Home For AAT student members AQ 2016 Professional Diploma in Accounting Management Accounting: Decisions and Control

MDCL mock assessment task 1.6

Hi,
I am struggling with this question. Please can someone explain the calculations on how you work out this question.

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  • Pian32Pian32 MAAT Posts: 385
    Hi Tan

    I'll outline the method below I'd attempt the question yourself after the first equation as I think it'll slot into place. If not the method for all section a is below.

    Start with the metric you have available.

    Inventory holding period = 45 days
    Average inventory = £225,000

    You can use this is find a Cost of Sales figure

    365/45 * 225,000 = 1,825,000

    From here it all cascades

    You can calculate the Sales using the margin given of 20%

    CoS = 0.8 Sales
    Sales = 2,281,250

    This allows you to calculate the Gross Profit, Selling and admin costs

    GP = 2281250-1825000 = 456,250
    Selling = 2281250 * 0.02 = 45,625
    Admin = 2281250 * 0.035 = 79843.75 Round per instructions = 79844

    From there you can get the net Profit

    NP = 330,781

    Hope this helps

    AAT Level 4, MAAT
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