PCR December 2005 Paper Task 1.4 Part C

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:26AM in AAT student discussion
:oops:
I am having trouble understanding logic on part c of 1.4 On December 2005 paper.

Althought it is a marginal question the answer talks about cost of sales which I thought was only used in absorption costing. Also if using opening and closing stock why does the answer not use the closing stock part. Me very confused with this.

I understand where the turnover figure comes from but not the rest. Can anyone help?

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR December 2005 Paper Task 1.4 Part C

    Glad its not just me. I am really confused by this. I can't understand why closing stock isn't included.

    I feel with PCR, I'm doing the papers and its like okay 2+2 is 4 great I get it, then I do another paper and suddenly 2+2 makes 5 and then I do another paper and 2+2 = -30!!!!!

    Don't think our teaching has been brilliant this year but I am realy confused
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR December 2005 Paper Task 1.4 Part C
    Task 1.4
    Prepare the following statements for period 1:
    (a) the budgeted marginal (or variable) cost of production for each product
    (b) the unit cost of fault-free production for each product
    (c) a budgeted operating statement showing for each product the total turnover,
    total expenses and total contribution.

    Look at the answer NOT necessarily the examiner's method

    My answer would have passed and shows
    Turnover
    Variable Cost (expenses)
    Contribution

    I'm sure you understand that contribution per unit x sales volume
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR December 2005 Paper Task 1.4 Part C

    Sorry Sandy but I am still not understanding this do you mean you just multiply 3200 units by Unit cost of good production to get £560,000 which subtracted from £640,000 gives contribution of £80,000? If this is not correct could you just detail your answer.

    Thank you for taking the trouble to answer and if I fail this exam I will definitely be on your PCR revision course ready for the June exam!!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR December 2005 Paper Task 1.4 Part C

    Jackie I hope you pass and won't need to come along.

    You are absolutely right.
    you just multiply 3200 units by Unit cost of good production to get £560,000 which subtracted from £640,000 gives contribution of £80,000

    The way you describe it is just what the question asks for.

    If you want you could check it by saying £200-£175 to get the contribution per unit.
    Then 3,200 x £25 = £80,000


  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR December 2005 Paper Task 1.4 Part C

    thank you very much for explaining it to me.

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