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Did my exam today and need help!

kellyprestonkellypreston AAT Student Posts: 23
edited October 2018 in Management Accounting: Decisions and Control
I got completely thrown off a question when I needed to calculate sales from the following information:
Inventory holding period
Inventory
Gross profit margin
Net assets

Can someone please explain/provide a formula I would use to calculate sales based on this?I know you can calculate cost of sales from inventory and inventory holding period but then I got completely lost.

Can someone also tell me if AAT give you follow through marks? Because I made up a figure for sales so I could answer the other questions

Comments

  • mergenmergen Just Joined Registered Posts: 105
    Think of Profit and Loss statement and how it looks. What comes first and then work your way down.
    You've got Inventory Holding Period = Inventory/C of Sales x 365. Once you've got Cost of Sales, you can work your way up to Sales.
  • kellyprestonkellypreston AAT Student Posts: 23
    But how? That’s what I’m stuck on. How do you get from cost of sales back to sales? I know you have gross profit margin but that’s a percentage not a number. Sorry if I’m being stupid here
  • crispycrispy Trusted Regular SouthamptonRegistered Posts: 456
    Hello,
    Made up example:

    Inventory Holding: 20 Days
    Closing Inventory: £ 10,000
    Gross Profit Margin: 20%

    First work out missing pruchases figure: £ 10,000/20 Days * 365 Days = £ 182,500
    Then Add Gross Margin to arrive at Sales £ 182,500 / 0.8 = £ 228,125

    Hope this helps.
  • fournaanjezfournaanjez Registered Posts: 32
    Re-arrange inventory holding period to find COS.

    Then if you know the gross profit margin is, for example, 20% you can find sales by multiplying COS by what you want by what you've got ie 100/80. This will give you a sales figure.

    With regards to the follow through marks, I have no idea sorry. I should imagine if it is a human marked part of the exam that there would be, but can't give you any guarantee.
  • kellyprestonkellypreston AAT Student Posts: 23
    I see! Thanks everyone, I will now know for next time :)
    fournaanjez
  • mergenmergen Just Joined Registered Posts: 105
    @kellypreston sorry was rushing trying to type and miss read your post. I read it as Gross Profit and didnt see margin. What the guys above have said.
  • charlotte1234charlotte1234 Registered Posts: 8
    I'm so glad i'm not the only one who didn't get this question. I can't remember how I answered but this question could be the difference between me passing or failing.....I should get my result tomorrow but I will keep you answers in mind if I need to retake and definitely prepare for this!
  • TarynPitchforkTarynPitchfork NottinghamshireRegistered Posts: 39
    I'm having the same issue having taken my exam yesterday, do you know if AAT gave you any marks for this even though the sales revenue figure was incorrect but calculations were good correctly?

  • salma1salma1 AAT Student, AATQB Posts: 8
    I did my exam today and this question completely thrown me out. I have answered the question but I know it was wrong.
    Inventory holding period is 45 days, inventory vaule £225000, gross profit margin 25%, cost of sales 2%, cost admin 3.5%, net asset £18736.
    This was the exam question any suggestions how it should have been answered? It required the following
    Sales
    Cost of sales
    Gross profit
    Cost admin
    Net profit

    Thanks
  • CornishPixieCornishPixie Registered, MAAT, AATQB, AAT Licensed Accountant Posts: 116
    You can't discuss exam questions in here Salma.
  • salma1salma1 AAT Student, AATQB Posts: 8
    Sorry I didn't know. But they are not the exact figures it's the style of the question.
    I won't ask anymore questions Cornishpixie.
    Thank you
  • CornishPixieCornishPixie Registered, MAAT, AATQB, AAT Licensed Accountant Posts: 116
    Go ahead and ask by all means Salma1 - that's the reason this forum is here - so that you can get advice on how to approach a question.

    It's just in your post above, you said "This was the exam question any suggestions how it should have been answered?" which indicated that this was the actual question - which is not allowed.

    Which practice assessment question did these figures come from? If you post that question, then people will be able to help you.
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