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BPP/Fernhust

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › BPP/Fernhust

  • This topic has 3 replies, 2 voices, and was last updated 5 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • May 28, 2020 at 4:46 pm #572087
    gbay
    Participant
    • Topics: 14
    • Replies: 18
    • ☆

    Dear John,
    Sales revenue for year 3 is ‘132,500x100x1.052×1.2×1.3’.
    It is clear for that 1.2 and 1.3 are increased in sales volume by 20% and 30% in years 2 and 3 respectively. What I do not understand why 1.052? Selling price for year 1 is 100, for year 2 to be increased by 1.05, then for year 3 to be increased by 1.04. So 1.092 to be used rather 1.052. Where am I wrong?
    Thank you

    May 29, 2020 at 8:18 am #572175
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54722
    • ☆☆☆☆☆

    Two things.

    Firstly, the BPP answer is mistyped. Although they have typed 1.052 and 1.053, it should read as 1.05^2 and 1.05^3 (and they have done the actual calculation correctly).

    Secondly, although the inflation in year 1 is 4%, the selling price is written in the question to be $100 in year 1. So it only inflates in year 2 onwards and the inflation in year 2 onwards is 5% (the 4% is therefore not relevant).

    May 29, 2020 at 12:09 pm #572193
    gbay
    Participant
    • Topics: 14
    • Replies: 18
    • ☆

    cleared, thank you.

    May 29, 2020 at 3:33 pm #572217
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54722
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘BPP/Fernhust’ is closed to new replies.

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