How was today's paper??

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:How was today's paper??
    klr wrote:
    I thought it should be margin of safety/sales volume but I got this wrong in the past paper and found they'd used the breakeven so I did it that way

    according to my notes it should be (Projected sales - breakeven) divided by Projected Sales, which meant i put- 1000-1200/1000*100/1 = (20%)
    1200-1200/1200*100/1 = 0%
    1500-1200/1500*100/1 = 20%

    Where did the 1200 come from?

    I completley screwed up that question. I only got a break even for the 1500 one and that was 6000 units (fixed costs/4.80) .. which doesnt make sense because it should be under 1500!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:How was today's paper??

    1200 was the break-even point as calculated in the previous question.

    Although technically you cannot have a negative "margin of safety" based on the definition given in the Osbourne book ... you can in reality. If you level of sales does not reach your break-even requirement, you have a negative margin of safety. In this case, you need to sell 1200, you only sell 1000. You are 200 short - which equates to 20% of the 1000... thus leaving you -20%.

    I agree that this paper was NOTHING like the previous papers, but the tutors at college told us to expect something a little different due to their being a new chief assessor and him leading things in a slightly different direction.

    I am quite confident, having discussed the paper afterwards with fellow students to justify my answers etc. There were several people who struggled with it though - most of whom were from a different college, and clearly werent as well prepared for the process costing aspects.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:How was today's paper??
    Chris369 wrote:

    I completley screwed up that question. I only got a break even for the 1500 one and that was 6000 units (fixed costs/4.80) .. which doesnt make sense because it should be under 1500!

    I think what you did was calculate the break-even sales VALUE rather than number of units. Possibly.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:How was today's paper??

    Yeah,

    I got 11 for the cost per unit of output too.. With this figure my T-account were equal on both sides without any difficulty.
    It's strange for i've never done anything like this b4 but i just concentrated and managed to come out with the answer at the end.. I am convinced that it's correct. :wink:
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:How was today's paper??

    I dont remember what i had for the cost per unit, but 11 does sound familiar.

    I have to say though, THANK GOD thats over. Bring on the financial accounting!! Much more straight forward.

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