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MA Chapter 4 Questions Cost Classification and Behaviour
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Why is packaging counted as production cost? Shouldn’t it be classified as distribution costs?
I assume that you are referring to question 4.
It is counted as a production cost because they are only moved to the warehouse (according to the question) after they have been packed. Therefore they only sell goods that have already been packed.
Truck drivers in the stores of an engineering company are indirect labour but wages given to those truck drivers classify as a production cost or non-production cost?
If they are driving raw materials in the factory then they are a production cost.
sir i do get that we in question 2, we need to subtract the step up of 5000 from the total costs. but why would we need to do so?
Because 5,000 of the difference in the total cost is due to the step-up. Only the rest of the difference is due to the variable cost of the extra units.
If total cost is equal to variable cost plus fixed cost then where exactly are we accounting for the 5000 of fixed cost in question 2, because it seems we only used the variable cost per unit all through the calculation
Because part of the increase in the total cost is due to the extra fixed cost. Only the rest is the extra variable cost of the extra units.
In which function does the inspecting cost fall?
It is classed as a production cost.
@John Moffat but sir how?
Production costs are those costs that are incurred in ending up with finished goods that are ready for sale – i.e. costs in the factory.
Inspection will take place in the factory so that only ‘good’ units leave the factory.
Thanks for the practice, it helps open up our minds
sir in question 2 need to ask doubt, so whenever there is an increase in the fixed cost the variable cost decreases with the same amount
The total cost is always the total variable cost plus the total fixed cost. Therefore if 5,000 of the increase in the total cost is due to an increase in fixed costs, then the increase in the variable cost must be the remainder.
Would like to know the answer and workings to this question, as when calculated my Variable cost at 5.83 and multiplied to the productivity level for 16000 and 22000 was out on the Fixed Cost by 20 is this to do with rounding? So my Fixed cost for both did not match?
If anyone has the time to do the calculus will be much obliged
Thanks
Charlotte
You have now asked this same question three times, and I have answered your post in the forums. I have also explained how, by clicking on the relevant buttons on the test, you can see the answers and the workings for all of the questions!
Hello sir
Sir, for Q4, does packing the items not fall under logistics than in production (operations department) under Porter鈥檚 Value Chain Diagram ?
Not at all. Packing them before moving them from the factory to the warehouse is a production cost.
Porter’s Value Chain is not relevant for Paper MA – it is not in the syllabus.
Sorry sir, I was just connecting some information I learnt from one subject to another – from BT to MA. I learnt from my notes from the Institute I go to, that outbound logistics include packaging within Porter鈥檚 value chain analyses. I guess that information is wrong, or meant that outbound logistics also may include packaging as some of their activities.
Asif110 Packaging also occurs within logistics when products are loaded in bulk onto pallets and wrapped in cellophane for example, but the packaging that’s referred to here is the direct packaging of the individual product that the consumer will receive, thus it’s a part of the finished product, thus it’s a production cost.
Also, what was meant by Porter’s Value Chain not being relevant is not that what you learned in BT is wrong per se, it’s just that it’s not included in the Management Accounting syllabus and so you’ll never be tested on it in the MA paper, so thinking about it just complicates things unnecessarily.
Correct me if I’m wrong on any of this John!
The process of learning through opentuition is highly appreciated. Well I am still confused about the last step of Q2.
Why we took 2000 units?? And fixed cost as $175000?
Looking forward for your kind response. Thanks
The answer does not take the fixed cost as $175,000. We know from the question that the total cost for 22,000 units is $170,000.
20,000 units will have the same fixed costs as 22,000 units (because they are both over 17,500 units) and therefore the only difference in the total cost will be the variable cost of the 2,000 fewer units.
Thank you so much sir. Now I get it.
You are welcome 馃檪
Thank you, sir. Your lecture was very useful. I got 100% but it took about 20mins complete. I hope I will improve soon by practicing.
