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Is it possible for you to explain the Sec C sum 327 from the exam kit of Kaplan?
I do not have the Kaplan Kit (only the BPP Revision Kit). If the question is labelled as being from a past real exam then tell me the name of the question and which exam – then I will be able to find it because I do have all the past exam questions.
It’s from JUNE 2018, the Portable garage Co.
Could you explain the (b) part of the question?
Also from September/December 2017 Sports Co
Could you explain the calculation of controllable profit as to why have we included depreciation and the head office cost?
The most B will be prepared to pay for adaptors is $13 because this is what they cost if bought externally.
A is better selling externally for $15 than selling to B for only $13.
However the external demand is 200,000 but A is capable of producing 350,000. A will therefore sell 200,000 externally. The remaining 150,000 they will be prepared to sell to B at a price they both agree on (which must be less that $13). B will then buy 150,000 from A and buy the remaining 30,000 (because the demand for the batteries is 180,000) externally.