Day: May 22, 2022

A company has fixed costs of £30,000.

It sells 10,000 units of a single product for £20 per unit and has a contribution to sales ratio of 75%.

What is the increase in profit if total sales are 15,000 units?

Select ONE answer:

1. £45,000
2. £75,000
3. £195,000
4. £225,000

Show your workings to arrive at your answer, and explain and justify your reasons:

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This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct – £20 * 0.75 = £15 * 5,000 units ==> £75,000
3. Not correct
4. Not correct

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