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June 10 – BEG – % used to measure change in Ext and Int costs

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA APM Exams › June 10 – BEG – % used to measure change in Ext and Int costs

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  • November 26, 2015 at 9:36 pm #285595
    Edward
    Member
    • Topics: 21
    • Replies: 17
    • ☆

    Hi,

    Can you advise why you would use the total of manufacturing costs as your basis to confirm % of external failure costs as done in the q?

    3100 / (8400+3000) = 27.20 %

    I would of taught it was on the total costs? = 3100 / 22,000 = 14.10 %

    Appreciate if you can confirm why?

    Thanks,

    Ed

    November 27, 2015 at 7:18 am #285630
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10589
    • ☆☆☆☆☆

    I think it is most useful to compare the initial cost of manufacturing to the external failure costs.

    If you compare to 22,000 you are including some failure costs in the 22,000 which rather flatters the figure by reducing the % cost.

    I don’t think it’s a fatal difference.

    December 2, 2015 at 8:50 pm #287080
    Edward
    Member
    • Topics: 21
    • Replies: 17
    • ☆

    Thanks.

    Going through solutions can be painful when no one will have the same answer but at the same time, trying to hit key points. Struggle sometimes is, is knowing what the key points are. 🙂

    appreciate your help.

    ed

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