choose relevant paper please and post again

a.

Calculate the direct materials price variance. (Do not round your intermediate calculations. Input the amount as positive value. Indicate the effect of variance by selecting “Favorable”, “Unfavorable”, or “None” for no effect (i.e., zero variance). Leave no cell blank – be certain to enter “0″ wherever required. Omit the “$” sign in your response.)

Price variance $

b.

Calculate the direct materials quantity variance. (Input the amount as positive value. Indicate the effect of variance by selecting “Favorable”, “Unfavorable”, or “None” for no effect (i.e., zero variance). Leave no cell blank – be certain to enter “0″ wherever required. Omit the “$” sign in your response.)

Quantity variance $

a.

What is the accounting rate of return? (Round your answer to 2 decimal places.Omit the “%” sign in your response.)

Rate of return %

b.

What is the payback period? (Round your answer to 1 decimal place.)

Payback period years

c.

What is the net present value? (Do not round intermediate calculations. Round “PV Factor” to 4 decimal places. Round your final answer to the nearest dollar amount. Omit the “$” sign in your response.)

Net present value $

d.

What would the net present value be with a 14% hurdle rate? (Do not round intermediate calculations. Round “PV Factor” to 4 decimal places. Round your final answer to the nearest dollar amount. Negative amount should be indicated by a minus sign. Omit the “$” sign in your response.)

Net present value $

e. Based on the NPV calculations, in what range would the equipment’s internal rate of return fall? (Round your answer to 2 decimal places. Omit the “%” sign in your response.)

Internal rate of return %

What he is saying is that rather than use ABC (which allocates all the overheads between the different products) we should just consider the extra costs that will be incurred. Provided the revenue is more than the extra costs we will incur then he is saying that it will be worth doing.

If this were just one special job, then there would be a good case for this. However, in the longer term, we do have to cover all the overheads somehow and if we do not allocate some to this product then we would have to increase the prices of the other products (which would not doubt mean that we would sell fewer of them).

I have been provided with this examination Pre-seen material below.

I’ve figured out the areas that are most likely going to be tested are, ABC vs Traditional, ROI & RI and transfer pricing, however I was wondering if I’ve missed any major hints or clues from this pre-seen and was hoping you could make any suggestions? e.g. exam papers with similar questions etc

Lastly I wanted to ask about the “the marketing directors” argument (question below) with regards to a custom order, I know that incremental means extra, but do you know if this is just random information or are there questions on working out incremental costs within ABC or seperately because I dont have any knowledge on incremental costs.

Sorry for large amount of information but I really need help as my exam is in just over a week.

I would really appreciate ANY help.

Regards

Rockford, a division of the Cannon Group, assembles three types of motorcycle at the same factory: the 50cc City; the 250cc Tourer and the 1000cc Lightning. It sells the motorcycles throughout the world. In response to market pressures Rockford has invested heavily in new manufacturing technology in recent years and, as a result, has significantly reduced the size of its workforce.

The business is organised around 4 key departments:

• Production
• Marketing and sales,
• Finance
• Human Resources

Each department is headed up by its own director who reports to the Chairman as part of the Executive Management Team (EMT). The EMT meet annually to review the previous year’s performance and to plan strategy for the following year. Regular monthly review meetings are held between the departments with the Finance Department contributing to executive decision making through production of reports covering key financial indicators namely, production costs and overheads, sales broken down by product, and profit. These reports are comprehensive and cover a broad spectrum of financial indicators including key ratios covering profitability, gearing, and liquidity.

Consistent with this traditional approach to management accounting, the company has allocated all overhead costs using total direct labour hours, but is now considering introducing Activity Based Costing (ABC). Rockford’s accountant has produced the following analysis.

The three cost drivers that generate overheads are:

Deliveries to retailers — the number of deliveries of motorcycles to retail showrooms
Set-ups — the number of times the assembly line process is re-set to
accommodate a production run of a different type of motorcycle
Purchase orders — the number of purchase orders.

