Past paper dec 2008

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nosaj
nosaj Registered Posts: 20 New contributor 🐸
Can someone assist me in calculating the stock turnover in section 2

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  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034 mod
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    (vii) raw materials stock turnover in days

    Closing stock of raw material x 365
    Raw material cost within the cost of sales

    Stock of material (glass) 60,000 x 365...... 60,000 x 365
    Direct materials (glass) .540,000............. 300,000
    ......
    Sandy
    sandy@sandyhood.com
    www.sandyhood.com
  • nosaj
    nosaj Registered Posts: 20 New contributor 🐸
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    thanks sandy could you please explain why the direct materials was used i was using the cost of sales 786000
  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034 mod
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    This might seem a very teachery response, so sorry in advance, but look at what the question asked for.
    (vii) raw materials stock turnover in days

    When you value your raw materials, what went into the cost?
    Does the stock of raw materials have costs that we incur after it has gone into production?

    Finished goods stocks have cost us: raw material, labour and the overheads incurred.
    Raw materials have cost us: only the raw materials
    Sandy
    sandy@sandyhood.com
    www.sandyhood.com
  • nosaj
    nosaj Registered Posts: 20 New contributor 🐸
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    thanks for your help, now I now the tricks to these question.
  • jilt
    jilt Registered Posts: 2,903 Beyond epic contributor 🧙‍♂️
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    The BPP book says average stock/cost of sales x 365

    but if no opening stock figure given then use the closing stock figure so

    closing stock/cost of sales x 365

    Which is correct avearge stock or closing stock? I'm getting confused
  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034 mod
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    Both are fine
    But try not to "learn" these measures of performance
    They should be telling you something you can use to help the management.

    Ave stock tells you the average period that stock was held prior to sale
    Cost of Sales

    Closing stock tells you the same, but it gives you more of an idea of how long the closing stock will last before it runs out
    Cost of sales
    Sandy
    sandy@sandyhood.com
    www.sandyhood.com
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