# Financial Performance - Sample assessment 1 - task 7-a

Registered Posts: 19
You have been provided with the following information involving a company which operates an absorption costing system.

Scenario 1
Sales volume (units) - 120000
Revenue - 1680000
Gross profit - 600000
profit from operations - 275000
net assets - 2298400
inventory - 147950

Calculate the following performance indicators

Return on net assets - 11.96
Inventory holding period in days - 50
Sales price per unit - 14
Full production cost per unit - ?????

Can somebody pls help in finding out the full production cost per unit?

It should be direct material + direct labour + direct overheads
So I have calculated:
(revenue - profit from operations)/sales volume
(1680000 - 275000)/120000 = 11.71

However the correct answer is 9

• Registered Posts: 58
Ok, take you gross profit from your sales revenue and divide sales volume and it 9. Gross profit less revenue gives you cost of sales. Hope this helps
• Registered Posts: 19
Oh gosh, sometimes we make it difficult! thank you for your reply

I have aslo issues in working out the below one which is the part b of the same question. Can you pls help again?

Net assets - gbp 175000
Return on net assets - 13%
Profit margin - 14%
Gearing - 32.75%
Profit to the nearest gbp - ???
Sales revenue to the nearest gbp - ???
• MAAT, AAT Licensed Accountant Posts: 5
Return on NA = Net Profit / NA
Therefore:
Net Profit = NA x Return on NA
= 175,000 x 13%
= £22,750.

Profit margin = Net Profit / Sales revenue
Therefore:
Sales Revenue = Net Profit / Profit margin
= £22,750 / 14%
= £162,500.

See if you can lookup 'rearranging formulae' or similar in maths.
• Registered Posts: 19