Telford Engineering has identified a global business services partner off-shore. The annual cost of outsourcing the accounting function per annum is forecast to be $292,000. The GBS Company will take over the highly systemised and transactional operations
of payables, receivables, payroll and credit control. Long-term asset and treasury and cash management will remain in-house.
Outsourcing would take place immediately following MEXIT (in about one year’s time) and annual outsourcing costs are estimated to remain constant over time. The total cost of making the staff redundant under the outsource option is estimated to be 25%
of their current annual salaries. Outsourcing would mean that 40% of the other non-staff accounting department costs could be saved each year.
The retained skeleton staff, post-outsourcing, will be paid at 20% more than their current salaries.
Note: The remaining staff to be retained under the Outsource Option will be as follows:
Head of Accounting (unchanged salary) + 2 Fully Qualified (FQ) Accountants and one Part Qualified (PQ) Accountant
Had done in several ways but got incorrect answer.
ACCA Ethics & Professional Skills Module
Problem in calculating outsourcing cost
Hi, Could you help with the items considered for the 25% increase? I am actually stuck here and I do not know what to do. thanks in advance.
2y ago#32There are now two pages of posts on this thread, this is the first https://opentuition.com/topic/problem-in-calculating-outsourcing-cost
Based on most recent comments it comes down to careful reading. There is nothing I can add that has not already been commented on.
Thank youuuu!!!! This helped me alotttt... I have been trying this since soo long... Thanks a ton!!!
This is what I did for Q1- OPTION A
-10% rise in salary of post-restructure staff (Head of accounting (unchanged salary) + 2 Fully Qualified (FQ) Accountants + 3 Part Qualified (PQ) Accountants + 4 Accounting Technicians)
-H.A salary is unchanged 70k
-2FQ+3PQ+4AT salaries is (90+90+80) with 10% increase equals a total of 286
-Additional 25% increase becomes 357.5
-Finance cost is 100
-Total is 70+357.5+100= 528 rounded and it is wrong
Can You tell me where is my mistake?
2y ago#35If you read through the posts you should find it - there is another page here https://opentuition.com/topic/problem-in-calculating-outsourcing-cost
Hi Guys,
I did the calculation as follows but it shows incorrect answer. Stuck on this from past few weeks. Please tell me where I am wrong.
Total salaries = ($70,000+(2*49,500) +(3*33,000) +(4*22,000))
i.e. 356,000
25% increase in total payroll cost i.e. 25% of 356,000
Total Payroll Cost=356,000+89,000=445,000
Hi Kim,
I successfully solved Option A. But still stuck with Option B.
May I please ask what am I missing?
- outsource fee - 292 k.
-Redundancy fee - annual salary * 25% - 140 k.
-Other costs - (60 %) - 144 k.
-retained staff cost - 70 k + 108 k (increased by 20%) + 36 k ( increased by 20%) - 214 k.
In total = 790 K. but the answer is wrong. Please please support. Thank you.
# Outsourcing - 292k
# Redundancy - Calculate only for 2 PQ and 4 AT cuz they only have left after the Redundancy surely you'll get your answer
# Amortization and Admin cost (60% 240)
# 20% increased salary members ( only retained )+ HOA unchanged salary
You'll get your answer
HI .
i have worked on option A for days but I still get it wrong .
Any advice or more expiation on how to approach this option A please .
thanks
Hi, I calculated :
a) Redundancy cost 2*30*25% +4*20*25%==> 35
b) outsourcing ==> 292
c) Remaining staff 70+(2*45*120%)+(1*30*120%)==> 214
d) other cost (80+160)*60% ==> 144
total cost 685
however, it doesn't work. where did I go wrong?
hey Kim
I did the calculation as follows (Option B) but it shows incorrect answer. Stuck on this from past few weeks. Please tell me where I am wrong.
1. The annual cost of outsourcing the accounting function = 292
2. The total cost of making the staff redundant under the outsource option= 25%((2FQ)+4(PQ)+8T)
= 25%*370
= 92.5
3. other non-staff accounting department costs= 60%* 240
=144
4. The retained skeleton staff, post-outsourcing= 1.2(45*2)+1.2(30)+70
=214
my Total accounting cost is 742.5
2y ago#42As a tutor, I still don't have access to this final assessment. All I know is that with careful reading, it's possible to calculate the correct answer as testified also on this page https://opentuition.com/topic/problem-in-calculating-outsourcing-cost e.g. who are redundant staff.
