Cost-volume-profit analysis — common mistakes

Paper 2 marking often splits marks between calculation, chart, and comment. Always state formulas before substituting numbers and label axes on any graph. When dealing with multi-product CVP, clearly state the sales mix and show your working for the weighted average contribution.

The core maths is identical. 9706 Paper 2 may require more formal accounting presentation, journal awareness, and chart drawing; 9609 adds more evaluation of business context.

When its core assumptions break down: e.g., if discounts change the selling price, step costs increase fixed costs, the product mix shifts, or output is far outside the relevant range.

You must first assume a constant sales mix (e.g., for every 2 units of A, you sell 3 of B). Then, you calculate a weighted average contribution per unit based on this mix. Finally, you divide the total fixed costs by this weighted average contribution to find the total number of units to break even, which you then apportion back to the individual products.