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Mini Exercises: Cost of sales Question 2

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Mini Exercises: Cost of sales Question 2

  • This topic has 5 replies, 2 voices, and was last updated 10 years ago by MikeLittle.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • March 7, 2015 at 3:02 pm #231619
    Neil
    Member
    • Topics: 1
    • Replies: 8
    • ☆

    Hello,
    I managed to figure out the other two questions in this part, but can’t get this one for the life of me. I simply do not get how you got the balancing figures. Could you please explain this to me, so I don’t rip out all my hair.
    Thanks,
    Neil

    March 7, 2015 at 5:28 pm #231635
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23315
    • ☆☆☆☆☆

    Go back to your school boy days and let “x” equal the value of the opening inventory.

    Take it from there but, if you find that you are still losing your hair, post again

    March 7, 2015 at 9:40 pm #231647
    Neil
    Member
    • Topics: 1
    • Replies: 8
    • ☆

    I still can’t seem to get the figures that are in the answers. The thing that is throwing me is not knowing the opening and closing inventories. I get the profit margin etc and try to work my way back up, but without something besides the purchases using both forms I get something completely different.

    Its been 20 years since school, so very rusty here.

    March 8, 2015 at 1:54 pm #231705
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23315
    • ☆☆☆☆☆

    Let “x” be the value of opening inventory

    Therefore closing inventory is “1.3x”

    Gross profit is 15% x 450,000 = 67,500

    Therefore cost of sales is 382,500

    So, “x” + 400,000 purchases – “1.3x” = 382,500

    400,000 – 382,500 = .3x

    So “x” (opening inventory) is 58,333

    Ok?

    March 8, 2015 at 2:02 pm #231709
    Neil
    Member
    • Topics: 1
    • Replies: 8
    • ☆

    Wow, so obvious. I guess I just let the frustration get the best of me. For some stupid reason I was using percentages.

    Thanks a bunch. I’ll buy you a pint next time you are in London!

    March 8, 2015 at 2:24 pm #231717
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23315
    • ☆☆☆☆☆

    I’ll hold you to that! Pity you didn’t say that before 10th February! I was in London on that day and that was the first time for around 4 years so your money is safe!

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