And there's probably some rounding instruction.
Answer to option A is as following:
Salaries = Sum of (unchanged salary) + (2 Fully Qualified (FQ) Accountants + 3 Part Qualified (PQ) Accountants + 4 Accounting Technicians )*10%)
Additional cost = Salaries*25%
Amortisation of non-current assets = same as before
Accounting admin costs: materials and variable overheads = same as before
Thank you for this. This question is completely misleading to a lot of us and it was not clear to me initially that the accounting admin costs and amortisation were to be included as well. Now got the answer correct.
HI
I am struggling with EPSM - Unit 8
The equation is Calculate and compare the forecast total accounting costs in the year following MEXIT under the restructured in-house option (A); to assess which option will be most economical for Telford Engineering in the future.
Enter the accountancy department costs for Option A (to the nearest $M'000). For your answer only provide the first three numbers and do not include any symbols, for example, "543".
I have done more them 10calcualtions but clearly i missing information
Can someone help please
Angel
2y ago#46@NOOOKIE1111 - the answer is in the posts above - try Jamil's on December 2, 2023 at 5:06 pm
Thank you KIm
No matter whatever I tried, I couldnt get the right answer for "accountancy department costs quiz".
Very frustrating.
The other problem is I left acca midway for longtime and now continued again with EPSM. Not sure how I get through this quiz.
Can I get some help?
Hi All! I have successfully been able to solve Q1 for Option A after weeks of trying! It was so confusing but I will list the method below to help!
Step 1) Calculate the salaries. Complete the sum of:
Head of Accounts = salary is unchanged
FQ = (2 x FQ cost) * 1.10
PQ = (3 x PQ cost) * 1.10
AT = (4 x AT cost) *1.10
= Total all of the above to get the TOTAL SALARY COST.
Step 2) Calculate 25% of the TOTAL SALARY COST.
Step 3) Sum the below for other costs. Note: these are unchanged so take the amounts as listed.
Amortisation + Accounting admin costs = TOTAL OTHER COSTS.
Step 4) Total everything to get your final answer:
S1) TOTAL SALARY COST X
S2) TOTAL SALARY COST * 25% X
S) TOTAL OTHER COSTS X
TOTAL = ANSWER
Hope this helps you guys! You only need 50% to pass so if you use the above for Q1, leave Q2 blank if you cannot calculate and then Q3 is multiple choice so is straightforward.
Hi,
I am struggling with the accountancy department quiz questions 1 and 2. I have tried almost every suggestion on here and still haven't managed to find the correct answer.
Please can someone help
Thanks
I did not understand your steps. You mentioned "Step 3) Sum the below for other costs. Note: these are unchanged so take the amounts as listed.
Amortisation + Accounting admin costs"
This should be as follows: (10% * 80) + (20%*160)
Furthermore the final calculation:
Step 4) Total everything to get your final answer:
S1) TOTAL SALARY COST X
S2) TOTAL SALARY COST * 25% X
S) TOTAL OTHER COSTS X
TOTAL = ANSWER
do we need to multiply Step 1 * Step 2 * Step 3? Please. Thank you
1y ago#52"Total" means sum/add not multiply.
I am still unable to solve please can you elaborate more?
Everyone that is stuck on the above, you must make sure to include you own costs, 70k in the total salaries. and when multiplying the additional 25% charges. You must also include yourself in those charges
DELETED
Concentrate on A, it is by far easier.
All you need to do is work out the salary costs including increases and additional 25%, no need for redundancy costs as it doesn’t tell you to calculate.
Final tip for A – remember the Breakdown of total accounting department cost also.
If you got the answer please contact me at my mail i need help regarding the quiz of accountancy department cost “unit8”
Mail:
DELETED
Can you please tell me the answer
1y ago#59@Chiggy21 - see here in ACCA's EPSM Regulations and guidelines FAQs:
"You should NOT request for others to provide you with quiz or final assessment answers."
Sign into reply to this topic.