Question 1

Section A

CodeCraft sells two software products: Basic and Pro. 
The sales mix is 3 units of Basic for every 1 unit of Pro.
Basic: Selling price $50, Variable cost $20.
Pro: Selling price $120, Variable cost $40.
Total fixed costs are $85,000.

What is the break-even revenue for the company? (Round to the nearest whole dollar)

Accepted Answer

1. Calculate contribution per unit for both. 2. Calculate revenue per mix (3 Basic + 1 Pro). 3. Calculate contribution per mix. 4. Find weighted average C/S ratio. 5. Divide Fixed Costs by C/S ratio.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Averaging the C/S ratios of the two products directly without weighting them by sales volume.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA PM — Performance Management Practice Exam 3

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