- This topic has 1 reply, 2 voices, and was last updated 10 years ago by
.
- Posts
Hello,
I was Doing The Stay Clean Question Regarding Relevant Costing, but got confused regarding the lost discount solution which was 19,000 while i took put 23,425, i couldnt understand the solution where it was stated that there was gross cost meaning to imply the results in the question were net-off discount, furthermore it stated that the gross cost if TD ceased and others reduced by 5% was 9,500, and on that figure he applied 5% dicount and 3% discount, cant understand logic, shouldnt it have been 5% applied to the gross cost when all products were being produced
The reason is that the prices given in the question are already net of a 5% discount.
This means calculating first what the price would have been without the discount. Then dealing with the loss of TD etc… The new ‘full (gross) price’ is then below the limit for a 5% discount and so the final new price will be after a discount of only 3%.
- You must be logged in to reply to this topic.