 marks · multiple choice

   Question 1 consists of eight multiple-choice items (here numbered 1.1–1.8), each apparently worth 2.5 marks so that the eight items together make up the 20 marks allotted to this question, to be completed within 24 minutes. The items are based on several unrelated costing scenarios drawn from divisions of Blue Sky Industries Limited, a large diversified listed company. The marketing section that sells the FOX Sat FXS1 decoders incurs fixed costs of R3 486 000 per month and is required to earn a contribution of 10% on sales. The board of directors has fixed the selling price of the FXS1 decoders at R450,00 per unit. Determine how many decoder units must be sold for the section to break even.