PEV Answers for Section 2.1

Khurram Taj

Task 2.1

Gross Profit Margin 35% 30%
Net Profit Margin 15.66% 11.50%
DM Cost per unit £12.50 £30
DL Cost per unit £5 £10
Fixed Production
Overhead Cost Per unit £15 £30
ROCI 26.85% 19.16%


Could anyone tell me, are they right?

donnaalwill

They look like what I remember. I think those are the right answers. Can't remember the last figures exactly.

Khurram Taj

Section 2.1 B

Return of Capital investment = operating profit / capital invested

this ration measures the profitiablty of capital investement against the operating profit.

so i recommended, Koffio is more profitable than Supremio because its return on capital investment is higher than supremio.

What do you think, is it right?

donnaalwill

Thats what I suggested. I would presume it was right, I have seen a few people say they have done the same thing! Then after recalculating the effect of the capsules I recommended that the Supremio be produced as the new ratios became more favourable.

Khurram Taj

But in next sation, I still suggested Koffio because it is less investment than Supremio

investment on Koffio is 3500,000 and supremio and capsules togathere investment is 4400,00 but return on capital investment difference is only 7.24% so i recommended that company could spend this investment to improve anyother section and secondly how does company arrange this investment.

investment on Koffio is less and koffio machine straight forward and will be sold less price. so company should invest on Koffio.

I do not know it is righ or wrong but i have done like this

donnaalwill

I think when it comes to the recommendations, as they are what you are personally suggesting I think that they look for your choice, and backing it up with your reasons. Not sure if there is a right or wrong answer as marks are probably awarded fpr justification! As long as your reasoning is logical I would imagine its still marked as correct? Not sure what they look for but thats how I presume it would work!

sdv

Khurram Taj wrote: »

Task 2.1

Gross Profit Margin 35% 30%
Net Profit Margin 15.66% 11.50%
DM Cost per unit £12.50 £30
DL Cost per unit £5 £10
Fixed Production
Overhead Cost Per unit £15 £30
ROCI 26.85% 19.16%


Could anyone tell me, are they right?

I agree with the above

Khurram Taj wrote: »

But in next sation, I still suggested Koffio because it is less investment than Supremio

investment on Koffio is 3500,000 and supremio and capsules togathere investment is 4400,00 but return on capital investment difference is only 7.24% so i recommended that company could spend this investment to improve anyother section and secondly how does company arrange this investment.

investment on Koffio is less and koffio machine straight forward and will be sold less price. so company should invest on Koffio.

I do not know it is righ or wrong but i have done like this

Although I got return on captial invested 34% some 7.24% higher, I went to explain that this was a forcaste and in the notes it said some thing about 10 capsules per week and 40 000 customers. therefore making a sale of 400,000 capsules instead of 10,400,000 capsules forecasted. this will reducce the returns from 34% to 28%.

Only 1.?? % higher

Therefore from the risk point of view I recommended that it was safer (less risk) to produce Koffico machine then Supremio machice because it was appealing to more cusomers.

Khurram Taj

yes true it make sence and explain in more detail. I thought about it but I don t know why I didn t mention it in my answer.

What about value analysing?

I explain the target costing but did not have time to esplain further so i recommended if company have some competator than they should consider the target costing option

rachelrunshaw

Khurram Taj wrote: »

Task 2.1

Gross Profit Margin 35% 30%
Net Profit Margin 15.66% 11.50%
DM Cost per unit £12.50 £30
DL Cost per unit £5 £10
Fixed Production
Overhead Cost Per unit £15 £30
ROCI 26.85% 19.16%


Could anyone tell me, are they right?

I can't guarantee they are right, they are the same as my answers though. I also agree with most of your answers for section 1 however I did get different answers to the second part of 1.3 as it said continuing the trend so I went up in £100 increments

Jointy

rachelrunshaw wrote: »

I can't guarantee they are right, they are the same as my answers though. I also agree with most of your answers for section 1 however I did get different answers to the second part of 1.3 as it said continuing the trend so I went up in £100 increments

How did you find the exam today rachel? Have you done any revision for PCR just guna start mine now?

Hodan

For the variance in section 1 u had to take the F. overhead out because it only asked the material cost.
F. overhead exp:1000 A and volume overhead 325 A so 1000+325=1325 total of the F.Overh. So i took 29250-1325=27925 (i think) and my reconciliation balanced.

Index: i got 170,180 and 190.

For section 2.1
I had the figures as you Khurram. Koffi machine generate a higher ROCE therefore koffi machine to be lauched.

2.2
i am not sure, i had to rush to do this section so i have add the turnover for capsule and the machine also the net profit,gross profit and the investment capital (4400000).

Recommended Supremio machine bcz got a higher ROCE.

I have got PCR exam on Thurs, then am done. I really hope that i won't fail i wanna finish with AAT by Feb....so i can do something else.

Anyway good luck everyone and well done 1 down for me and 1 to go....

Highlander1

Hodan wrote: »

For the variance in section 1 u had to take the F. overhead out because it only asked the material cost.
F. overhead exp:1000 A and volume overhead 325 A so 1000+325=1325 total of the F.Overh. So i took 29250-1325=27925 (i think) and my reconciliation balanced.

Index: i got 170,180 and 190.

For section 2.1
I had the figures as you Khurram. Koffi machine generate a higher ROCE therefore koffi machine to be lauched.

2.2
i am not sure, i had to rush to do this section so i have add the turnover for capsule and the machine also the net profit,gross profit and the investment capital (4400000).

Recommended Supremio machine bcz got a higher ROCE.

I have got PCR exam on Thurs, then am done. I really hope that i won't fail i wanna finish with AAT by Feb....so i can do something else.

Anyway good luck everyone and well done 1 down for me and 1 to go....

Am I the only one who recommended the Koffio? Yes, the Supremio did have a higher ROCE but the Koffio still had the higher absolute profit! Unless I got the number of capsules wrong! Question stated 1,040,000 but it did go on and say 10 capsules a week, 4000 customers= 10x52x 4000 = 2,080,000 capsules a year I did my workings however on 1,040,000 capsules and have a feeling I was wrong!

rachelrunshaw

Jointy wrote: »

How did you find the exam today rachel? Have you done any revision for PCR just guna start mine now?

I thought todays exam was ok. Part 1 seemed to take an age and it wasn't laid out to my liking but hey ho. I think I was stronger in part 2 but I was getting tired of all the report writing. I hope I have done enough to pass, I generally check my answers against the answers posted by Sandy Hood (usually by the end of the week).

I have started June 09 PCR paper but I keep being lured back to the forum. Not my fave subject I'm afraid.

donnaalwill

Same as, I think its a combination of disliking the subject and it being a looooong day but I'm struggling to get into PCR revision tonight. Might read through some notes and start fresh tomorrow.

Jointy

rachelrunshaw wrote: »

I thought todays exam was ok. Part 1 seemed to take an age and it wasn't laid out to my liking but hey ho. I think I was stronger in part 2 but I was getting tired of all the report writing. I hope I have done enough to pass, I generally check my answers against the answers posted by Sandy Hood (usually by the end of the week).

I have started June 09 PCR paper but I keep being lured back to the forum. Not my fave subject I'm afraid.

Same here just doing June 09, section 2 is a doddle do that first i keep being lured back aswell got my laptop at side of me while im working. Think a tea break is in order soon and a bit of football Preston v Blackpool.

Didnt find PEV too bad today just seemed to be very time and writing intensive I was there for the full time. Struggled with the index thing but think i got some of it right. Answered all the questions so fingers crossed. I looked at that sandy person last time was quite helpful.

Good luck for thursday.