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Thank you so much for simplifying this topic for me. The text I have gives a formula for each of the budgets with no meaningful link between, so that it’s almost impossible to remember. You’ve taught the topic in such a way that it is not necessary to learn yet more formulas.
John Moffat says
Thank you for your comment 🙂
Hello Sir, I just wanted to know whether we’ll be asked to prepare a cash budget and master budget in the exams…(or is it just functional budgets) This is the only confusion i got while reading the bpp text.. My exam is next week!
Great lectures! Thank you for making it easier for us…?
You could be asked for extracts from a cash budget. As far as the master budget is concerned, it is enough to know what it is.
(and thank you for the comment 🙂 )
I got lost between BPP, LBS & Opentuition. I guess that I will put my faith and efforts on opentuition only :).
Our lectures cover everything needed to be able to pass the exam well. Just make sure that you buy a Revision Kit from one of the ACCA approved publishers, because they contain lots of exam standard question for practice, and practice is vital to passing the exam.
Sir How do i prepare for F2 theory ? the problem i face is theory, MCQS like statements ? examiner is testing more theory in this paper than calculation? please avise
Dear Mr. Moffat, the previous format was more appealing where you had been teaching to a group of students in a class room. Further, it act as a two way communication.
However, I thank you for your valuable service, and I am understanding concepts and also solving problem from the Revision Kit. Your hints and tips are highly appreciated.
Thank you for your comments 🙂
I have to disagree with AK. I much prefer this format 🙂
Great work either way.
Thank you 🙂
i do not quite understand where you got the figures for decrease i n inventory under part D materials used. Can you please explain it to me?
The question tells you what the opening and closing figures are for the inventory of Wood and of Varnish.
The decrease is simply the difference between the opening and closing inventories.
(I assume that you have printed out the lecture notes that are used with these lectures?)
Thanks Mr. John Moffat.. I want to ask you a question, so how do you see?
How do I see what??
I mean you wrote in the open tuition web a question without answer.. So I need its solution
Who wrote a question without an answer? Don’t be silly.
I work through the answer in the lecture, and if you look at the contents page of the lecture notes you will see that the answers are printed in the notes.
Investment appraisal is capital investment budget Other Budgets are Functional, sales, production, Inventory, usage material , and purchase material budgets cash, balance sheet, income statement and capital investment budgets and cash flow budgets are not functional but they are the master budgets ! am I RIGHT?
Sir i would like to know where can we find the ans for the example questions given in your lecture notes ?
Try looking on the contents page! The answers to both the examples and the test questions are printed at the end of the lecture notes.
(Also almost all the examples are worked through and explained in the lectures – you should not use the lecture notes on their own).
Thank you once again for a great lecture.
You are welcome 🙂
What about Master Budgets. Are there no lectures on Master Budgets? And is master budgets important in exams point of view?
Why do you not watch all the lectures??
There is not much point in picking one at random – if you watch our lectures in order then they form a complete classroom course covering the whole of what is needed to pass Paper F2 (provided, obviously, that you have the free Lectures Notes in front of you while you watch).
If you watch the first budgeting lecture (the introduction to budgeting) then you will find I explain what is meant by the master budget.
You cannot be asked to prepare a master budget – you can only be asked what it is and what budgets it is likely to include.
Thank you for your reply. Yes I do watch your lectures in order but I wasn’t sure if it is required to prepare a master budget in exam.
Thank you for clearing my doubt 🙂
Hey good day’
A little lost with (d), how did you get the 3000 and 1000 for inventory?
3,000 and 1,000 are the changes in the inventory.
According to the question (in the Lecture Notes) the opening inventory of wood is 21,000 kg and the closing inventory is 18,000 kg. Since the inventory fell by 3,000 it means that 3,000 of the usage came from inventory and only the remainder needed to be purchased.
Great. I was wondering the same thing. Perfect.
One of the great lecture….Thanks for your support…I wish i could attend any of your lectures.
Hi I couldn’t understood how inventory increase by 100,200,100????
I am away from home until tomorrow and so I will answer you then. Please ask this question in the F2 Ask the Tutor Forum so that I do not forget 🙂
They sell an equal number of each product. Selling 1 of each of them give total revenue of 100+200 = 300.
