accounting question (flexible budgeting)

willowmegs

ok this may be only a minor thing and the answer is probably right in front of me, but you know when you're preparing the flexible activity thingy at lets say 80% and you add up all the direct materials, wages, production overheads, admin expenses. how do you know (or find out) what percentage your total cost is at the end of that? e.g in my revision book one is 70% of sales. i'm trying to work out one in my exam papers at the moment but can't seem to get it. it says profit is 22% of sales though.

NADA

Can't help you. I will when I'm cramming on sunday night.

willowmegs

Ok well, you just better hope both marginal costing and flexible come up!

NADA

Yeah. I prepared Marginal costing last night. I am going to try and do question 1 today and question 9 tomorrow. Then I will worry about question B on Saturday and Sunday. I am afraid that they will do something radical on the accounting paper this year. Look at what they did with maths paper two to stop rote learners. Accouting is an even bigger rote learners subjects. YOu can get an A without knowing what a creditor or debtor is! I swear it's ridiculous. Hopefully they will change the syllabus to make it more difficult. Next year!

willowmegs

Im hoping Sole Trader will be question 1 as its a little bit easier than Company, what are you hoping it will be?

Faerie

NADA wrote:

Yeah. I prepared Marginal costing last night. I am going to try and do question 1 today and question 9 tomorrow. Then I will worry about question B on Saturday and Sunday. I am afraid that they will do something radical on the accounting paper this year. Look at what they did with maths paper two to stop rote learners. Accouting is an even bigger rote learners subjects. YOu can get an A without knowing what a creditor or debtor is! I swear it's ridiculous. Hopefully they will change the syllabus to make it more difficult. Next year!

Well if that's the case Departmental it will be...
And Suspense because so many schools avoid it. I don't actually mind it though because I like double-entry!
Tab isn't that bad either, it's just if you make one tiny mistake you can lose a lot of marks and we only learned them like a month ago!
Wouldn't it be great though if they left interpretation out?!

willowmegs

Faerie wrote:

Wouldn't it be great though if they left interpretation out?!

Not for me as it's my only hope if both Tab & Suspense come up as 100m!

DonaldDuck

Faerie wrote:

Well if that's the case Departmental it will be...
And Suspense because so many schools avoid it. I don't actually mind it though because I like double-entry!
Tab isn't that bad either, it's just if you make one tiny mistake you can lose a lot of marks and we only learned them like a month ago!
Wouldn't it be great though if they left interpretation out?!

To be completly honest,with tabulars theres only 2 adjustments that require thinking,the others are basically copyin numbers.And those 2 adjustments are at most going to take 2 or 3 minutes each

happydance

willowmegs wrote:

ok this may be only a minor thing and the answer is probably right in front of me, but you know when you're preparing the flexible activity thingy at lets say 80% and you add up all the direct materials, wages, production overheads, admin expenses. how do you know (or find out) what percentage your total cost is at the end of that? e.g in my revision book one is 70% of sales. i'm trying to work out one in my exam papers at the moment but can't seem to get it. it says profit is 22% of sales though.

Ok, "it says profit is 22% of sales". two things make up the selling price the COSTS and the PROFIT. Both of these MUST add up to 100%. So if profit is 22% of you sales the the costs must make up the other 78%.

So, to work in out: You add up you materials and stuff and get a figure, say 156000.
Total costs=15600(divide by 78, 156000/78=2000 write that figure down)
profit (22%) = 2000x22=44000
Selling price (100%)= 2000x100=200000 To check (costs and profit: 156000+44000=200000)

Hope that made sense.

willowmegs

happydance wrote:

Ok, "it says profit is 22% of sales". two things make up the selling price the COSTS and the PROFIT. Both of these MUST add up to 100%. So if profit is 22% of you sales the the costs must make up the other 78%.

So, to work in out: You add up you materials and stuff and get a figure, say 156000.
Total costs=15600(divide by 78, 156000/78=2000 write that figure down)
profit (22%) = 2000x22=44000
Selling price (100%)= 2000x100=200000 To check (costs and profit: 156000+44000=200000)

Hope that made sense.

Ive just discovered i made an error. whoopsie

However, thanks for your method, I will try it out tomorrow when I do another question

Divide profit by 0.22 to get sales....