• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

December 2007

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › December 2007

  • This topic has 5 replies, 2 voices, and was last updated 9 years ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • November 24, 2015 at 7:17 am #284830
    farhana001
    Member
    • Topics: 34
    • Replies: 45
    • ☆☆

    Sir can you explain me part b buffer stock I am not so clear about the calculation of December 2007 PKA company./ bop question 21 (b)

    November 24, 2015 at 8:38 am #284851
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54701
    • ☆☆☆☆☆

    Buffer inventory is where they hold extra inventory throughout the year to be safe (to reduce the risk of running out).

    In this question they order when they have 35,000 units left in inventory, but on average they only use 25,000 units before the next delivery arrives. So on average they are always holding 10,000 more units than they actually usually need.

    It doesn’t affect the EOQ calculations at all, but it does mean that when calculating the total holding cost over the year we need to add on the cost of holding the extra 10,000 units.

    November 24, 2015 at 3:49 pm #284931
    farhana001
    Member
    • Topics: 34
    • Replies: 45
    • ☆☆

    Can we do Q/2*0.50
    100000/2*.50
    Instead of finding weekly demand

    November 24, 2015 at 4:33 pm #284948
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54701
    • ☆☆☆☆☆

    No. You need to do it the way that I wrote before 🙂

    November 24, 2015 at 5:45 pm #284962
    farhana001
    Member
    • Topics: 34
    • Replies: 45
    • ☆☆

    Thank you Sir.
    Can you please explain me the lead payment calculation in part d of the question

    November 25, 2015 at 7:26 am #285081
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54701
    • ☆☆☆☆☆

    Leading is paying early, so the lead payment simply means paying the euros now, instead of waiting until it is due in 6 months time.

    So we convert at the current spot.

    However, in order to convert now means having to borrow money and so because of the interest the cost in 6 months time will be the money borrowed together with the interest.

    (It is, of course, a silly thing for them to do – it would be more sensible to put the euros on deposit rather than pay the supplier immediately (which is what is happening with the money market hedging). Therefore it is not surprising that the lead payment is the most expensive of the three choices.

  • Author
    Posts
Viewing 6 posts - 1 through 6 (of 6 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • RashidMh on MA Chapter 1 Questions Accounting for Management
  • John Moffat on Relevant Cash Flows for DCF Relevant Costs (example 1) – ACCA Financial Management (FM)
  • John Moffat on Accounting for Management – ACCA Management Accounting (MA)
  • Hsaini on Accounting for Management – ACCA Management Accounting (MA)
  • kennedyavege@2023 on Relevant Cash Flows for DCF Relevant Costs (example 1) – ACCA Financial Management (FM)

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in