29/11/04 PEV Exam

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:08AM in AAT student discussion
Im just going through this exam and am stuck on Task 2.1<BR><BR>d) Stock Turnover in months<BR>e) Age Of creditors in months<BR>f) Age Of debtors in months<BR>g) Labour capacity ratio<BR><BR>I have the answers but do not know how to get to them and which figures to pick up.<BR><BR>Any Help would be much appreciated<BR><BR>Thanks

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    29/11/04 PEV Exam

    Hi Dan.<BR><BR>See my reply to message below - PEV Nov 04.<BR><BR>Scott.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    29/11/04 PEV Exam

    scotty on the creditors question, where does it tell you to use materials???? i understand how to get the answer now but i just dont understand why you have to use materials, i just looked at the question and would use the formula :<BR><BR>Creditors/Credit Purchases For The Year<BR><BR>& To get the credit purchases<BR><BR>O/Stock £142,000<BR>+ Purchases £??????<BR>- C/Stock £120,000<BR>Cost Of Sales £1320<BR><BR>So therefore purchases would be £1,298,000????? i know its wrong but why???
  • System
    System Posts: 100,534 🤖 Admin 🤖
    29/11/04 PEV Exam

    Hi again.<BR><BR>To work out Creditors you can either use purchases or cost of sales. In the question before that one it says that it's based on materials only.<BR><BR>Scott.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    29/11/04 PEV Exam

    I hope you don't mind me butting in to your question<BR><BR>Read the exam carefully and <b>make sure your answer is in the context of the question</b><BR>Beware trying to make the data fit your formulae<BR><BR>In this question the top of page 7 makes it very clear. <b>the only thing in the stock is raw materials</b> so the average age of the stock on hand at the year end should only look at raw materials.<BR><BR>Does that make sense?<BR><BR>Sandy
  • System
    System Posts: 100,534 🤖 Admin 🤖
    29/11/04 PEV Exam

    But it says ''Stock value is based on materials cost only''<BR><BR>Im probably being an idiot but how does this relate to purchases or cost of sales? I appreciate your help and im sure i'll understand it soon! <img src="i/expressions/face-icon-small-smile.gif" border="0"><BR><BR>See, i would have understood if it said ''Purchases are material cost only'' next to the question?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    29/11/04 PEV Exam

    If the only stock you have is the raw materials, then the only purchase you have made is of raw materials.<BR><BR>Relax, the penny will drop. You have to read everything and work out which figures to use - it's not easy.<BR><BR>Scott.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    29/11/04 PEV Exam

    ignore cost of sales<BR><BR>Use material cost only<BR><BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    29/11/04 PEV Exam

    Oops! being an idiot i didnt look and recognize that the: Materials+Dir.Labour+Fixed P. Overheads = Cost of sales! I was looking at the cost of sales figure and trying to work out purchases from there e.g. doing the whole o/stock+Purchases-c/stock using the balance sheet! I get it now, its just i always see P&L's as Turnover less Cost Of Sales (Being O/stock+Purchases-C/Stock) but this task is set out different, if im making any sense!<BR><BR>Cheers Scotty & Sandy!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    29/11/04 PEV Exam

    one last question <img src="i/expressions/face-icon-small-smile.gif" border="0">. How do you calculate the stock turnover in this task???? The formula i have is:<BR><BR>Cost Of Goods Sold/Average Stock = # Of Times Per Year<BR><BR>Therefor i would have done the following: For Factory A<BR><BR>1320/ 131 ( O/Stock On B/S £142,000 + C/Stock On B/S £120,000 / 2) = 10.07 / 12 to get months 0.8<BR><BR>Once again i know its wrong because the answer should be 2.2!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    29/11/04 PEV Exam

    Hi again Dan.<BR><BR>Stock turnover is closing stock divided by materials, then multiplied by 12.<BR><BR>Scott.<BR>

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