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Ahsan says

in question 6 we reaportion cost from service to production deptt on percentage base but if base given is number of employee then after using algebraic method we multiply it to no. of employee of particular deptt dividing total no of employee. the total no. of employee we take includes srvices deptt employee or not. say from above percentages as no of employee then reaportioning store to production deptt 1. we multiply the calculated store cost to 60 and divide by 90 instead of 100 as total base.

John Moffat says

The object is to apportion all of the costs to the production departments.

The canteen is a service department (and the cost of employing people in the canteen is part of the total cost of the canteen). The canteen is there to feed the workers in the production departments and therefore the cost of the canteen should be apportioned on the basis of the number of production employees.

Ahsan says

thanks

Naomi says

Hi there on qn 6. where did you get 0.995

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

Naomi says

Thank you Sir.

Ruksar says

Hello Sir

I tried both ways and they gave me almost the same answers. However i miss out on your lecture in terms of audio after 14.50min as i can not hear what you are explaining. please check.

Thanks.

John Moffat says

Both ways will give the same answer.

ashiq says

sir,what is the answer for 5th question in test

John Moffat says

The answer is C.

(All the answers are at the back of the free Lecture Notes – see the contents page)

David says

I didnt get the 0.15 x 0.20 at first but the penny has just dropped, and now I understand.

May I ask:

Would you be asked in any of the exams to do the algebraic version for recharging dept’s?

John Moffat says

No. In the exam, if reciprocal apportionment is asked then you will always be able to do it either way – whichever way you prefer.

David says

Ok cheers for that John.

Dhruv says

Hello sir John Moffat, I did not understand in algebraic method that how you got 0.03s & 0.97s.

Thanks for giving us free notes & lectures it really helps us

John Moffat says

Have you looked at the answer at the back of the course notes?

Dhruv says

Sir I have looked at the back of the course notes but still cannot understand

happyfeet says

I am also struggling with this part. I don’t understand how 0.03 becomes 0.97 and the value of S stays the same.

happyfeet says

It’s ok, I have it now! So…

S = 20,000 + 2,250 + 0.03S

Take 0.03 away from both sides so..

0.97S = 22,500

Bonang says

I still don’t understand where the 2250 comes from , can anyone please do the algebraic method of example 6 for me step by step,,,I am totally lost, I have watched this lecture so many times but it is still not clear.

John Moffat says

Have you looked at the answer at the back of the Course Noted? It sets out the steps.

Heba 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 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…