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Bits and pieces (June 2009)
I also have a problem with this question how to deal with this question and with its calculation. I hope it is a relevant costing question (rather than incremental budgeting). Please could you kindly explain because I find it difficult to answer?
And again do we have this kind of question in the exam nowadays?
Thank you in advance.
Although this question was set by the previous examiner, questions such as this can still be asked.
It is effectively a relevant costing question, although there are none of the normal relevant costing techniques required to be able to answer it.
The question actually specifies the approach to take. If the incremental (extra) revenue of opening on Sundays is greater than the incremental (extra) costs of opening on Sunday, then it is worthwhile. If the extra revenue is less than the extra costs then it is not worthwhile.
Some of the extra costs you should find very easy (for example, the extra heating), others take more time (but remember in the exam that each part you get correct gets marks, even if other parts you get wrong).
If you specify which bit(s) of the answer you are not clear about, then I will explain.
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