• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA Books

Books for Sept'23 ACCA exams : Get your discount code >>

New! Ask ACCA AI Tutor

Post your questions
& get instant answers

Relevant Costing – One off contract – Specimen Question

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Relevant Costing – One off contract – Specimen Question

  • This topic has 1 reply, 2 voices, and was last updated 1 month ago by LMR1006.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • August 20, 2023 at 7:00 am #690279
    Shadow93
    Participant
    • Topics: 1
    • Replies: 0
    • ☆

    Good Afternoon

    Quick question:

    “The wood is regularly used by Hi Life Co and usually costs $8.20 per m2. However, the company’s current supplier’s earliest delivery time for the wood is in three weeks’ time. An alternative supplier could deliver immediately but they would charge $8.50 per m2. Hi Life Co already has 500 m2 in inventory but 480 m2 of this is needed to complete other existing orders in the next two weeks. The remaining 20 m2 is not going to be needed until four weeks’ time.”

    Why the solution suggests that the quote should have “Wood = (30m2 x $8.50) + (20m2 x $8.20) = $419”

    I get the first calculation for the 30m2 to be bought, but why it counts the 20m2 that we already have in stock and multiplies it with the historic (sunk) cost? ($8.20)

    Thank you

    August 20, 2023 at 8:58 am #690315
    LMR1006
    Keymaster
    • Topics: 0
    • Replies: 294
    • ☆☆☆

    Hi Life Co needs to consider the cost of purchasing additional wood from the alternative supplier for the immediate delivery of 30 m2, as well as the cost of using the remaining 20 m2 from their inventory.
    The alternative supplier charges $8.50 per m2 for immediate delivery, so the cost for the 30 m2 would be (30m2 x $8.50) = $255.
    The remaining 20 m2 from their inventory would be valued at the regular cost of $8.20 per m2, so the cost for the 20 m2 would be (20m2 x $8.20) = $164.
    Adding these costs together, the total cost of wood for the quote would be $255 + $164 = $419.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA Qualification syllabus changes for 2023/24

Need verifiable CPD for 2023? 21 units of FREE CPD on offer from ACCA

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

PQ Magazine

Latest comments

  • fruitella on Discounting, Annuities, Perpetuities – ACCA Management Accounting (MA)
  • ukpabi on Marketing – ACCA Strategic Business Leader (SBL)
  • nghja2012 on Inventory – Examples – ACCA Financial Reporting (FR)
  • kelems on Basic group structures – SPLOCI introduction and example – ACCA (SBR) lectures
  • jcosgrove16 on Double Entry Bookkeeping (part a) – ACCA Financial Accounting (FA) lectures

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in