Cost Classification and Behaviour part 1 - ACCA Management Accounting (MA)/you
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53 Comments
J
jaimeen·
are they still valid sir?
R
Rachel·
Many thanks for this video.
I'd like to ask if incoming delivery (for materials) counts as an indirect production cost, please?
J
John MoffatTutor·
It would usually be treated as being effectively an extra cost of the materials, and so a direct production cost.
R
Rachel·
Many thanks for clarifying that for me
J
John MoffatTutor·
You are welcome :-)
S
Siddharth·
Hello, really loving these lectures
J
John MoffatTutor·
Great :-)
B
Bhumi·
Hello Sir,
Can I watch your lectures for the upcoming exams in 2025 or 2026??
J
John MoffatTutor·
The lectures that are currently online are all valid for the exams up until the summer of 2026.
M
mohomed·
Hi sir should I do my study kit questions for each chapter or should I do it later
S
S·
I have a question from a question from the BPP exam kit.
It asks if the given costs are fixed, variable or semi variable and the answer says:
The key to the question is to understand that for variable costs the cost per unit is constant, whilst for fixed costs the total cost is constant. Cost X can quickly be identified as a fixed cost as the total cost between the two output levels is unchanged (10,000 units x
S3 = 15,000 units x $2). Cost
Y is a variable cost because the cost per unit is constant.
Cost Z meets neither of these criteria because it contains elements of both fixed and variable costs, and therefore is a semi variable cost.
Why are variable costs the same per unit? How would I go about answering a question like this next time and how can I tell if a cost is semi variable if they just give two costs for two levels of activity?
Please help
J
John MoffatTutor·
The variable costs are always the same per unit. The whole nature of variable costs is that the total variable cost varies with the level of production.
The whole nature of fixed costs is that the total fixed cost remains the same regardless of the level of production.
Have you watched all of the lectures working through this chapter of our free lecture notes, because this is all explained in the lectures?
J
Joshua·
Hi John,
Thank you so much for these. I passed my FA exam a few weeks ago thanks to your lectures.
I might be getting mixed up here with accounting principles (after doing the FA exam), but you mention in the lecture that delivery to customers comes under non- manufacturing costs. I though carriage outward was something that was not recognised by a business.
Is it just the case that they are accounted for in terms of planning as the business still have to pay for it?
Thanks
Joshua
(From Belfast NI)
J
John MoffatTutor·
Carriage outwards is an expense, and all expenses have to be recorded by businesses :-)
G
Geet·
Shouldn't Builder's cost unit be per square meter?
N
Njabulo·
What will be the unit cost of the farmer who produces 1. a maize in Kgs, broilers and layers?I think insurance of the factory is the overheads,I'm I correct?
M
Mannan·
Are wages of maintenance men and depreciation of machines fixed production overheads or variable production overheads?
M
Mannan·
Is rent of offices an administration cost? If not, then what type of non-production cost is it?
J
John MoffatTutor·
Yes, it is administration.
D
diamondfar·
Hello sir,
Rent of factory and rent of offices isn't it the same?? Then why one classified in indirect cost and the other no production cost. Can you please explain. I did read in the previous comments, still I didn't understand
J
John MoffatTutor·
The factory and the offices are not the same.
Production costs are those costs incurred in the factory to actually produce the goods. The offices are not producing anything and so their rent is an overhead i.e. and indirect cost.
J
John MoffatTutor·
The factory and the offices are not the same!!
Production costs are those costs incurred in the factory to actually produce the goods. The offices are not producing anything and so their rent is an overhead i.e. and indirect cost.
L
Leticia·
excellent teaching teaching skills, love it.
J
John MoffatTutor·
Thank you for your comment :-)
S
sintayehu·
Thank you sir
A
ABDULRAFAY·
Aah! Really appreciated sir, The way of teaching is Really great ??
J
John MoffatTutor·
Thank you for your comment :-)
P
Pascal·
Thank you Sir for this lecture
J
John MoffatTutor·
You are welcome :-)
A
ayhail·
Thank you so much sir.
A
Ameer·
will transportation of raw materials be a direct cost?
K
Khan·
no,direct cost is the cost that can be directly attributed to the product.
Bringing of raw material is not direct cost.
T
Tarik R·
Based on this lecture and information I have reviewed elsewhere are you saying Prime costs are comprised of only Direct Materials and Direct Labor? Other text including BPP includes Direct Expenses! Please explain.
J
John MoffatTutor·
No. As I make clear in the lectures the prime costs are comprised of costs that are directly attributable (i.e. measurable) for the product. This is almost always just material and labour, because they can be measured for each unit.
