PCR Query

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:26AM in AAT student discussion
Hi,

With regards to the second section of PCR, in the instance of being asked to prepare a variable cost flexed budget, can anyone tell me whether they think the examiner would prefer to see the cost of production altered as a percentage, or have the figures worked out ignoring the extra production, or does it not matter?

Thanks

Paul

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR Query

    I dont really understand what you mean. Can you give an example. I've never introduced % into my flexi budgets
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR Query

    Well you have to take the closing stock out, so one way to do it is to work out the closing stock figure as a percentage of your total cost of production, and then reduce each production cost element by that amount.
    Or you just work out the actual figures on actual sales, as opposed to actual production.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR Query

    Dont worry about the closing stock as a percentage. Just work out the actual cost for material, labour etc and multiply it by the amount produced (except turnover is amount sold by selling price)

    When this is all done and put in the relevant position in the statemrnt you can just ignore the stock.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR Query

    If you do it that way you have to multiply it by the amount sold though, as the amount produced contains a portion of the fixed overhead that is going to be carried forward.



  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR Query

    I apologise.

    When working out unit cost you divide by amount produced and when putting figures into operating statement you multiply by amount sold.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR Query

    No need for apologies, thats why this is a good place for revision.
    Paul.

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