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June 25, 2016 at 7:50 pm
Example 2 also asks to summarise in a form suitable for management – I’m guessing that this would be in the format of an Operating Statement?
Do you work through this format somewhere in the next lecture on budgeting?
John Moffat says
June 26, 2016 at 9:31 am
Yes it would be an operating statement and this is dealt with in detail in the lectures on variances.
June 26, 2016 at 11:51 am
I look forward to those lectures then. Thank you 🙂
November 18, 2016 at 5:44 pm
I wanted to ask what is the difference between flexed budget and flexible budget? I know about fixed budget just confused between those two. If you could please clear my doubt
November 19, 2016 at 4:38 am
Its simply a budget prepared in a way that is easy to flex. For example, the variable and fixed expenses are shown separately.
January 21, 2016 at 6:17 pm
i hope u r fine. sir here is not any lecture about master budget and cash budget . plz must tell me about
December 11, 2015 at 9:47 pm
Please I don’t understand where the figures under the flexed budget comes from? My CBE is on the 21st December 2015.
November 12, 2015 at 6:35 pm
Where can I get lectures for cash budgets in deep. It’s there in 2015-16 syllabus.
November 13, 2015 at 8:52 am
They have always been in the syllabus, but you don’t really need more for the exam than being aware what a cash budget is (which is dealt with in the lecture) and a bit of common sense.
If you want more then look at the F5 lectures where there is a worked example, but the chance of getting much if anything in Paper F2 are small.
July 27, 2015 at 10:04 pm
Firstly, thank you for all these lectures which are extremely helpful.
You lost me during the F2 video in which you did exercise on p. 83, example 1d. For the cost of material purchase, you seem to have multiplied wood and varnish by their unit price, $8 and $4 respectively. However, the question is about how much 26 300kg of wood and 14700l of varnish cost. So, surely, we should not be multiplying these quantities by the per unit costs of $8 and $4, but rather by the per kg and litre costs of wood and varnish?
Thank you in advance.
Ps. I tried to post this in ask the tutor but it would not post.
February 14, 2015 at 12:39 pm
Thank you open tuition for your great assistance in lectures and course notes. Since i have the opportunity few weeks ago, i have benefit a lot of ideas that was never known to me before. Thank you once more and bravo to you all.
January 9, 2015 at 7:10 pm
Wow great lecture I understood every thing that was thought . Good job Sir.
December 9, 2014 at 5:09 pm
Great lecture. Was previously worried when I didn’t see the solution to the examples in chapter 15 in the course notes and the definition of the different types of budget. The lectures has addressed my concerns. Thanks
October 21, 2014 at 10:24 pm
I love the lecture. Thanks to you Sir!
Only facing some problems in semi-variable costing methods. Its confusing.
October 11, 2014 at 2:24 pm
Hi, Mr. Moffat. i don’t understand examples four(4) and five(5) of depreciation; sale of non-current assets and revaluation. please, i need a detailed explanation. Thanks.
October 11, 2014 at 3:08 pm
I am sorry but I have no idea which examples you are asking about – depreciation has nothing to do with budgeting in Paper F2.
I suggest that you watch the F3 lectures on deprecation and if you still have problems then ask in the Ask the Tutor forum and not as a comment under a lecture on something completely different.
September 22, 2014 at 7:21 am
The actual SALES revenue is $995000 not 995
September 22, 2014 at 7:24 am
Are you sure the question only says “Find out the total expenditure and volume variances”?
(because that could mean more than one thing)
September 22, 2014 at 11:56 am
yes sir, i am sure it’s on kaplan kit Budgeting chapter page no. 62 and question no. 206.
September 22, 2014 at 12:21 pm
The volume variance is the difference between the original budget profit and the flexed budget profit.
The original budget profit is 120,000. If you flex the budget for sales of 100,000 units, you get a flexed profit of (10,000) (I.e. a loss of 10,000). So the volume variance is 110,000 (adverse)
The expenditure variance is the difference between the flexed budget profit and the actual profit. The flexed profit is a loss of (10,000); the actual profit is 5,000 and so the variance is 15,000 (favourable).
(This question is a bit naughty of Kaplan. Firstly because it should really be in the variances section rather than the budget section, and secondly because ‘expenditure’ variance isn’t really the correct name.)
October 27, 2015 at 3:38 pm
What is the question??
October 27, 2015 at 4:02 pm
The question was in the Kaplan Kit, but it is now over a year since Imran asked and there is a new edition of the kit now.
July 24, 2014 at 11:57 am
Sir, how to work this out?
A company manufactures a single product. Budgeted production for the first three months of next year is as follows :
Month 1 :8k units
Month 2 : 9k units
Month 3 : 7k units
Each unit uses 4kg of raw material costing $5 per kg. The budgeted raw material inventory at the end of each month is to be 20% of the following months production.
