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In regards to the paper we sat yesterday for the ECR. I just wanted to see if you knew if any of my answers were correct or if anyone else got the same answers. <BR><BR><BR>For the re-order level I put 75,000kgs. <BR><BR><BR>For the labour question I put the: <BR><BR><BR>£3000 as a CR in the ledger code for â??Work - In - Progress) <BR>Employee NI and Employers NI â?? I added these together and put it in the ledger code for â??NI Payableâ?? as a DR. <BR>Net wages went is a DR in the ledger code for â??Net Wages Payable) <BR>And the other one, which I cannot remember what it was, went in the ledger code remaining as a DR also. <BR><BR><BR>For the break-even I got £52,000 / £52 contribution per unit for Beta = 1000 units <BR><BR><BR>We should make more the Beta range and then the Gamma range and then the Alpha range. <BR><BR><BR>We should not adopt the policy of making just Beta, as the company would need to make and sell 1000 units of the Beta range, but the demand is only 200 units. Also, the other reason was because it may upset your current clients and therefore they might decide to buy all three of the products elsewhere, thus resulting in a loss of business for China Ltd. <BR><BR><BR>For the unit contribution it was £27 for Alpha, £52 for Beta and £43 for Gamma (I think). <BR><BR><BR>For the question were it asked if budgeted activity increases then what happens to the cost of overheads charged to an individual product. I put that if activity goes up the cost of overheads charged to one single unit is going to be less than if the activity was less, since you are spreading the cost over more hours. <BR><BR><BR>For the memo I put: <BR><BR><BR>- Payback - is the amount of time it would take us to recover our initial cash cost of this investment. This is used to help us evaluate this project as it lets you know how quickly you will recover your initial investment. <BR><BR>- Internal rate of return â?? is the rate of return which the company would like on its investment. (We didnâ??t actually cover this is class). <BR><BR>- NPV is the net present value of money. It tells you the value of £x received in the future in todayâ??s value, i.e. how much £1 received in the future would be worth now. So, having a positive NPV means that you have cash surplus and that therefore you should go ahead with the project. This method deducts any costs that will be incurred against the initial cash flow, thus leaving the net present cash flow. <BR><BR>- I said that you should go ahead with the project as it has a relatively short payback period of 3 years, and that because it has a positive NPV, thus a cash surplus. <BR><BR><BR><BR><BR>Look forward to hearing from you. <BR><BR><BR><BR>BhavE

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Hi<BR><BR>regarding the journal question i have spoken to my tutor and here is her reply <BR><BR>"Had a quick look - the journals required needed you to DR WIP with the<BR>full direct labour cost, and then to CR the three other accounts with<BR>the relevant values."<BR><BR>Hope this helps <BR><BR>Mike<BR>