Question 1

**Section A**

EcoTransit operates a fleet of electric buses. The company has fixed costs of $240,000 per month. The average ticket price is $4.00, and the variable cost per passenger (electricity, ticketing fees) is $1.60.

Calculate the breakeven revenue per month for EcoTransit. (Enter your answer as a whole number, without the $ sign)

Accepted Answer

1. Calculate the Contribution to Sales (C/S) ratio: (Selling Price - Variable Cost) / Selling Price.
2. Calculate Breakeven Revenue: Fixed Costs / (C/S ratio).

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Calculating the breakeven point in units (100,000 passengers) and forgetting to multiply by the selling price to get revenue.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA PM — Performance Management Practice Exam 6

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