Accounting for overheads part 3 - ACCA Management Accounting (MA)
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40 Comments
S
Siddharth·
if we are asked in mcq, can i use only algebraic cause i find it easy
M
mohomed·
hi sir
in repeated distribution method is it a must to make our cost to zero, or does the question provide any details about it
T
Thenuka·
Dear John,
Your lecture Notes Only Mentions "The Reciprocal & Algebraic Methods"
However, on the BPP Pass Card they've mentioned 2 Other Methods Known as: "The Direct Method & The Step-Down Method" (Will this Not Be Tested In The Examination?)
N
Nishant·
buddy, in the previous lecture he explained direct method and step down is a mix of both; easier than reciprocal
R
Ronan·
In the algebraic method, when attributing the $22,938 from S, 50% is attributed to X and 30% is attributed to Y.
Where is the remaining 20% attributed?
Thank you!
A
Anton·
Those have been allocated to M which was calculated as 15000 + 0.2*S.
0.2 *S is 20% you are looking for.
P
Patrick D·
Sir, would there be a problem if I am 1 or 2 off and getting $90283 & $44717 or $90285 & $44715, Using the Repeated Distribution Method?
A
Alexander·
Dear Sir,
May I have your help with this task as well?
A company manufactures two products, X&Y, in a factory divided into two production cost centres, Assembly and Finishing.
The following information is available:
Cost centre Assembly Finishing
Allocated fixed overhead costs $144,000 $82,500
Direct labour minutes per unit
Product X 36 31.25
Product Y 48 30
Budgeted production is 6,000 units of Product X and 7,500 units of Product Y. Fixed overhead costs are to be absorbed on a direct labour hour’s basis. What is the budgeted fixed overhead cost per unit for Product Y?
Solution is USD 18 but how to calculate it for Y?
Thank you very much!
P
Pyae Phyo·
Did u make sure to divide the Direct labour minutes per unit? Because they are in minutes turn them into hrs.
For X: 36/60= 0.6, 31.25/60= 0.5
For Y: 48/60= 0.8, 30/60= 0.5
and try to find labour hours for Assembly and Finishing. Check example 2 for opentuition for details.
I got assembly hr= 9600 and finishing hr= 6750
Then, try calculating OAR for assembly and finishing.
OAR Assembly= 15
OAR Finishing= 12
Finally, calculate the fixed overhead cost per unit for Y;
(0.8 x 15)= 12
(0.5 x 12)= 6
and add them together and ta-da, the answer is 18
P
Pyae Phyo·
sry, check example 3 xD
J
John MoffatTutor·
In future you must ask questions like this in the Ask the Tutor Forum, and not as a comment on a lecture.
C
Chris·
Thanks for this lecture it was very informative.
Have to say the algebraic method is much more comfortable for me.
1. Saves time
2. Reassuring to have a constant check with either side of the equal sign balancing
I'm usually fairly ok with algebra but after watching your lecture I attempted the example independently and had to go back and see exactly how you isolated the 's' or 'm' in the equation. Of course it was me lacking common sense and on second glance it clicked instantly.
Thankyou for
C
Chris·
taking the time to go through it step by step.
A
Alexander·
Dear Colleagues,
May I have your help how to resolve to below task?
"A product requires 5 hours of labour at 12.50 per hour and includes direct expenses of $100. If Absorption rates are $16.50 per direct labour hour then calculate the total cost per unit."
The solution is $245 but I am not able to find out how to calculate this :(
Thank you very much!
Alexander
J
John MoffatTutor·
Labour is 5 hours at $12.50 = $62.50.
Overheads are 5 hours at $16.50 = $82.50.
Direct expense are $100.
100 + 62.50 + 82.50 = $245
A
Alexander·
Thank you very much! It is so simple.
What does mean - A product requires 5 hours of labour at 12.50 per hour? I do not understand this part of the sentence.
J
John MoffatTutor·
It means that it takes the worker 5 hours to make the product and the worker is paid $12.50 per hour.
W
waseem·
Thanks for teaching me algebraic, i struggled for a while. I passed my FA Exam with a pass of 85%, im in the process of writing the MA examThanks your contributions.
J
John MoffatTutor·
Congratulations - that is great news :-)
J
Joe·
On algebraic method, why do we do 1 minus 0.03s- where does the 1 come into it?
J
John MoffatTutor·
This is basic algebra.
If you subtract 0.03S from both sides, then 1S - 0.97S = 0.03S
S
S·
Please explain this to me as I was not very good at algebra, why do we subtract 0.3 and what does it mean to subtract from both sides?