L
liu·
Thank you so much sir, your lectures briefly explain the essentials the way that my current teachers aren't able to. Hopefully I can pass the exam under your guidance.
J
John MoffatTutor·
Thank you for your comment :-)
A
Adaeze·
Awesome lecture! Thank you sir.
J
John MoffatTutor·
Thank you very much for your comment :-)
J
jaehun·
I have a doubt regarding the
Indirect cost and non-production cost
According to the lecture, "wages of accounting deaprtment" / "Rent of officies" are under the Non-production costs.
Apart from that, "Wages of maintenance me" / "Rent of factor" are under the indirect production.
For me, these two are sounds similar. Thus, my point is that are these two are the same? If so, indirect production costs would be the same as non-production costs?
J
John MoffatTutor·
They are not the same.
Production costs are cost of actually producing. So wages of maintenance staff and rent of the factory are costs in the factory and are production costs. Wages of accounts department and rent of offices are not costs in the factory and so are not production costs.
Indirect costs are costs that cannot be measured in each unit separately, Materials can be measured in each unit and so are direct production costs. Wages of maintenance men and rent of the factory can not be measured in each unit separately and so are indirect production costs.
J
John MoffatTutor·
What you have written is not true.
The lectures cover everything needed to be able to pass the exam well and there are no lectures that are not in the current syllabus!
I
Iradukunda·
Thank our recuture may God bless u.understandable chapter?
O
Onyeka·
Thank you sir
J
John MoffatTutor·
Thank you also :-)
H
habiba05·
I spent time and energy paying for MA training and yet I couldn't get a hang of the course until now. Thank you for making it easy.
L
Lokesh·
Again , Every time i visit next chapter, I can't stop my self to write "Awesome Lecture". When i study from open tuition i gain the self-confidence that I am finishing it really fast.
I'd like to ask if incoming delivery (for materials) counts as an indirect production cost, please?
Can I watch your lectures for the upcoming exams in 2025 or 2026??
It asks if the given costs are fixed, variable or semi variable and the answer says:
The key to the question is to understand that for variable costs the cost per unit is constant, whilst for fixed costs the total cost is constant. Cost X can quickly be identified as a fixed cost as the total cost between the two output levels is unchanged (10,000 units x
S3 = 15,000 units x $2). Cost
Y is a variable cost because the cost per unit is constant.
Cost Z meets neither of these criteria because it contains elements of both fixed and variable costs, and therefore is a semi variable cost.
Why are variable costs the same per unit? How would I go about answering a question like this next time and how can I tell if a cost is semi variable if they just give two costs for two levels of activity?
Please help
The whole nature of fixed costs is that the total fixed cost remains the same regardless of the level of production.
Have you watched all of the lectures working through this chapter of our free lecture notes, because this is all explained in the lectures?
Thank you so much for these. I passed my FA exam a few weeks ago thanks to your lectures.
I might be getting mixed up here with accounting principles (after doing the FA exam), but you mention in the lecture that delivery to customers comes under non- manufacturing costs. I though carriage outward was something that was not recognised by a business.
Is it just the case that they are accounted for in terms of planning as the business still have to pay for it?
Thanks
Joshua
(From Belfast NI)
Rent of factory and rent of offices isn't it the same?? Then why one classified in indirect cost and the other no production cost. Can you please explain. I did read in the previous comments, still I didn't understand
Production costs are those costs incurred in the factory to actually produce the goods. The offices are not producing anything and so their rent is an overhead i.e. and indirect cost.
Production costs are those costs incurred in the factory to actually produce the goods. The offices are not producing anything and so their rent is an overhead i.e. and indirect cost.
Bringing of raw material is not direct cost.
Indirect cost and non-production cost
According to the lecture, "wages of accounting deaprtment" / "Rent of officies" are under the Non-production costs.
Apart from that, "Wages of maintenance me" / "Rent of factor" are under the indirect production.
For me, these two are sounds similar. Thus, my point is that are these two are the same? If so, indirect production costs would be the same as non-production costs?
Production costs are cost of actually producing. So wages of maintenance staff and rent of the factory are costs in the factory and are production costs. Wages of accounts department and rent of offices are not costs in the factory and so are not production costs.
Indirect costs are costs that cannot be measured in each unit separately, Materials can be measured in each unit and so are direct production costs. Wages of maintenance men and rent of the factory can not be measured in each unit separately and so are indirect production costs.
The lectures cover everything needed to be able to pass the exam well and there are no lectures that are not in the current syllabus!