The diagram shows the profit-volume chart of Z Ltd for its last accounting period.

The company made a profit of $w during the period.

(a) An increase in the fixed costs per period (assuming the selling price per unit and the variable cost per unit remain unchanged), will result in:
(i) areduction ins;
(ii) an increase in w;
(iii) areduction in t;
(iv) no change in u.

(b) The following results were achieved in the last accounting period:
r = $50000 w = $16000 t = 800 units u = 2500 units The company expects to make and sell an additional 1400 units in the next accounting period. If variable cost per unit, selling price per unit and total fixed costs remain unchanged, the effect on profit will be:
(i) an increase of $10500;
(ii) an increase of $21 210;
(iii) an increase of $28 000;
(iv) an increase of $87 500.
(2 marks)
CIMA Management Accounting Fundamentals

Transcribed Image Text:

Profit ($) 0 Loss ($) U >w Sales units