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The main tip you need to remember is for this question you only need 2 from 3 correct. Q3 is one or the other and you will find out the right answer the first time you attempt to answer it.
Therefore you only need to answer one of the number questions correct to proceed.
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 other finance costs as well.
Hi,
I have followed this and still not getting the correct answer.
I get £586k and still not right ….
See in the posts on the previous page https://opentuition.com/topic/problem-in-calculating-outsourcing-cost – there is also a 20% that you are not factoring in to your calculation
Hi Kim,
I had the FQ x 2 at £90k and then 1 PQ at £30k, makes £120k, and £24k (20%) then at the £70 for the HOA for staff cost of £214k…
Thanks for the tip. Spent hours on hours trying to do the insourcing one and this one took me 10/15 min ha!
Hello, Please, was the HOD amount also considered in the 25% increase in payroll 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.
There 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?If 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. 356,00025% 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 salaryYou’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 742.5As 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 beforeThank 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
@NOOOKIE1111 – the answer is in the posts above – try Jamil’s on December 2, 2023 at 5:06 pm
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