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March/june 2020 Hammock Co

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › March/june 2020 Hammock Co

  • This topic has 3 replies, 2 voices, and was last updated 4 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • February 11, 2021 at 1:36 pm #610040
    kennigara
    Participant
    • Topics: 193
    • Replies: 250
    • ☆☆☆

    Hi Dear Tutor, I have some questions

    The weekly revenue per guest is $2000 in the 20×7 budgetm the 20×7 actual results and the 20×6 actual results which is not line with inflation

    20×7 budget=4000000/2000=2000
    20×7 actual results=3920000/1960=2000
    20×6 reulst=3880000/1940=2000

    It appears that revenue per guest has not been adjusted for inflation so showing in real term not in nominal term so i understood here

    However all staff costs have increased by 2% which is caused by inflation

    maintenance from 20×6 to 20×7 (480000-470588)/470588=2% which is the result of inflation
    service from 20×6 to 20×7=(960000-941176)/941176=2% which is the result of inflation

    it appears that increase from one year to another year is the outcome of inflation which is also understandable

    Coming to repairs I faced some problems in understanding

    The repair costs allowing for inflation have been set at the same level as 20×6

    Repair costs 196078 in 20×6 and 160000 in 20×7 actual results and 20000 budget in 20×7. Despite there is decrease in repair costs has its inflation been included in the amount of 20×7 repair cost?

    February 11, 2021 at 4:19 pm #610066
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54670
    • ☆☆☆☆☆

    The terms nominal and real have no relevance at all in Paper PM – they are not relevant until Paper PM!!!

    The figures given in the question are the amounts that actually happened.

    The general rate of inflation is 2%. Do you really think that means that all companies will automatically increase their price by 2% a year? They might increase them by more or they might increase them by less.

    The relevance is only for the discussion part of the question – have prices gone up by more or less than inflation.

    February 11, 2021 at 8:09 pm #610085
    kennigara
    Participant
    • Topics: 193
    • Replies: 250
    • ☆☆☆

    Dear Tutor I am not saying real and nominal terms are part of the PM.

    if the price is stable and unchanged in the given years meaning that the revenue per guest has not been increased as inflation did?

    from my calculation showing that the percentage rose in those categories were in line with the inflation, then is it?

    The repair costs allowing for inflation have been set at the same level as 20X6-how it has been determined the same as 20X6 since the actual result in 20X7 is 160000$ and budget figure in 20X7 is 200000$ ?Well i understood the figure in the question underwent inflation but from which yardstick it says it set at the same level as 20X6?

    February 12, 2021 at 7:13 am #610102
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54670
    • ☆☆☆☆☆

    But it was you who mentioned real terms and nominal terms in your question, and they are meaningless for Paper PM.

    If the price has been unchanged then they have not inflated the prices,

    You are told the actual results for 20X6 and 20Xy and your job is to discuss whether or not they are achieving their objectives,
    One factor you will mention in your answer is whether revenues and costs have increased by more or less than the general rate of inflation, but the marks are for the discussion – they are very few marks for calculations.

    Read the examiners answer to see the sort of discussion that was required.

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘March/june 2020 Hammock Co’ is closed to new replies.

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