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Hello,
Kindly look at the Dec 2009 question 5 at WM, DW and TD, and please look at ACCA’s suggested answer to this question in the marking scheme. Please refer to alternative two in the suggested answer where Mr. Geof gets the lost discount as $19,000. Please explain how we get this figure. I don’t understand any of the working that Mr. Geof has shown there to get the $19,000. Please explain to me how we derive the $19,000 in alternative 2 for the materials in notes.
Please explain and kindly let me understand how the $19,000 lost discount figure is arrived at.
PS; Please set up a facility whereby we can attach document and JPEG pictures so that we can easily post our questions and answers simply by putting up/uploading them in the form of JPEG format.
I actually think that the first alternative is easier 🙂
However, for alternative 2, the position is this:
If TD stops, the sales of the other two will fall by 10%.
This means that the costs will be as follows:
DW: 95% x 5000 units – 4750 units x $70 = 332,500
WM: 95% x 6000 units = 5700 units x $100 = 570,000
This gives a total cost of 332,500 + 570,000 = $902,500.
However, at the moment they are getting a discount of 5% and these figures are net of the discount, which means they are only 95% of the full cost.
So the full cost would be 902,500 x 100/95 = $950,000. So they are currently getting a discount on these of 950,000 – 902,500 = $47,500However, in future (because the total is less than 1,000,000) they will only get a 3$ discount on the full cost. So the discount will be 3% x 950,000 = $£28,500.
So…..they will be losing discount of $47,500 – $28,500 = $19,000.
With regard to your suggestion of attaching documents etc., I will ask admin about it. However please appreciate that we are operating this service free of charge (and do not receive anything from the ACCA) and so it very much depends on what costs would be involved for us. Also, it is important to us that everyone can see the questions so that everyone can get the benefit of the answers.
Thanks. You made it so simple to understand, although I find with your explanation, alternative 2 is way easier 🙂
Regarding my suggestion, we could upload pictures of our questions on the forums itself so that everyone can see. Look at the studentroom.co.uk for example and there in the public forum all the facilities are there. Like , text enhancement, uploading files, etc.. this will also allow OT members to share files on the website and this will be very beneficial as the file will be uploaded on the forum itself.
Thanks anyways.
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