The question is asking the product profitability and that must be DIRECTLY related to the product. Without having sales profit cannot be arrived. Hope I replied correctly.

Question 4 o of CIMA P2 Chapter 1 Test, does not make much sense. It asks “what costs will be used in calculation of DPP..” and includes sales revenue as an answer.

I would like to know how to calculate the difference between conformance and non conformance costs ? [ Kindly illustrate with an example on calculation basis]

A query for the 2nd question: 1. Why have we considered Total Orders for dispatch cost while the actual sold units are less than the total orders. 2. That cost is not yet realized right?

As far as I understood the lectures, the ‘placed’ and ‘dispatched’ will be calculated as per the orders that had been placed. The units ordered in each order may vary; eventually amounting up to either equal or more in number. For this question, we assume each order had at least 1 unit. Hence, disregarding the line item ‘units sold’ here as it was not required.

Please do correct me if I’m wrong. Would appreciate the tutor’s insight on this.

EpicThinkers says

Insightful. thanks a lot

shamshad.qazi3@gmail.com says

The question is asking the product profitability and that must be DIRECTLY related to the product. Without having sales profit cannot be arrived. Hope I replied correctly.

pawelski says

Question 4 o of CIMA P2 Chapter 1 Test, does not make much sense. It asks “what costs will be used in calculation of DPP..” and includes sales revenue as an answer.

Since when revenue is a cost?

Prabashini says

Hi,

I would like to know how to calculate the difference between conformance and non conformance costs ? [ Kindly illustrate with an example on calculation basis]

amorgan says

In question 4, is sales revenue included in calculating DPP?

zuhakhan says

Yes, because for the calculation of DPP, we require the gross margin figure. Ultimately for which, we would require the sales revenue figure.

This may help:

DPP (%) = Gross margin ($) – Direct product costs ($)

saurabhsoodsubbu says

A query for the 2nd question:

1. Why have we considered Total Orders for dispatch cost while the actual sold units are less than the total orders.

2. That cost is not yet realized right?

Vmacklenin says

looking at the gross margin; and the question, the assumption is that all has been made and dispatched.

zuhakhan says

As far as I understood the lectures, the ‘placed’ and ‘dispatched’ will be calculated as per the orders that had been placed. The units ordered in each order may vary; eventually amounting up to either equal or more in number. For this question, we assume each order had at least 1 unit. Hence, disregarding the line item ‘units sold’ here as it was not required.

Please do correct me if I’m wrong. Would appreciate the tutor’s insight on this.

shamshad.qazi3@gmail.com says

We follow what question suggest as cost driver.