pcr june '07

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
I'm looking at the PCR June paper and i can not undrstnd why the answers contain opening & closing stock figures within the P&L on question 1.2 (iv) as they are not calculated on the previous question before amendments? Please would someone kindly point out the obvious to me.

Thanks

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:pcr june '07

    Acky
    Please tell me if I'm not answering the same question you are asking.
    The cost of production is the cost incurred producing the total revised output of luxury models for August, but the cost of sales (as required for the P & L) has to recognise that there were 2,507 in stock at the beginning of August and that the equivalent of 2 days sales are in stock at the end of August.

    Does that help?

    sandy.hood@chichester.ac.uk

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:pcr june '07

    You are reading from the same Hymn sheet Sandy although, my main confusion is 1) how did they get to the figures they have for the opening and closing stock figures on the P&L2)Why were the opening and closing stock calculations not used in the original Operating statement prior to the revised sales.

    If you can help me out with that you are a complete Diamond.

    Many thanks.

    Acky
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:pcr june '07

    These are 2 quotes from the question
    • The sales of the luxury model in August are now expected to be 40% more than originally forecast.
    • The finished stock of both models at the end of August is planned to be equal to 2 days sales of each product during August.

    I can't see any reason to have a different opening stock, but as
      40% more sales are being generated and 2/25ths of sales = closing stocks, then the closing stock will be higher.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:pcr june '07

    But is there a reason why opening & closing stock was not calculated in the original P&L?

    thanks Acky.

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