How do we think PEV went?

Section 2.2 I thought you had to add your costs together as if you producing the turbine at a per turnbine basis ie 2.2 a1 was £800 (£300 for materials £200 for labour and £300 for production overheads) 2.2a2 I put £1,050,000/10000 units = £105 per unit unavoidable. 2.2a3 £1,950,000/10000units = £195 avoidable costs. in the report I just compared the £800 per unit being produced inhouse to the £745 per unit on a contracted out basis. (640 for turbine and £105 unavoidable costs) so it made sense to contract out 10,000 units, when I compared 140000 units I found it the other way round

I honestly couldn't comment Lee as I totally guessed that one and can't remember????

Lee Manning wrote: »

Section 2.2 I thought you had to add your costs together as if you producing the turbine at a per turnbine basis ie 2.2 a1 was £800 (£300 for materials £200 for labour and £300 for production overheads) 2.2a2 I put £1,050,000/10000 units = £105 per unit unavoidable. 2.2a3 £1,950,000/10000units = £195 avoidable costs. in the report I just compared the £800 per unit being produced inhouse to the £745 per unit on a contracted out basis. (640 for turbine and £105 unavoidable costs) so it made sense to contract out 10,000 units, when I compared 140000 units I found it the other way round

I was stuck on this one for ages. I did the workings the same way but I ran out of time with the report. I know that I didn't state which option was the best to use correctly as I didn't have enough time to look at what I had calculated.

well thats what made sense to me. I first thought that the the two figures related to production overheads and then overheads as the question was worded funny but if you added 1.95m and 1.05m its comes to 3m which was the total production overheads in 2.1 so I assumed the to two figures were talking just about the production overheads

Lee Manning wrote: »

Section 2.2 I thought you had to add your costs together as if you producing the turbine at a per turnbine basis ie 2.2 a1 was £800 (£300 for materials £200 for labour and £300 for production overheads) 2.2a2 I put £1,050,000/10000 units = £105 per unit unavoidable. 2.2a3 £1,950,000/10000units = £195 avoidable costs. in the report I just compared the £800 per unit being produced inhouse to the £745 per unit on a contracted out basis. (640 for turbine and £105 unavoidable costs) so it made sense to contract out 10,000 units, when I compared 140000 units I found it the other way round

First part was what I got.

Second part, I included the turbine purchase price as part of the unavoidable cost.

Third part, I'm pretty sure you were supposed to include the material and labour costs in the avoidable costs as it said in the task that they wouldn't be incurred(or words to that effect) if production was contracted out.

Agree with your report recommendation as well.

NBB wrote: »

I like it when someone else got the same as me LouLou143, even if we are both wrong just gives me that little biit of reasurrance!!

I know it does give you reassurance....at least we thought on the same lines!!!!

mehmet wrote: »

First part was what I got.

Second part, I included the turbine purchase price as part of the unavoidable cost.

Third part, I'm pretty sure you were supposed to include the material and labour costs in the avoidable costs as it said in the task that they wouldn't be incurred(or words to that effect) if production was contracted out.

Agree with your report recommendation as well.

I thought is said materials and labour would be saved hense the whole idea of contracting out?

Yes, that's why you include it in part of the avoidable cost. Because contracting out means you avoid paying it.

Oh, I honestly haven't got a clue over that 2.2 question but hey back to the books for DFS!!!

I got much the same as the other people posting, especially Lee I did the very same.

I guess it seems the majority hated Section 2 especially the turbines!!

I suppose even if we calculated wrong if we go on to explain our own figures well with good arguments then we will get credit.

Gonna a long road to DFS on Wednesday as focused more on PEV.

A long wait till August too.... we all deserve a good ole sess in the pub this weekend!


good luck to anyone with BTC tomorrow and no doubt we will all re convene on Wednesday after DFS!!


:confused1:

I wouldn't say it was easy Joyride I did have to think about my answers!!

mehmet wrote: »

Yes, that's why you include it in part of the avoidable cost. Because contracting out means you avoid paying it.

I see what you are saying but that means you must have included the purchase of the wind turbines on the unavoidable costs as this replaces the labour and materials. Thats the only way I can see comparing like for like. I prob wrong but it mad sense the exam not to incude it.

It was all about how you interpreted the question and you do get marks on this if you made assumptions....theres nothing to stop you from saying that you assumed because of this etc because of that etc,..this is how I came to the overall conclusion....you would get marked on those assumptions.

mehmet wrote: »

The question was well worded. What differs is how you understand it.

For example, in the unavoidable costs, I included it because I thought that if you contract out production, paying for the units was unavoidable. However, you could argue that as the cost would not have been incurred if you produced the units, it's not avoidable/unavoidable anyway, and instead you would include the purchase cost in the report when comparing producing with contracting out, which sounds like what Lee did.

yep did that

Standard cost card

50 x 474 = 23,700
200 x 150 = 30,000
800 x 10 = 8,000
+ 150,000
=211,700