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Heba Naeem says

Hello sir!

Thankyou for your lectures.i have a doubt in algebraic method

For eg: the last question 6

S=6300+0.05M

M=8450+0.10S

S=6300+0.05(8450+0.10S)

S=6300+423+0.005S

0.995S =6723

Where did this figure 0.995S come from??

rest everything is fine but could you please explain that bit.

John Moffat says

S = 6300 + 423 + 0.005S

If you subtract 0.005S from both sides, then on the left hand side S – 0.005S = 0.995S

Heba Naeem says

Thanks

dosan says

Thank you so much. I became super clear..

I have last question)))

A company has a budgeted labor cost of 180 000 dollar for the production 30 000 units per month. Each unit is budgeted to take 3 hours of labor. The actual labour cost during the month was 160 000 dollar for 28 000 units and 85 000 hours were worked.

What is the labour efficiency variance?.

John Moffat says

Have you watched all the lectures? This question relates to the chapter and lecture on variance analysis, and so please do not post it under a lecture on accounting for overheads.

You should post the question in the F2 Ask the Tutor forum (after you have watched the lecture on variance analysis).

dosan says

Hi John

Can u help me with this question? The answer is 8 (from mock exam). can not fih=gure out somehow. Thanks

A company produces 2 products P and Q that are both worked in 2 departments of 1 and 2.

Each unit of P spends 1 hour in department 1 and 2 hours in department 2

Each unit of Q spends 2 hours in department 1 and 2 hours in department 2

The total budgeted production of P is 5000 units and Q is 10 000 units.

The total budgeted overheads are 50 000 US dollar for department 1 and 90 000 US dollar for department 2

What is the overhead per unit of P?

John Moffat says

Hi Dosan

Have a look at my answer to the question below – it is exactly the same approach

Imran says

Sir, could please explain the 4th test question of chapter 7,

it’s really confusing..

A company manufactures two products L and M in a factory divided into two cost centres, X and Y. The fol- lowing budgeted data are available: Cost centre X Y Allocated and apportioned fixed overhead

__________________________________X___________Y_______________________

costs____________________________$88,000 $96,000_____________________

Direct labour hours P.u: Product L___ 3·0________ 1·0___________________________

___________________Product M___2·5 _________2·0__________________________

Budgeted output is 8,000 units of each product. Fixed overhead costs are absorbed on a direct labour hour basis.

What is the budgeted fixed overhead cost per unit for Product M?

John Moffat says

First you have to calculate the absorption rate for each department separately.

For department X, the total overheads are $88,000.

The total hours worked are 8,000 x 3.0 (for product L) and 8,000 x 2.5 (for product M). That comes to a total of 44,000 hours.

So for department X, the absorption rate is 88,000/44,0000 = $2 per hour.

You can do the same exercise for department Y, and you should get $4 per hour.

To get the cost for product M, it will be 2.5 hours in X at $2 per hour, plus 2.0 hours in Y at $4 per hour.

Imran says

thank you sir.

John Moffat says

You are welcome

Munazza says

This was the great lecture…but some comments make me confused…

Your explanation is better than live…

Thanks alott…