# Management Accounting Decision and Control Sample assessment 1 task 1.7

Loopster
Registered Posts:

**24**
Hi,

I am a bit stuck on task 1.7 and would like a bit of help please?

A business with receivables of £120,000 and receivables collection days of 30, operates on a gross profit margin of 25% and a net profit margin of 15%. Fixed production overheads 40% of the total cost of sales.

c) Complete the profit and loss account below using the following performance indicators. Enter all figures as positive numbers - do not enter negative figures.

£

Sales

Variable Production Costs

Fixed Production Costs

Cost of Sales

Gross Profit

Non-Production costs

Net Profit

I don't really understand what to do without further information. Any help will be greatly appreciated.

I am a bit stuck on task 1.7 and would like a bit of help please?

A business with receivables of £120,000 and receivables collection days of 30, operates on a gross profit margin of 25% and a net profit margin of 15%. Fixed production overheads 40% of the total cost of sales.

c) Complete the profit and loss account below using the following performance indicators. Enter all figures as positive numbers - do not enter negative figures.

£

Sales

Variable Production Costs

Fixed Production Costs

Cost of Sales

Gross Profit

Non-Production costs

Net Profit

I don't really understand what to do without further information. Any help will be greatly appreciated.

0

## Comments

191Receivable collection days (30)= Receivables x 365 (£43,800,000) / Sales

therefore Sales = £1460,000

191less VC

less FC

(25%) = GP (GP margin is 25%)

FC = £1460,000 x 40% = £584,000GP= £1460,000 x 25% = £365,000VC = £1460,000 - £365,000 - £584,000 = £511,000COS = VC+FC = £511,000 + £584,000 = £1,095,000191less COS

= GP

less non-production costs

(15%) = NP (NP margin is 15%)

NP = £1460,000 x 15% = £219,000Non-production costs = £365,000 - £219,000 = £146,000I don't have access to the answers so hopefully they are correct.

24Thank you so much for the reply! Apologies, I should have included the answers.

The answers are:

Sales: £1,460,000

Variable Production Cost: £657,000

Fixed Production Cost: £438,000

Cost of Sales: £1,095,000

Gross Profit: £365,000

Non-Production Costs: £146,000

Net Profit: £219,000

You pretty much nailed it, thank you for the workings too, makes complete sense.

19124Thanks so much! I'll be doing the other practice assessment later so will probably have a couple more queries I should have thought. Thanks again!