Hello Sir,
It will be great if you can help me with the below question:
he management accounts for income read as follows:
$m
Revenue 3,500
Cost of sales 1,800
Local administration 250
IT costs 50
Distribution 80
Central administration 30
Interest charges 90
Net profit 1,200
Ignore taxation.
Cal - RI
My question - while calculating controllable profit why do we need to add IT Costs ? Isnt it a necessary cost that may had been incurred ..
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RI
5y ago#1Presumably IT costs are being recharged from a separate IT department which is not controlled by the division.
Sir, isnt it too blur means we just assume this , what if the division is only IT related .. because question doesnt specify anything .
5y ago#3I would expect normally that the question would make it clear.
However the fact that it is show separately from local administration costs suggests that it is not a local cost controlled by the division.
Yeah that makes sense..
Thank you so much for clarifying!
5y ago#5You are welcome :-)
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