PEV 08 Task 2.3 Target Costing

Laura88
Laura88 Registered Posts: 48 Regular contributor ⭐
in AAT Level 4 (Level 8 in Scotland)
Having seen on another discusion board, there seems to be a bit of a debate about this question.

The selling price was £25 and the company wanted to make a profit margin of 30%.

My answer was:
Selling Price £25 x 30% = £7.50 profit
£25 - £7.50 = £17.50 Target Price

We haven't done this is class, I have just learnt this from previous exam papers and revision.

Whats everyones thoughts?

Comments

  • >Michaela<
    >Michaela< Registered Posts: 37 Regular contributor ⭐
    I agree with you :001_smile:
  • Fi21
    Fi21 Registered Posts: 19 New contributor 🐸
    Yeah you're right - I was lucky I read it in the BPP book just before the exam - nearly the identical question!
  • NBB
    NBB Registered Posts: 125 Dedicated contributor 🦉
    Yes, you're right I checked as soon as I came out of the exam!!!!
  • Laura88
    Laura88 Registered Posts: 48 Regular contributor ⭐
    Well, I'm glad people agree with me! :thumbup: Because I thought that this was right until other people had stated differently on another discussion.

    Good luck to everyone with their other exams this week. I've got DFS and PTC :thumbdown:
  • bigmuggsy
    bigmuggsy Registered Posts: 92 Regular contributor ⭐
    Thats what I got too
  • NBB
    NBB Registered Posts: 125 Dedicated contributor 🦉
    Me too hehehehe!!
  • confused!!
    confused!! Registered Posts: 130 Dedicated contributor 🦉
    Me too! Still feel worried that it was wrong though... reading the other posts I mean!
  • Bex
    Bex Registered Posts: 33 Regular contributor ⭐
    PCR June 08 - Target costing

    Morning all,

    My three buddies and I got £17.50 for that final PCR question. Target costing is calculated by the selling price - anticipated profit = the target cost, so surely £17.50 is correct?

    That's how I learnt it from the Osborne books anyway.

    The rest of the exam I found so tough though, so even if this is right I don't know if it will save my skin :001_unsure:

    Good luck to everyone for the rest of the week

    Bex

    xx
  • kiki
    kiki Registered Posts: 3 New contributor 🐸
    That's the correct answer based on the formula (17.5
  • tattookitten
    tattookitten Registered Posts: 46 Regular contributor ⭐
    Thats what I got too, it was something that was covered in intermediate and briefly covered in class, I read about it the night before the exam, but I had to sit and think for a moment what was going on. But of course the £25 was 100%, so the target cost was going to be 70% of this leaving the 30% margin that they wanted.
  • Don
    Don Registered Posts: 11 New contributor 🐸
    I added the £7.50 on to the £25.00. I showed working so I hopefully I will get a mark for the £7.50 lol. I need all the marks I can get.
  • LouLou143
    LouLou143 Registered Posts: 74 Regular contributor ⭐
    Don wrote: »
    I added the £7.50 on to the £25.00. I showed working so I hopefully I will get a mark for the £7.50 lol. I need all the marks I can get.

    Did the same Don....so yes you will pick up the mark on the £7.50. The stupid thing is in my workings I actually put £17.50!! lol! They will mark that and laugh.

Categories

Privacy Policy