TSSM 07

[aposta28]

Theres a q in TSSM 07 which im confused about:

1.3 Invoice price
$100 per unit cartage inwards 10% of invoice price
Modification costs $5
Stock insurance $240 p.a (whilst in store)

On september 1, Eddie purchased 20 of these phones, and by the end of the month 12 of the items had been sold for 250 dollars plus 25 GST each

1.3.1 Calculate the cost of each:

 Obviously 100+10+5= 115

However this question below confuses me
1.3.2 Calculate COGS for the month:
I put down.

$12x250 (sales) = 3000
12x115 (cost of sales) = 1380
Insurance 240/12= 20 So gross profit = 1600

However,
In the solutions it says
20 x 250= 5000
20x 115= 2300
240/12= 20 Gross profit= 2680

Why is this the case for? :S


Only 12 have been sold out of the 20, so why do they have it they sold 20 for? Thank

[eeps]

I think the solutions are wrong. I think COGS should be:

= (12*115) [Cost of Sales] + 240 [period cost] = $1,620.

I would have thought that the Stock Insurance is treated as period cost - as it can't logically be allocated to each individual item of stock (anything that is per annum etc is a period cost) and also it isn't included in the cost of the stock. I don't know why you would then divide it by 12. =S - I think that's an error on TSSM's behalf.

Also the solutions are also wrong in that it should be 12x250 not 20x250 (as you already had).

By my calculations, Gross Profit should equal: $1,380.

[aposta28]

Thanks EPL.11.4ever

I thought it was an error, but also AS soon as i post this, I knew, oh shit, insurance is a period cost, and its to do with the store not stock!

Thanks

Good Luck for Thursday, You seem to be working hard, i hope you get your 40.
I am also in the same situation, getting 77/90 in Mid Year, so pushing very hard to crack the 40!

[eeps]

LOL no probs! =)

Good Luck to you too! I know what you mean... being 1 mark off A+ (sorry if I reminded you! =P)

BEST OF LUCK.

[aposta28]

I was shattered, it was the worst, Its still high but not what i was looking for

BTW, how many practice papers you done?

[eeps]

I think I've done about 25/26 exams.

[aposta28]

Thats a solid effort!

EPL, i asked my teacher about this before i posted up here
and she just replied then
Apparently, The insurance is 240/12. as its 240 p.a
Because, the question asks COGS for the MONTH

So therefore it is
1380+20=1400
Is the Cost of goods sold

[JinXi]

Thats a solid effort!

EPL, i asked my teacher about this before i posted up here
and she just replied then
Apparently, The insurance is 240/12. as its 240 p.a
Because, the question asks COGS for the MONTH

So therefore it is
1380+20=1400
Is the Cost of goods sold

Yeah 1400 is the correct answer. Checked this with my teacher as well. But seriously EPL you did 25+ papers? I'm officially dead then, only done 3 papers omg...

[mmmmm]

Thats a solid effort!

EPL, i asked my teacher about this before i posted up here
and she just replied then
Apparently, The insurance is 240/12. as its 240 p.a
Because, the question asks COGS for the MONTH

So therefore it is
1380+20=1400
Is the Cost of goods sold

Yeah 1400 is the correct answer. Checked this with my teacher as well. But seriously EPL you did 25+ papers? I'm officially dead then, only done 3 papers omg...

:O You got 174/180 for mid years? That is amazing! Well done

[eeps]

Thats a solid effort!

EPL, i asked my teacher about this before i posted up here
and she just replied then
Apparently, The insurance is 240/12. as its 240 p.a
Because, the question asks COGS for the MONTH

So therefore it is
1380+20=1400
Is the Cost of goods sold

Oh right! Yeah, I see what you mean. =)

Yeah 1400 is the correct answer. Checked this with my teacher as well. But seriously EPL you did 25+ papers? I'm officially dead then, only done 3 papers omg...

LOL no bull. I actually did 25~26 practice papers! =P Don't worry, if you're good enough to get 174/180 for the mid-year exam, you'll do well on Thursday. =P