Target costing

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Can anyone help with the working for the target costing, I initially put £550 profit and £450 production cost then, changed my mind and altered it to £1000/155 = 645.16 and 354.84. Can't decide which is right although I think its the first answer that i crossed out

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Target costing

    Hi I put the cost at 450, as the question was a margin and not a markup, it implies that its 55% of the sale price! But they may notice you got it righ initially, considering you didnt crossit out beyond reading??
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Target costing

    Yeah the target cost is £450 because they wanted a margin of 55% on £1000 sales price, which as you said is £550 profit.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Target costing

    Ah well, think I will be re-sitting in December as I got the stock turnover wrong and I completely messed up the revised ROCE. (didn't add both business's figures together just took the adjustments off the one business's results, really stupid thing to have gone and done, should of known better) :cry:
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Target costing

    Hi,

    I also did that, i know the answer is £450, but at the time of doing it, i was certain my answer was right.

    Oh well.

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