Comments

  1. avatar says

    Dear Sir,

    Need your help on BPP revision kit – 3Z Co page 4,

    Could you please assist by clearing the question. I don’t get the calculation for (I) current system and how they calculate the delivery cost. please help.

    these questions are so hard and mostly I can’t understand how to apply the calculation, I wish if we had some revision lectures (past paper), conducted by you.

    Thank you.

  2. avatar says

    hi John, please could explain to me using the ABC method why we did not absorb the overheard cost per unit of each product to each labour hours as we did with absorption costing . eg
    cost card, using ABC

    Overheads. A B C
    3,90*2 3,79*1hr 8,63*1hr
    thanks

    • Avatar of John Moffat says

      The whole point of ABC is that it is not labour hours that ’cause’ most of the overheads.

      Also, what would be the point of working out a cost per hour for each product? It is the cost per unit that we need :-)

  3. avatar says

    thank you so much John ,your lectures have been of great help to me i do my studies online by watching your lectures and reading your lectures. as such i past all my three paper, F1;F2 and F3 2013:. i am looking forward o F5 and F4 NOW
    Thanks alot. God bless you

  4. avatar says

    Dear sir, I just completed the first chapter using your notes and lectures and understood it really well :). The way I’m self sutdying is learn one topic and work as many questions possible on that topic. So after completing the lectures on this chapter I was planning to work out the practice questions found at the end of the course notes and also from the revision notes. I also have a BPP revision kit and will work out all the questions of ABC and Absorption costing as I’m assuming the two must be worked out together(coz both are discussed in this chapter). However in F2, I remember there was marginal costing as well and on my bpp F5 kit, I’m finding there are questions on MC as well, so should I work them while i’m still dealing with ABC and Absorption costing or should I work them out later, maybe they go better with a later chapter in the notes?

    Thank you.

  5. avatar says

    this was a good lecture…..i wonder if this is enough for one to pass the exam. can i rely only on this lecture and course notes with out reading the study and revision kit to pass my exams?

    • Avatar of John Moffat says

      There is enough knowledge in the lectures and course notes to be able to pass the exam well – best is to use the study text just as a reference book for any areas you are not so sure about.

      However it is vital to practice as many questions as possible to get used to the wording, the level of difficulty, and the time pressure. At the very least it means working through all the past questions. Best is to use a revision/exam kit because they have more questions.

  6. avatar says

    Can somebody clarifies to me please the explanation he mentioned when he refereed the advantage number 2 to the question. i honestly couldn’t get the relation ship between the setup and labours in reducing the cost. I was lost:(

    • Avatar of John Moffat says

      In the example used, we are setting up the machines a total of 25 times.

      The reason we need to set up the machines so many times is because we are producing the units in batches. (So for example, we are producing 20,000 units of product A and we are setting-up the machines 10 times, which must mean that each time we produce product A we are producing 20,000 / 10 = 2,000 units each time)

      If we could change, and decide to produce (say) 4,000 units each time, then we would only need to set-up the machines 20000/4000 = 5 times.

      If as a result we could reduce the number of set-ups needed, then maybe we could operate with fewer workers (we need people to do the setting-up). If we can operate with fewer workers setting up then we could save money.

      Activity based costing makes us find out what is causing the costs (i.e. why are we spending $90,000 on set-up costs). Having found out that it is because of the number of set-ups we are having we can then consider ways of reducing the number of set-ups (by making bigger batches each time) and then hopefully save money.

  7. avatar says

    Could someone please explain the calculations to arrive at the table below found on paper F5 pilot paper answer sheet question one part C

    Products D and C are relatively minor volume products but still require a fair amount of administrative time by the production
    department; ie they involve a fair amount of `hassle`. This is explained by the following table of `activities per 1,000 units
    produced`.

    Set-ups Materials Inspections movements
    D 100 16 200
    C 92 17 144
    P 69 12 96
    This table highlights the problem.
    – Product P has fewer set-ups, material movements and inspections per 1,000 units than or C
    – As a consequence product P’s overhead cost per unit for these three elements has fallen
    – The machining overhead cost per unit for P is still two or three times greater than for products D or C, but because this
    overhead only accounts for 20% of the total overhead this has a small effect on total cost.
    – The overall result is P’s fall in production overhead cost per unit and the rise in those figures for D and C

  8. avatar says

    Please Sir I need your help……
    Thank you for wonderful lecture…. I try to solve ABC examples. I found in this year pilot paper from ACCA web site, Question-1 for ABC costing and that question is for 25 marks. Only four question in pilot paper. I have idea, in exam 5 question and each for 20 marks. Please Sir can you tell me is there any changes in exam format? or This changes for pilot paper only.
    Thanks

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