Thank you for your comment 馃檪
Hi, thank you very much for the vast amount of free resources. I was amazed to find that there is a company that actually done this. I have personally attempted to do the ACCA with BPP and Kaplan and LSBF(twice) but somehow don’t carry on with it after the first month or so. I hope I can stick with it now to the very end. Quite humbled to see that you provide the resources for free so hopefully that should give me inspiration to complete this. Regards.
Thank you for your comment, and I hope you are able to stick with it to the very end 馃檪
Yes I hope I can finish it to the end as well 馃檪 I think my progression is good in this module. Do you know how we can take the exam? I think I might be ready in a month to take this exam.
Also do you recommend I buy the 2019 or the 2020 edition question revision kits from BPP?
You can find details of where you can take the exam on the ACCA website:
https://www.accaglobal.com/ubcs/en/student.html
You should buy the latest edition of the Revision Kit.
(In future please ask this sort of question in the Paper MA Ask the Tutor Forum and not as a comment on a test.)
Hello Sir,
thanks loads for your notes and lectures which are awesome, especially for those who cannot afford to attend courses.
i have finished submit the answers – but i cannot find where to get the solution for question 2. i can see only option print results or view results
thanks
thank you i have seen it
I am pleased that you found it 馃檪
this is great
Thank you for your comment 馃檪
there is no explanation or whatsoever in the lecture or notes for me to get the answer in question 2. Get back to me please, thanks.
The high low method is explained in my free lectures.
This question has a little trick in it (the fixed costs increasing) but that is typical of all sorts of little tricks in the exam that the examiner does to make sure that you understand the topic and have not simply just learned ‘rules’.
The explanation that appears after you have submitted your answers and review them explains in detail how the answer is obtained. If you are not clear about the explanation then say which bit you are not clear about.
In relation to question #2:
(a) it states that the increase in variable cost is now $30,000 can you please explain.
(b) 2,000 units was used as opposed to $16,000 can you please explain,
Thank you.
The total cost increases by $35,000. $5,000 of this is the increase in the fixed costs, so the remaining $30,000 is the increase in the variable cost.
20,000 units will have the same fixed cost at 22,000 units. The variable cost will be lower by $10,000 because there are 2,000 fewer units.
Thank you for your explanation, appreciated !
You are welcome 馃檪
Wow I never thought of solving question 2 the way itvwasvexplained in the review.
Thanks open tuition
You are welcome 馃檪
thank you @opentuition for making these study materials available. Much appreciation all the way from Belize Central America.
Thank you for your comment 馃檪
Hi, we understand that this is just a quick test but i think there should be at least 10 questions so we can evaluate ourselves better. I would appreciate it, if you consider this proposal.
We provide all our free lectures, notes, tests, and other material completely free of charge, so please do not expect more for nothing 馃檪
As we make clear throughout our website, it is essential that you buy a Revision Kit from one of the ACCA approved publishers – then you will have plenty of questions to practice!!
Sir I live in iran and if I want to buy that book I should almost pay my one month’s salary. but thanks for your usefull information.
Thank you so much for making this available completely free, I am studying by myself and I truly appreciate it!
I am pleased that you appreciate it 馃檪
Woow I passed just failed the last one and I’m enjoying the calculations.. Wish the exam could bring more practical questions
I am not sure whether you mean that you passed this test, or you passed the real exam 馃檪
If it was the real exam, then congratulations.
Otherwise, do make sure that you buy a Revision Kit from one of the ACCA approved publishers, because they are full of exam standard questions for practice and practice is vital for passing the exam.
I passed. I got everything correct!
But I need that revision kit
Do make sure to buy one and that it is from one of the ACCA Approved Publishers (BPP or Kaplan).
aftab2628: There are enough practice questions in the Kaplan Kit 馃檪
Keep practicing, watch all the free lectures, and ask in the Ask the Tutor Forum if you have any problems.
overall nice test but the number of questions should be increased
These are only meant as quick tests.
As we stress throughout this website, you must buy a Revision Kit from one of the ACCA approved publishers. They are full of exam standard questions for practice and practice is vital to passing the exam.
john,
I bought revision kit from Kaplan ,what else I need to pratice more.because I am not very good in cost accounting …just wonder if you can help me thanks