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Example of Profit Volume Graph
The summary results of a company are given as:
Contribution sales ratio
1. Prepare a profit volume graph that shows the overall consequences.
2. Prepare an amended profit curve whereas the market forces have led to a switch of Shs. 200,000 of sales from product A to product C
3. Prepare a summary that shows the value of each of the following for both the amended results and the original results
a) Net profit
b) Break-even point
c) Margin of safety
d) Overall contribution sales ratio
The shown profit volume graph displays the existing and amended cost curves.The amended data that implements the switch of Shs. 200,000 of sales to product C from product A may be summarized as:
Contribution sales ration
Following figures are taken from annual budget of ABC manufacturers for the year 2013: Fixed factory overhead Rs. 4,000,000 Factory overhead absorption rate Rs. 70 per direct labor
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