What are the budgeted raw material purchases for month 2 of next year (in $’s)?
(answer is $172,000)
July 24, 2014 at 12:07 pm
Opening inventory for month 2 = 20% x 9,000 = 1,800
Closing inventory for month 2 = 20% x 7,000 = 1,400
So production in month 2 = 9,000 + 1,400 – 1,800 = 8,600
So raw materials = 8,600 x 4 a 5 = $172,000
July 24, 2014 at 12:11 pm
Why did you add 1,400 units (c/inventory) to the production of month 2?
July 24, 2014 at 12:13 pm
We sell 9,000. We start with 1800 in inventory, so that means we only need to produce 9000 – 1800. However we would then end up with no inventory at the end, but we want to have 1400 in inventory, so we need to make an additional 1400.
Sales units are always equal to opening inventory + production – closing inventory.
July 24, 2014 at 11:09 am
Sir, i have a question. a company uses flexed budgets. The fixed budget last month was based on 100% activity level and showed material costs of $200k. Last months actual material cost were $120k and showed a favourable variance of $5000 when compared with the flexed budget. What was the actual level of activity last month as a %?
(answer is 62.5%)
p.s i got wrong for this when doing the revision mock exam.
July 24, 2014 at 12:05 pm
If actual costs had a favourable variance then the standard cost for the actual production would be 125,000. Since the original budget was 200,000, the activity level must be 125/200 = 62.5%
March 23, 2014 at 8:57 pm
HI sir there one problem in Flexed budget on Variable overhead side
Variable OH Per unit = $12,500 / 10,000 Units = $2 per unit
if we multiply it by actual level of activity we will get $24,000 for variable overhead in flexed budget
March 23, 2014 at 9:56 pm
12500 / 10000 does not equal $2 !!!
I think the problem is on your side 🙂
November 10, 2013 at 1:03 am
thank u very much once again john
November 8, 2013 at 4:22 am
this was very straightforward…… thank you 🙂
October 14, 2013 at 6:21 pm
A Co. uses Flexed Budgets:The fixed budget last month was baase on 100% Activity level and show material cost of
$200,000. Last month’s actual material cost were compared with the flexed budget and show the follow:
material Actual 120,000 Variance 5000 favourable
What was the actual activity last month as a percentage
October 14, 2013 at 6:24 pm
Because the variance was 5000 favourable, it means that the flexed budget will show materials of 125,000.
The original budget at 200,000, and so the actual activity must have been 125,000/200,000 x 100%
May 21, 2013 at 3:41 pm
Please how did you get the contribution of 12500?
May 12, 2013 at 6:54 am
i feel sorry for you and you might send your students to TIME OUT for not remembering the term CONTRIBUTION………..even i named the term when you asked…………
May 12, 2013 at 10:03 am
I always have to remind people what contribution is 🙂
The term is used in later exams also, and always many people forget what it is!
February 21, 2013 at 1:41 am
I have a question.
QT co. Manufactures a single product and an extract from their flexed budget for production costs is as follows.
Direct material. 2400. 2700
Labour. 2120. 2160
Production o/h. 4060. 4080
What would the total production cost allowance be in a budget flexed at the 83% level of activity?
I keep on getting 7121.4 which is wrong. Any help plz???????
May 12, 2013 at 10:10 am
You need to us high/low because some of the costs are variable and some of the costs are fixed.
The total cost for 80% is 2400 + 2120 + 4060 = 8580
The total cost for 90% is 2700 + 2160 + 4080 = 8940
So, the variable cost for 10% is 8940 – 8580 = 360.
So the variable cost for 3% (83% – 80%) is 3/10 x 360 = 108
So the total cost for 83% is 8580 (the cost for 80%) + 108 (the extra variable cost for the extra 3%) = 8688.
(there is obviously no extra fixed cost for the extra 3%)
December 19, 2012 at 5:54 pm
December 9, 2012 at 4:30 am
Very well explained. Thanks opentuition.com
December 6, 2012 at 3:40 pm
Thanks a million.
November 29, 2012 at 5:15 am
October 11, 2012 at 4:23 pm
feels like a day at the spa…..sipping on some coconut water…………….REJUVENATING!!!!!thx OT!!
September 24, 2012 at 2:21 pm
This is very good. i enjoyed it. God bless this teacher.
July 13, 2012 at 7:25 pm
cannot find video for example 2b, please assist
June 23, 2012 at 2:52 am
thanks, great job!
June 4, 2012 at 1:17 pm
March 26, 2012 at 9:36 pm
cleared up a whole lot of things. very good.
November 17, 2011 at 4:04 pm
I cannot see this lecture. Is this meant to be audio.
January 4, 2012 at 9:18 pm
February 16, 2011 at 6:14 pm
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