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Greetings sir,
Hope you are well and back safely,I had some doubts from my practice of the Revision Kit recently and hoped you could remove my difficulties.
Mistletoe Co Q.215, Pg 71
Could you please elaborate on the answer and each of the false options – the purpose of their existence and why they are wrong for the selection in this particular question ? And does probabilistic budgeting elude to Expected Values Weighted Average ?Cam Co Pg 26
Q.82 Explain nicely why we couldn’t calculate target cost as $200/135×100 = $148.15
My mind was thinking – $200 is the sales price and not cost , so it will be equal to 135%Q.84 I got my answer as $10.75 different from the answer at the back $10.98. Would my answer be deemed correct ? If not, then please elaborate on the critical error.
Here are my workings:
(45/60) x 100^-0.152 = 0.3724 avg hrs /unit x 100 units = 37.24hrs in total
(45/60) x 99^-0.152 = 0.3730 avg hrs / unit x 99 units = 36.93 hrs
Time for 100th unit = 37.24hrs -36.96hrs = 0.31hrs
Avg labour cost per unit = 0.31hrs x $34.67
= $10.75Appreciated,
Thankyou.
Mistletoe:
Probabilistic budgeting does refer to the use of the expected values. Neither zero-base budgeted nor activity-based budgeting take any account of the uncertainty.
Cam Co:
Profit margin is the profit as a % of the selling price.
(It it was a % of the cost then it would be referred to as a mark-up.)Q48
Yes, your answer would be given as correct. The difference is due to roundings which is not a problem.
Mistletoe:
So what do zero based budgeting and activity based budgeting take account of ?
Cam Co:
Q82)
So selling price = 100% it means.Q48)
Thankyou very much sir.Mistletoe: They don’t take account of anything. They are different approached to budgeting.
Q82: If you want to think of it that way, then yes.
Q48: You are welcome.
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