A confectionery manufacturer is considering adding a new product to the current range.

CIMA BA2 Question Answer

A confectionery manufacturer is considering adding a new product to the current range. Forecast data for the product are as follows.

Incremental fixed costs attributable to the new product are forecast to be $24,000 each period.

The forecast sales volume of 180 units is insufficient to achieve the target profit of $10,000 each period.

Which of the following statements is correct?

The margin of safety is negative because the target profit will not be achieved from the forecast sales volume.

If the fixed cost is changed to $20,000 the sales volume required to break even will decrease.

If the forecast sales volume is changed to 190 units the sales volume required to achieve the target profit will decrease.

If the selling price is changed to $510 the sales volume required to achieve the target profit will increase.

CIMA BA2 Summary

Price: $52.5 ~~$149.99~~