ECR Dec 2008 Exam

I'm having a go at this exam and am a bit stuck...

Section 2 Task 1

In the notes it says that the company chartering the flights has negotiated a reduction of 10% per mile, paid on all miles flown in excess of 5,000.

Where would this effect the profit statement? I'm really confused!!

Comments

  • Rachey
    Rachey Registered Posts: 589
    Esme wrote: »
    I'm having a go at this exam and am a bit stuck...

    Section 2 Task 1

    In the notes it says that the company chartering the flights has negotiated a reduction of 10% per mile, paid on all miles flown in excess of 5,000.

    Where would this effect the profit statement? I'm really confused!!
    This was the exam i took that there was a big uproar with! As far as i could tell, you reduce the revenue by 10% after the 5,000 miles. That was what the tutor said and i'm sure that's what i did and passed. I imagine you'll be in for an easy paper after the fuss made about that one lol!!!

    Good luck
  • ema192
    ema192 Registered Posts: 107 ? ? ?
    Im sure i did that aswell! i remeber vaguely.
    Oh god what a horrible exam totally was convinced id fluffed it but passed by stroke of luck! Just hope i do the same in June FRA :-(
  • Esme
    Esme Registered Posts: 711
    Thanks! I thought I'd start on this paper as I'd realised from reading the forum that it was quite hard! I'm hoping I'll be in for an easy paper but won't keep my hopes up!
  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034
    I hope I'm not dampening your enthusiasm, but I felt Dec 2008 ECR was fair (particularly the question you refered to). I had a minor issue with the EOQ part of 1.2 and would have prefered the examiner to not use the word relevant in 2.1 (b)

    I honestly think you should expect this type of question in June, perhaps in relation to a raw material where increased production enables the business to have bulk purchasing discounts.
    It might even include a stepped fixed cost.

    Look at the question you refered to:
    1. Find the original price per mile - £500
    2. Reduce it by 10%
    3. So the price per mile over 5000 is £450
    4. Then each column where the total miles is over 5000 multiply the miles by £450
    Sandy
    [email protected]
    www.sandyhood.com
  • Esme
    Esme Registered Posts: 711
    Thanks Sandy, I managed to arrive at those figures but only after the help on here about the sales revenue.

    The practice skills test I recently completed had a section involving bulk discounts which was fine, it just confused me as it was the other way round!
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