Page 192 - F2 - MA Integrated Workbook STUDENT 2018-19
P. 192
Chapter 8
Test your understanding 2
D
Fixed costs are not relevant because they do not affect contribution. Taking a
selling price of, for example, £100 per unit, the cost structure will look like this:
Before change After change
$ per unit $ per unit
Sales price 100 110
Variable cost 60 60
Contribution 40 50
Contribution per unit increases by 25%. If sales volume remains unchanged
then total contribution will also increase by 25%
Test your understanding 3
(a) The total contribution earned during the period is $15,000
Total variable costs = $(3 + 6 + 2 + 5) = $16
Contribution per unit = $21 - $16 = $5
Total contribution = 3,000 × $5 = $15,000
(b) The total loss for the period under marginal costing is $10,000
Total profit/(loss) = total contribution – fixed production overheads
incurred
= $(15,000 – 25,000) = $(10,000)
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