Phew! ECR done
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Funny how we all seem to remember so much detail when we're in a stressful situation isn't it?0
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OK - just registered...the abnormal loss I also made the assumption that it was valued at £20 per tonne, everything seems to balance nicely then.
The npv question - do you think this was a trick question, as the payback period would be 3 years (not 2 years anything...) as the sale of the fixed asset for £50,000 wouldn't be until the very end of the year - hence it would be negative npv until 3 years and the project was finished... :-)0 -
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I worked it out first without the realisable value, & didn't get a neg NPV.0
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OK - just registered...the abnormal loss I also made the assumption that it was valued at £20 per tonne, everything seems to balance nicely then.
The npv question - do you think this was a trick question, as the payback period would be 3 years (not 2 years anything...) as the sale of the fixed asset for £50,000 wouldn't be until the very end of the year - hence it would be negative npv until 3 years and the project was finished... :-)
ok now im off to cry and cry and cry, i was feeling quite confident.0 -
Sould be available for everyone!0
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Yes, you're right! Normal loss was 12, abnormal was 28 (so total losses were 40 x £20 = £800)0
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OK - just registered...the abnormal loss I also made the assumption that it was valued at £20 per tonne, everything seems to balance nicely then.
The npv question - do you think this was a trick question, as the payback period would be 3 years (not 2 years anything...) as the sale of the fixed asset for £50,000 wouldn't be until the very end of the year - hence it would be negative npv until 3 years and the project was finished... :-)
i don't think so. I did calculate the present value of the disposal just in case it made a difference and there'd still be a positive NPV of 5K ish. I had payback at 2.1 years so the £50K disposal wouldn't have been necessary....0 -
Hmm. I got around 39K as NPV (including the £50000 asset sale). Therefore without it it would be negative NPV right up until end 3rd year. Ah well. Will have to wait and see.0
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im doubting my normal loss thing now too...i did the total less the scrap value divided into the 388.....?? had £190 i think for each tonne...:confused1:0
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i don't think so. I did calculate the present value of the disposal just in case it made a difference and there'd still be a positive NPV of 5K ish. I had payback at 2.1 years so the £50K disposal wouldn't have been necessary....
I hope your right. If not thank you for making me feel better anyway
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I thought it said all losses were sold for pet food at £20 per tonne, not a loss of £190...0
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I thought it said all losses were sold for pet food at £20 per tonne, not a loss of £190...
It doesn't matter for the process account. Only normal loss is accounted for in the process account at their scrap value. Abnormal loss is charged at the output cost rate in the process account then it's all reconciled in the normal loss scrap and abnormal loss accounts to find the end loss to P&L account (difference between the output rate loss charge to the money recouped from scrap sales).0 -
...also the contribution for the soup was 50p (?) therefore to reach a target profit of £20000 it would be 20000/0.50 = 400000 added to my 625000 BEP was 1025000 cans?0
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Abnormal loss is still valued at the same amount as output, not the normal loss level so even if it was sold as petfood it still needs valuing at £190 a tonne0
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...also the contribution for the soup was 50p (?) therefore to reach a target profit of £20000 it would be 20000/0.50 = 400000 added to my 625000 BEP was 1025000 cans?
Sounds familar but didnt you then have to times the cans by sales price of £0.80 to get the figure in sales revenue.0 -
...also the contribution for the soup was 50p (?) therefore to reach a target profit of £20000 it would be 20000/0.50 = 400000 added to my 625000 BEP was 1025000 cans?
The question was for the BEP etc in sales revenue rather than unit volume which might be why you have different figures....?0 -
Of wht I remember:
FIFO as it increases stock valuation in times of rising costs...
Break even I calculated by using the PV ratio(5/8 = 0.625)...
so break even sales revenue= 312500/.625= £500,000
Margin of safety in terms of sales revenue= 875,000-500,000 = £375,000
Margin of safety as %= (375,000/875,000) x 100 = 42.86%
Graph 1 : semi variable cost
Graph 2: Stepped fixed cost
Normal loss = 12 tonne abnormal loss= 28tonne
expected output = 388 tonnes
Cost of unit output : (73960-240) / 388 = £ 190
In the process account Dr side = 73960
Cr Side
Normal loss = 240
Abnormal loss 28 x 190 = 5320
Finished output 360 x 190 = 68400
Total =73960
Pay back period: 2.125 yr ~2yrs 2 months
NPV IN £000 = 39.720 -
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Same answers as me Vidya.0
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I'm going to be cocky and say I'm right (that's the wine talking!). No, seriously - I did check and it really didn't make any difference. Project was acceptable disposal proceeds or not.:thumbup1:
Wine or not (not in my case, but could murder a glass or bottle or two), i think your right, and thats what im sticking too (seeing how we've agreed on a few questions).0 -
Of wht I remember:
FIFO as it increases stock valuation in times of rising costs...
Break even I calculated by using the PV ratio(5/8 = 0.625)...
so break even sales revenue= 312500/.625= £500,000
Margin of safety in terms of sales revenue= 875,000-500,000 = £375,000
Margin of safety as %= (375,000/875,000) x 100 = 42.86%
Graph 1 : semi variable cost
Graph 2: Stepped fixed cost
Normal loss = 12 tonne abnormal loss= 28tonne
expected output = 388 tonnes
Cost of unit output : (73960-240) / 388 = £ 190
In the process account Dr side = 73960
Cr Side
Normal loss = 240
Abnormal loss 28 x 190 = 5320
Finished output 360 x 190 = 68400
Total =73960
Pay back period: 2.125 yr ~2yrs 2 months
NPV IN £000 = 39.72
that all sounds spot on to me, even though I cocked a couple of em up I now agree with what you say! Ur brainy!:thumbup1:0 -
Yeah I think I see my error in the abnormal loss question now - hey ho.0
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Wine or not (not in my case, but could murder a glass or bottle or two), i think your right, and thats what im sticking too (seeing how we've agreed on a few questions).
We good!!!! Must say if you did the same as me taking the variable bit of semi-variable out before calculating absorption rates that was wrong. I checked and same came up last june - not meant to take it out. Poo. But hey, only 2 questions wrong there and will still get marks for principle on calculations even if the rates were wrong. Wine is good but really gone to my head!!!!!0
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