So to get revenue of 900,000, then need to sell 900,000/300 = 3,000 units of each.
(In future, please ask questions in the F2 Ask the ACCA Tutor Forum – not here. This is for comments on the lecture. 🙂 )
A company makes two products – A and B . The products are sold in the ratio 1:1 . Planned selling prices are $100 and $200 per unit respectively . The company needs to earn $900,000 revenue in the coming year. Required: Prepare the sales budget for the coming year Sir i need help in this
Hi sir Please look at this question CA Co manufactures a single product and has drawn up the following flexed budget for the year. 60% 70% 80% $ $ $ Direct materials 120 000 140 000 160 000 Direct labour 90 000 90 000 120 000 Production overhead 54 000 58 000 62 000 Other overhead 40 000 40 000 40 000 Total cost 304 000 343 000 382 000
What would be the total cost in a budget that is flexed at the 77% level of activity.
The answer states:
Direct material cost per 1% activity level = $2000 Direct labour cost per 1% activity level = $1500
production overhead at 60% $54000 at 80% ($62000) Difference $8000
Variable cost per activity change 1% change in activity = $8000/20 = $400
Substituting in 80% activity $ Variable cost = 80 * 400 32 000 Total cost 62 000 fixed cost 30 000
Budget flexed at 77% $000 Direct material 77 * $2000 154.0 Direct labour 77 * $1500 115.5 Prod. O/head: Variable 77 * $400 30.8 Fixed 30.0 other o/head 40.0 Total 370.3
My question is how do you explain the $2000 and $1500 for direct material and direct labour respectively and is there is shorter way that the answer could be arrived at given time constraints in an exam.
Since at 60%, the materials are $120,000 then at 1% they must be 120,000/60 = $2,000. (It’s the same for 70% and 80% since it is a variable cost. Same for labour – since 60% is $90,000 then 1% is 90,000/60 = $1,500.
No – there is not a quicker way.
r rupalia says
Like the video with the lecture.
Great lectures, really helpful.
Hi Sir John, Can you please tell me why did you add 100 increase in inventory, while making a production budget? In the question it says inventory for finished good (which im assuming is ready to sell) so then why would we need to take this under production budget if it has already been produced and is under finished goods heading?
I assume that you are meaning about Product X.
500 inventory have already been produced (the opening inventory) but we are budgeting on the inventory increasing to 600 by the end of the year (the closing inventory). So……in addition to producing the 2000 that we intend to sell, we also need to produce an extra 100 in order for the inventory to increase.
(Or, if it more obvious for you – for the 2000 we budget on selling, 500 are already in inventory and so we only need to produce 1500. But that would mean there would be no inventory left at the end of the year. So we also need to produce another 600 in order to have the closing inventory – total production is again 2100)
Its very kind of you for such a prompt reply. Your explanation has cleared my doubt.
Thanks a million. Ali
formula to b use sales+cl.inve-open.inve=2100
Sir, Where can I find the lectures for Capital budgeting and Standard Costing? Thank you.
Capital budgeting is chapter 21 of the course notes. Standard costing is the very first bit of chapter 22 (the important part is variances). There are lectures to go with both chapters.
i cant find the lectures of capital budgeting?
I have already written above – it is chapter 21 of the course notes (and chapter 20 is an introduction to it). There are lectures on both chapters.
Capital budgeting is not preparing budgets – it is appraising capital investments.
yes, Thankyou verymuch.
My ACCA students now have to buy very expensive lectures to study but seems do not know that good things are not always cost. I love opentuition! I love this teacher!
This was really helpful. Thank You so much.
please, can closing inventories of finished goods be lower than the opening? If so how will the production budget be?
@jnyameboame, Yes – closing inventories can be lower than opening inventory. In that case the production units will be lower than the sales units.
It makes budgeting easy to understand.
things make sense for the first time in life!
well, this video is not working from midway through
Wait for lecture to fully load before you press play
opentution is not so best for exam preperation some lectures and topics are missing!
Miss A.. says
@FREE ACCA, strongly disagreed………….
& appreciate that if not 100% lectures are there 70% to 80% are available..& most of all they are free ……..you should be thankful towards them.
this videox not workn
i dont see anything just voice. is something wrong with my setting etc
please use latest windows for best videos quality and use pentium 4 system
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