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

Congratulations to Jamil from Pakistan and Jeeva from Malaysia - Global Prize winners!
see all ACCA December 2022 Genius Hunt Competition winners >>

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

working capital

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › working capital

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • February 27, 2021 at 7:54 pm #612028
    adarsh1997
    Participant
    • Topics: 629
    • Replies: 278
    • ☆☆☆☆

    Hello John,

    TNG Co expects annual demand for product X to be 255,380 units. Product X has a selling price of $19 per unit and is purchased for $11 per unit from a supplier; MKR Co. TNG places an order for 50,000 units of product X at regular intervals throughout the year. As the demand for product X is to some degree uncertain, TNG maintains a safety (buffer) inventory of product X which is sufficient to meet demand for 28 working days. The cost of placing an order is $25, and the storage cost for Product X is 10 cents per unit per year. TNG normally pays trade suppliers after 60 days, but MKR has offered a discount of 1% for a cash settlement within 20 days.

    -Determine whether the discount offered by the supplier is financially acceptable to TNG Co.

    1. The answer is as follows:
    Annual credit purchases (255,380 x 11) 2,809,180 0.5
    Current payables (2,809,180 x 60/365) 461,783 0.5
    Payables if discount is taken (2,809,180 x 20/365) 153,928 0.5
    Reduction in payables (461,783 – 153,928) 307,855 0.5
    Finance cost increase (307,855 x 0·08) 24,628 0.5
    Discount gained (2,809,180 x 0·01) 28,091 0.5
    Net benefit of taking discount (28,091 – 24,628) 3,463

    2. My issue is that why the discount was not used to calculate “Payables if discount is taken”
    – The same requirement was asked in another question(Plot CO Dec 13) and discount used to calculate the revised the trade payables.

    Thanks

    February 28, 2021 at 9:21 am #612073
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51573
    • ☆☆☆☆☆

    There is no need to type out past exam questions in full – I have all past exam questions so you only have to give the name and the date of the exam.

    As I explain in my lectures on this, the examiner is not consistent on this – sometimes he brings in the discount and sometimes he does not. However he has said that either will get the full marks (and it never makes a big difference anyway).

  • 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 My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

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

Subscribe to ACCA’s Student Accountant Direct

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..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • Amalsudheesh on FA Chapter 6 Questions Depreciation
  • John Moffat on FA Chapter 6 Questions Depreciation
  • John Moffat on PM Chapter 7 Questions Pricing
  • Amalsudheesh on FA Chapter 6 Questions Depreciation
  • roshpatel on PM Chapter 7 Questions Pricing

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


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy