PEV Dec 2008 Question 2.1a (vii)

swampy1901

I'm having a particularly dense moment here. I cannot work out the answer using the usual formula. Is there something in the question that I'm not seeing?

Swampy

SandyHood

(vii) raw materials stock turnover in days

If you want to know the raw materials stock turnover in days you should look at how much you have in stock and how much you used during the year.

For the SP2000 the glass cost part of the cost of sales is £540,000

The glass value in closing stock was £60,000

So there is enough glass in stock to last £60,000 of a year
So there is enough glass in stock to last £540,000

approximately 41 days

Does that make sense?

swampy1901

Thank you Sandy - I said I was having a dense moment!! But what you say makes perfect sense - there was me - trying to divide it by Cost of sales!!!

Swampy

SandyHood

Well I did use cost of sales, but as I was looking at a raw material, I only wanted that part of the cost of sales.
If I was looking at finished goods then I'd need all of the cost of sales.