PCR JUNE 2006 - HELP!

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
:( I am having a mental block on june 2006 paper, i can't seem to get the calculation for the maintenance in section 2 question 2.1 d) the answer is maintenance of 440 in the flex budget. can anyone shed some light on this. i am starting to panick as i have the exam tomorrow. :lol:

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR JUNE 2006 - HELP!

    Is this a stepped cost question?

    You have to remember that if the cost increases for every 10,000, then any part of 10,000 extra would take it up to the next threshold
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR JUNE 2006 - HELP!

    I keep getting stuck on these an when i think i understand them, i do another question and forget. It is 275/50 then x 10000.This is the cost of 10000 pescas for maintenance.

    Hope that helps!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR JUNE 2006 - HELP!

    So when it come down to the 440 maintenance on flexed budget, you have to do 80000 x 55000 to get the answer as it is per every 10000 u have to round it up.

    Does that make sense?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR JUNE 2006 - HELP!

    Sounds like it yes, but im not looking at the paper!

    Paul
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR JUNE 2006 - HELP!

    In the tasks it originally asks you to get the cost per 10000. This is worked out by:

    275000 / 50000 = £5.50 * 10000 = £55000

    Now you have your cost per 10000. In the section 2 data it has a list of assumptions and for maintenance it says:

    "Maintenance is a stepped cost and increased by the same amount for every 10,000 units, or part of 10,000 units, produced"

    In relation to the answer, you need to prepare a flexed budget for the 72000 units (budget = actual for like for like comparison). In terms of maintenance it would be:

    £55000 * 7 = £385000

    But then note it has gone into another multiple of 10000 (2000 into another 10000 to make 72000) and therefore another charge for 10000 units maintenance cost needs adding on, hence:

    £385000 + £55000 = £440000
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR JUNE 2006 - HELP!

    matt, sorry i might be thick either that or i'm brain dead, but where did you get the 7 from to be able to x £55000 to get £385000
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR JUNE 2006 - HELP!

    You're both! Haha just kidding! :wink:

    The 7 comes from the actual volume being 72000. The original task asks you to get the figure for 10000 units which leaves you now with a multiple of 10000.

    There's 7 multiples of 10000 in 72000 hence where the 7 comes from. This leaves a balance of 2000 over but since the assumptions part states "or part of 10000 units" another is added to give £55000 * 8 (£385000 + £55000) equaling £440000.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR JUNE 2006 - HELP!

    I think the 7 just comes from the explaination of 7 lots of 10,000. But you actually produce 72,000 so as your cost increases by each 10,000 produced you have to increase your maintenence cost so 275,000/50(50 lots fo 10,000) * 80 (as you will go into the 80 lots of 10,00 0 criteria) = £440,000.

    If you had made say 72,001, because you had made that extra one you would have to go into the next cost bracket for prodution. If you had producesd 69,999 you would be in the cost for 5500 X 70 cause you are in the bracket for that cost.

    so - 0-10,000 units would be = £5,500 maintenance
    10,001-20,000 units would be (£5,500 * 2)
    20,001-30,000 units would be (£5,500 *3) and so on and so on.

    Sorry if that example was a little like trying to teach someone to suck eggs.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR JUNE 2006 - HELP!

    :lol: thanks everyone :lol:

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