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June 2013 Q-3

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › June 2013 Q-3

  • This topic has 1 reply, 2 voices, and was last updated 6 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • April 19, 2016 at 2:33 pm #311710
    Mujtaba
    Member
    • Topics: 13
    • Replies: 10
    • ☆

    I am little confused to calculate Rework Cost .
    It says in question that
    Rework cost:this is the average rework cost per webcam and is based on an estimate of 15% of webcams requiring rework at a cost of $20 per rework. With the use of more standard parts,the rate of rework will fall to 10% and the cost of each rework will fall to $18.

    My question is Why they dont use this calculation i.e 50000*.9*18=810000/50000=16.2
    Because the rate will fall 10% means 10% less.
    Is this correct?
    I am looking forward to hearing from you.

    April 20, 2016 at 8:23 am #311818
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51583
    • ☆☆☆☆☆

    The question says that the reworking will fall to 10%.
    So if they make 50,000 units it means that will have to spend money on reworking 10% x 50,000 units, at $18 each.

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