Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Choice of Contracts
- This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
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- March 7, 2017 at 7:51 am #376174
Thank you John.
In my previous post about the choice between two contracts and relevant costs – I didn’t really specify that the scenario opens with: ‘the company has its tender for a job in North East of the country, but has been asked to take on a South Coast job…. the contract does allow for an escape clause.’
More specifically the requirement said: ‘….. present comparative statements to show the net benefit to the company of undertaking the more advantageous of the two contracts.’
Within the question there were lots of hints, that for both contracts, there were will a number of relevant future cash flows to be incurred, with some inventory in stock and the classic NRV versus replacement costs.
The markscheme was presented in such a way that the comparative statements were two separate analysis of the relevant costs and benefits of both projects and ended by comparing both projects future cash flows and suggesting the one with the higher relevant net incremental benefit.
1. Does this mean that, if in the exam, we’re told a contract has been accepted, but can be withdrawn from to take on another contract, but both contracts still entail future incremental cash flows that we produce an incremental costs and benefits (incomes and savings) for both and then compare or is there maybe a fault with the markscheme on this particular Q?
P.S.
I appreciate the additional detail may mean that your interpretation of the requirements are now different, I’m sorry, I was trying not to include too much detail in the previous post.March 7, 2017 at 1:37 pm #376244It is difficult for me to be definitive without seeing the actual question (if it is in the current edition of the BPP Revision Kit then tell me the question number, or if it is a past exam question then tell me which exam – then I will be able to find it).
The fact that the question said present comparative statements does mean that they want two statements and it sounds as though the printed answer is correct.
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