S
S·
I am completely lost after we subtract the 0.3S as I don’t know what two sides we are subtracting it from and why we are diving after that. Please can you help me.
S
sintayehu·
Thanks for the lectures
J
John MoffatTutor·
You are welcome :-)
F
Fathima·
Can I know how u got 0.97s?
A
Anastasia·
1-0.03 . But I what also to know why S=1 ? I cannot find it from the exersice. Could you please explain it, Mr Moffat?
H
huldaya·
Thanks alot sir i had some issues with the algebraic method but with the lectures i understand it perfectly well now
J
John MoffatTutor·
Great :-)
J
John MoffatTutor·
I did!!
As AjayAnton has himself written above, I added the 4,000 to the 15,000 and recharged the 19,000.
A
Ajay·
Added 15,000 + 4,000 = 19,000.00
Ignore me. Thanks for this lecture!
A
Ajay·
Why didn't you recharge the 4,000 in the first line?
A
Asif·
Greatly Appreciate this Lecture !
F
Foziljon·
Thank you very much:)
J
John MoffatTutor·
Thank you for your comment :-)
D
Dhiraj·
Mr Moffat , Great Lecture , thank you !
J
John MoffatTutor·
Thank you for your comment :-)
L
Lokesh·
The Acca Platinium certified collages , Kaplan , BPP , Accowtancy - They can earn money.
But They can never earn the Love and Respect I/We have for you. Opentution is best and John Moffat is the Greatest in teaching.
H
hamza·
there is 4 method of reapportion the overheads of service dept but you did only two: step down method and algebric method. where is other two methods?
L
Lokesh·
Bro Only one method is sufficient. If every technique is presented, not only will students confuse, but precious time will be taken.
I am a math student, so Algebraic method is super easy for me.
in repeated distribution method is it a must to make our cost to zero, or does the question provide any details about it
Your lecture Notes Only Mentions "The Reciprocal & Algebraic Methods"
However, on the BPP Pass Card they've mentioned 2 Other Methods Known as: "The Direct Method & The Step-Down Method" (Will this Not Be Tested In The Examination?)
Where is the remaining 20% attributed?
Thank you!
0.2 *S is 20% you are looking for.
May I have your help with this task as well?
A company manufactures two products, X&Y, in a factory divided into two production cost centres, Assembly and Finishing.
The following information is available:
Cost centre Assembly Finishing
Allocated fixed overhead costs $144,000 $82,500
Direct labour minutes per unit
Product X 36 31.25
Product Y 48 30
Budgeted production is 6,000 units of Product X and 7,500 units of Product Y. Fixed overhead costs are to be absorbed on a direct labour hour’s basis. What is the budgeted fixed overhead cost per unit for Product Y?
Solution is USD 18 but how to calculate it for Y?
Thank you very much!
For X: 36/60= 0.6, 31.25/60= 0.5
For Y: 48/60= 0.8, 30/60= 0.5
and try to find labour hours for Assembly and Finishing. Check example 2 for opentuition for details.
I got assembly hr= 9600 and finishing hr= 6750
Then, try calculating OAR for assembly and finishing.
OAR Assembly= 15
OAR Finishing= 12
Finally, calculate the fixed overhead cost per unit for Y;
(0.8 x 15)= 12
(0.5 x 12)= 6
and add them together and ta-da, the answer is 18
Have to say the algebraic method is much more comfortable for me.
1. Saves time
2. Reassuring to have a constant check with either side of the equal sign balancing
I'm usually fairly ok with algebra but after watching your lecture I attempted the example independently and had to go back and see exactly how you isolated the 's' or 'm' in the equation. Of course it was me lacking common sense and on second glance it clicked instantly.
Thankyou for
May I have your help how to resolve to below task?
"A product requires 5 hours of labour at 12.50 per hour and includes direct expenses of $100. If Absorption rates are $16.50 per direct labour hour then calculate the total cost per unit."
The solution is $245 but I am not able to find out how to calculate this :(
Thank you very much!
Alexander
Overheads are 5 hours at $16.50 = $82.50.
Direct expense are $100.
100 + 62.50 + 82.50 = $245
What does mean - A product requires 5 hours of labour at 12.50 per hour? I do not understand this part of the sentence.
If you subtract 0.03S from both sides, then 1S - 0.97S = 0.03S
As AjayAnton has himself written above, I added the 4,000 to the 15,000 and recharged the 19,000.
Ignore me. Thanks for this lecture!
But They can never earn the Love and Respect I/We have for you. Opentution is best and John Moffat is the Greatest in teaching.
I am a math student, so Algebraic method is super easy for me.