- This topic has 1 reply, 2 voices, and was last updated 1 month ago by
P2-D2.
P2-D2.-
Posts
-
mahi819
- Topics: 1
- Replies: 0
- ☆
Harry acquired an 80% holding in Style on 1 April 20X6. From 1 April 20X6 to 31 December
20X6 Style sold goods to Harry for $4.3m at a mark?up of 10% Harry’s inventory at 31
December 20X6 included $2.2m of such inventory. The statements of profit or loss for each
entity for the year to 31 December 20X6 showed the following in respect of cost of sales:
Harry $14.7m
Style $11.6mWhat is the cost of sales figure to be shown in the consolidated statement of profit or loss
for the year to 31 December 20X6?A $18,900,000
B $20,200,000
C $19,100,000
D $19,300,000Answer
D
Cost of sales = $14.7m + $8.7m (9/12 × $11.6m) – $4.3m (intra?group sale) + $0.2m (PUP) =
$19.3mThe PUP is $2.2m × 10/110 = $0.2m.
If you chose B, you have not time?apportioned the results. If you chose A you have deducted
the PUP rather than adding it. If you chose C, you have missed the PUP.
I want to know how to calculate PUP in this question?
P2-D2
- Topics: 4
- Replies: 6227
- ☆☆☆☆☆
Hi,
The PUP is based upon the 10% mark up given in the question. Where we have a mark-up the profit is 10% (10/100) of the costs. The sales will therefore be 110% of the costs (110/100) and so the profit is 10/110 of the sales figure given.
This is knowledge brought forward from Management Accounting.
Thanks
P2-D2- You must be logged in to reply to this topic.