What formulas? unit 6

System
System Posts: 100,534 πŸ€– Admin πŸ€–
edited June 18 in AAT student discussion
Hi,<BR><BR>Sorry loads of questions.<BR><BR>I have the following formulas, budgeted fixed o/h absorption rate, production o/h absorbed, over/under absorbed, sales revenue, variable cost, profit, breakeven point.<BR><BR>Do you think i need to know any others? <BR><BR>Shelley.

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  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    What formulas? unit 6

    might nee margin of safety
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    What formulas? unit 6

    wot are the formulas u r learning?<BR>i cant think of a single one that i have learnt!!!!
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    What formulas? unit 6

    You will need to know how to work out the break even point and contribution out etc, there is a formula for each of them.<BR><BR>HTH.<BR><BR>Shelley.
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    What formulas? unit 6

    I am learning:-<BR>Reorder Level for stock<BR>Under/over absorbtion - although this isn't neccessarily a formula, I just remember it easier with a formula<BR>Contribution<BR>Breckeven<BR>Margin of Safety<BR>Required Profit (e.g how many unit you would need to make to meet a make a desired profit)<BR><BR>I am sure that there are more I am meant to learn but can't think at the moment.<BR><BR>Looking forward to when this costing is out the way and hope the new examiner isn't to hard on us<BR><BR>Good Luck<BR><BR>Mel :-)
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    What formulas? unit 6

    sales less variable costs = contribution.<BR>I dont think of thoses as 'formulas' lol just the basic calculations for ECR, which is why i was panicking!!!!!!<BR>Things like the EOQ formula with the square root thingy is what i think of as a formula<BR>Oh well, good luck all
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    What formulas? unit 6

    The reorder levels and maximum/minimum stock levels are a concern, as different books have different ways of calculating them.<BR>Ive got:-<BR>re-order quantity = maximum stock level - minimum stock level<BR>minimum stock level = re-order level - (average usage x average lead time)<BR>maximum stock level = minimum stock level + re-order quantity<BR><BR>Is this the same as everyone else???????????
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    What formulas? unit 6

    ShazAAT<BR><BR>Min stock is same formula as yours<BR>max stock = re order level + reorder quantity - (min useage x min lead)<BR>Reorder level = max usage x max lead<BR><BR>my books seem to refer to the re-order quantity as the EOQ (the square root thingy)<BR><BR>Does anyone have any idea which of these is right? <BR>I am going to look on the accounting technician site to see if they have anything<BR>
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    What formulas? unit 6

    I found this - so will go with these i think and hope for the best<BR><BR>http://www.accountingtechnician.co.uk/archive/?edname=930.htm&ped=930
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    What formulas? unit 6

    Minimum stock level: 'The lowest level to which stocks should normally be allowed to fallÒ?¦ held as a buffer <BR>stock to be made available in case of non-delivery by a supplier.' Takes into account the reorder level and average consumption in average delivery period.<BR>Maximum stock level: 'The highest level to which stock should normally be allowed to rise before too much <BR>working capital is tied up, sacrificing liquidity, and there is a risk of loss through deterioration and obsolescence.' Takes account of the reorder level, reorder quantity and minimum consumption in the minimum delivery period.<BR>Reorder level: 'The level at which an order would normally be raised.' Takes into account maximum usage in the maximum delivery period.<BR>Reorder quantity or economic order <BR>quantity: 'The quantity which is most economical to order as it minimises the costs of ordering and carrying costs such as storage, insurance and interest on capital.'<BR><BR>Once the reorder quantity has been determined, the other control levels can be determined by the following formulae: <BR>o Minimum stock level = reorder level - (average usage in average delivery period).<BR>o Maximum stock level = reorder level + reorder quantity - (minimum usage in minimum delivery period). <BR>o Reorder level = maximum usage x maximum delivery period. <BR>
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    What formulas? unit 6

    So if that is what the AAT site says, then that has gotta be correct.<BR>Thanks for the web page link geeyesxaah<BR>But it doesnt agree with Osborne Books!<BR><BR>Can anyone from the AAT please confirm what we are suppose to know to be correct???????

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