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Math Help - accounting basic math

  1. #1
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    accounting basic math

    I am having trouble with the following:

    Yearly Income (000)

    Year 1:
    Turnover: 51,000
    Cost of Sales: -33,000
    Overheads: -7815
    Exceptional Costs: -45
    Other Income: 180
    Earnings before Income Tax: 10,320

    Year 2:
    Turnover: 52,500
    Cost of Sales: -35,310
    Overheads: -8,128
    Exceptional Costs: -38
    Other Income: 600
    Earnings before Income Tax: 9,624


    Q1) If cost of sales, overheads, other income and earnings before income tax changed between year 0 to year 1 at the same rates as from year 1 to year 2, and if there were no exceptional costs in year 0, what was the turnover in year 0 in millions?

    ANS: 41.5, 49.5, 49.9, 51.2 or 63.1

    Q2) Other income is expected to drop by 70% in Year 3 and exceptional costs are predicted to double. IF turnover changes as from Y1 to Y2, and cost of sales and overheads remain as for Y2, what will the % change be from Y1 to Y3 in earnings before income tax?

    ANS: fall 55%, fall 17%, fall 7.2%, rise 3.8% or rise 11.3%



    The problem I am facing is calculating turnover in the first place!

    Your help will be most appreciated!
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  2. #2
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    Quote Originally Posted by csking01 View Post
    I am having trouble with the following:

    Yearly Income (000)

    Year 1:
    Turnover: 51,000
    Cost of Sales: -33,000
    Overheads: -7815
    Exceptional Costs: -45
    Other Income: 180
    Earnings before Income Tax: 10,320
    "Earnings before Income Tax" is the sum of all those things so to find just "turnover", subtract all the others from "Earnings before Income Tax":
    10320- 180-(-45)-(-7815)-(-33000)= 51000.

    Year 2:
    Turnover: 52,500
    Cost of Sales: -35,310
    Overheads: -8,128
    Exceptional Costs: -38
    Other Income: 600
    Earnings before Income Tax: 9,624


    Q1) If cost of sales, overheads, other income and earnings before income tax changed between year 0 to year 1 at the same rates as from year 1 to year 2, and if there were no exceptional costs in year 0, what was the turnover in year 0 in millions?
    Just "back up" each of those things. "cost of sales" went from -33000 to -35310, a rate of -35310/-33000= 1.07. "Year 0" cost, C0, must satisfy -33000/C0= 1.07: 1.07C0= -33000 so C0= -33000/1.07= -30,841. Do the same with each of the other things and calculate the "turnover" as above.

    ANS: 41.5, 49.5, 49.9, 51.2 or 63.1
    Why do you give 5 different numbers here when the problem only asked for one?

    Q2) Other income is expected to drop by 70% in Year 3 and exceptional costs are predicted to double. IF turnover changes as from Y1 to Y2, and cost of sales and overheads remain as for Y2, what will the % change be from Y1 to Y3 in earnings before income tax?

    ANS: fall 55%, fall 17%, fall 7.2%, rise 3.8% or rise 11.3%



    The problem I am facing is calculating turnover in the first place!

    Your help will be most appreciated!
    Last edited by HallsofIvy; November 21st 2009 at 06:45 AM.
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  3. #3
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    o sorry for the confusion,

    The answer is one of the following 5 given there.. i don't know what it is i thought I would give them to you also..

    Its Multiple choice question and the answer is one of the 5
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