The annual cost driver volumes relating to each activity and for each type of motorcycle are as follows:

At a board meeting there was some concern over the introduction of activity based costing.

The finance director argued: ‘I very much doubt whether selling the Lightning is viable but I am not convinced that activity based costing would tell us any more than the use of labour hours in assessing the viability of each product.’

The marketing director argued: ‘I am in the process of negotiating a major new contract with a motorcycle rental company for the City model. For such a big order they will not pay our normal prices but we need to at least cover our incremental costs. I am not convinced that activity based costing would achieve this as it merely averages costs for our entire production’.

The managing director argued: ‘I believe that activity based costing would be an improvement but it still has its problems. For instance if we carry out an activity many times surely we get better at it and costs fall rather than remain constant. Similarly, some costs are fixed and do not vary either with labour hours or any other cost driver.’

The chairman argued: ‘I cannot see the problem. The overall profit for the company is the same no matter which method of allocating overheads we use. It seems to make no difference to me.’

Case Study – Cannon Group

Part B

The Columbo Division of Cannon manufacture and supply motorcycle engines as intermediate product which form a vital part of the supply for Rockford’s motorcycle assembly. A transfer pricing system is in operation between the two divisions.

Columbo currently has capital employed of £1,000,000 and earns an annual profit after depreciation of £180,000. The Divisional manager is considering an investment of £100,000 in machinery and equipment which will have a ten year life with no residual value and will earn a constant annual profit after depreciation of £16,000. The cost of capital is 15%.

I started ACCA this year so far I worked mainly in the pulblic sector, that is administration as a civil servant. For almost 5 years in the ministry of finance and currently in the ministry of economy, dealing with request for funds, irregularity reporting, audit monitoring and control for EU funds programs.
I started ACCA in the hope that it will help me gain the financial knowledge and qualifications to be able to work in the private sector and I would really want a job as an auditor in one of the BIG 4. The problem I am facing is that they hire either experinced persons mostly with a BIG 4 background or freshgraduates as juniors. I am neither of the two I graduated 10 years ago, I wouldn’t mind at all starting as a junior, but I believe I would be disquallified due to my age.
What do you think I should do?
Thank you.

Traditional management accounting concentrates mainly on what is happening within the company, whereas strategic management accounting focuses much more on external factors (measuring performance – the balanced scorecard etc – it one part of this).

In ACCA exams, Paper F5 is mainly traditional management accounting, whereas Paper P5 is more strategic, so it might be worth your while looking at a few recent ACCA Paper P5 exams to see the sort of questions (you can find them on the ACCA website).

This article might help a little bit:
http://www2.accaglobal.com/archive/sa_oldarticles/43981

I want to be clear on the post you made as I am a bit confused at the moment. You mention ‘due to my less paper completed I’m rejected from audit firms’, was this meant to say ‘last paper?’

Are you or have you been a full time student and now you are looking for work in order to earn a salary and gain relevant experience for your PER?
Have you applied for numerous positions at audit firms and been told the only reason you would not be considered is because you failed your last papar?
Have you ever worked in accountancy (audit firm or other) but been released due to failure to pass an exam(s)?
If you can provide further background it will help in responding to you in a meaningful way.

I have not responded on ‘working abroad’ because it is better to understand your current position first, why in your own country you are unable to progress and you think it requires you to go abroad.

If you can respond to the above then over then next few days I or another mentor, Andrew, will give you further input.
Regards
Nigel

About three weeks ago you wrote the following

“I have been in the wood for a while not knowing what to do concerning my career path. I have written and passed papers f1-f5. and now doing f6(uk) and F8(int) for the dec sitting. I do self studies for financial reasons.I have wriiten and failed F6 two times ( 28% and 40% respectively) and [...]“

Andrew and I, two of the career mentors, tried to access the post but we always received a blank page. Was the above post going on to ask a career related question or was it more of a study type question?

Please repost if you have an outstanding career question.

Regards
Nigel