PEV 2.2 Question

Laura88

Having failed PEV :mad2: and now reading through the Chief Assessors Report and answers, can I please ask a question? :confused1:In Task 2.2

a) Calculate the following information for the demand level of 10,000 turbines per annum:
(i) full production cost per turbine manufactured by Voltair, using your relevant
answers from task 2.1 (a)

What answer do you use from 2.1 a?

They give the answer

(i) Full production cost per turbine based upon production of 10,000 turbines = £800 (£8M/10,000).

But I CAN NOT see anything that resembles this in 2.1a

Task 2.1
(a)

Scenario 1 Scenario 2
Gross profit margin 36.00% 28.57%
Net profit margin 17.20% 11.79%
Direct materials cost per unit £300.00 £300.00
Direct labour cost per unit £200.00 £200.00
Fixed production cost per unit £300.00 £214.29
Gearing* 58.82% 57.36%
Interest cover 4.58 3.75

* Alternative answer for gearing:

Gearing 1.43 or 143% 1.35 or 135%

I don't understand what should have been used! Please help!

Laura
x

AdamR

£800 is the total of the left hand fingers here:

Direct materials cost per unit £300.00 £300.00
Direct labour cost per unit £200.00 £200.00
Fixed production cost per unit £300.00 £214.29

ie add the three together and you will get the full cost per turbine.

The alternative method of 8M/10,000 is a sum of the three relevant figures given in the scenario data itself divided by the total number of turbines.

Hope this helps

NBB

Laura88 wrote: »

Having failed PEV :mad2: and now reading through the Chief Assessors Report and answers, can I please ask a question? :confused1:In Task 2.2

a) Calculate the following information for the demand level of 10,000 turbines per annum:
(i) full production cost per turbine manufactured by Voltair, using your relevant
answers from task 2.1 (a)

What answer do you use from 2.1 a?

They give the answer

(i) Full production cost per turbine based upon production of 10,000 turbines = £800 (£8M/10,000).

But I CAN NOT see anything that resembles this in 2.1a

Task 2.1
(a)

Scenario 1 Scenario 2
Gross profit margin 36.00% 28.57%
Net profit margin 17.20% 11.79%
Direct materials cost per unit £300.00 £300.00
Direct labour cost per unit £200.00 £200.00
Fixed production cost per unit £300.00 £214.29
Gearing* 58.82% 57.36%
Interest cover 4.58 3.75

* Alternative answer for gearing:

Gearing 1.43 or 143% 1.35 or 135%

I don't understand what should have been used! Please help!

Laura
x

Hi Laura,

I think it is all the below added togather??

Direct materials cost per unit £300.00
Direct labour cost per unit £200.00
Fixed production cost per unit £300.00 = £800.00

SandyHood

Here is my response from
http://aat.org.uk/forums/newreply.php?do=newreply&p=121182

SandyHood wrote: »

based on turbines produced ................................................. 10,000........................... 14,000
Full production cost per turbine manufactured by Voltair ............. £.................................. £
Direct (raw) materials....................................................... 300.00 ........................... 300.00
Direct labour cost ........................................................... 200.00 ............................ 200.00
Fixed production ohds....................................................... 300.00 ........................... 214.29
....................................................................(a) (i)........ 800.00 .......... (b) (i) ....... 714.29
....................................................................... Total............... per unit............ Total........... per unit
..........................................................................£..................... £................. £..................... £
Total fixed production overhead........................ 3,000,000 .............. 300 ........... 3,000,000 ........... 214.29
Specific (avoidable fixed production cost)........... 1,950,000 .............. 195 ........... 1,950,000 ........... 139.29
Unavoidable cost per turbine ........................... 1,050,000 .............. 105 ........... 1,050,000 ............. 75.00
.............................................................................................. (a)(ii)...................................... (b) (ii)
Avoidable production cost per turbine ............................... .............. £............................................. £
Direct (raw) materials................................................................ 300.00 ................................... 300.00
Direct labour cost .................................................................... 200.00 ................................... 200.00
Specific (avoidable fixed production cost)...................................... 195.00 ................................... 139.29
.................................................................................. (a) (iii) 695.00 ......................... (b) (iii) 639.29

Laura88

They give the answer

(i) Full production cost per turbine based upon production of 10,000 turbines = £800 (£8M/10,000).

Basically the model answer is poor, and I think you're not alone in wanting them to be a first class standard that can be used as a benchmark.
I think mine is more helpful in terms of showing you the steps in getting to the solution. Please also remember that good workings, even when the answer is wrong can enable you to pass.