Greetings sir.
I have an issue in 25.2, Task 3.
Point 2 within the Additional information, states that the goods were sold at $12m cost plus 40% and inventory was 30% unsold.
So I calculated Task 3 with the following method:
$12,000,000 x 0.3 x 40/140 = $1028,571.43
You had taught us that if it is cost plus, we do 40/140 if Im not mistaken.
But the answer was given on Pg221 =
$1,440,000 (12m x 40% x 30%)
Have they calculated using markup ? Is this an error on their part, or my understanding?
Please instruct.
Ask the Tutor ACCA FA
FA BPP Revision Kit, Preparing Simple Consolidated FS, 25.2 Pg Q.119 & A.221
5y ago#1It is an error on your part.
The question says that Black sold goods to Bury which had originally cost $12M.
Black invoiced for them at cost plus 40%.
(40/140 would only be of relevant if you were calculating the profit when you were given the selling price, which is not the case here. I have nowhere said differently in my lectures!)
Thankyou and apologies
5y ago#3You are welcome :-)
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