Marginal and relevant costing; ABC - ACCA Strategic Business Leader (SBL)
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6 Comments
E
Emma·
sorry-my question is under Identifying marginal and relevant costs-use of scarce resources. Thx in advance.
E
Emma·
Hello.
Kindly,
I'm lost at the computation of how much units to be produced by product A and how much it'll generate, 40 units and $600 respectively in the lecture video. I however agree with the lecture notes giving 20units and $480 respectively. Could this be an error of some sort?
K
kengarrettTutor·
If B is discontinued, 400,000 is lost. If, however, discontinuance meant that a whole factory (for example) could be closed down then fixed costs (rent, heating etc) would be saved. If this saving were at least 400,000 then the product could be discontinued and profits would increase.
H
Haripriya·
Sam question I hv with the ABC problem
S
SpiroSupporter·
Could you please explain further the meaning of this sentence at the end of lecture notes, related to this lecture (p.168):
"Product B would be worth discontinuing only if the expected contribution at market price of:
2000 x (250 – 50) = 400,000
were compensated for by a reduction in fixed costs of that amount."
T
Temitope·
Dear Sir
Thank you for the amazing work you are doing over there. I really enjoy your videos.
Please, I do not understand the analogy used under the 'closing/continuing operation' part of this video. Shouldn't I be continuing operations where my saved cost is greater than my lost revenue? Confused.
Kindly,
I'm lost at the computation of how much units to be produced by product A and how much it'll generate, 40 units and $600 respectively in the lecture video. I however agree with the lecture notes giving 20units and $480 respectively. Could this be an error of some sort?
"Product B would be worth discontinuing only if the expected contribution at market price of:
2000 x (250 – 50) = 400,000
were compensated for by a reduction in fixed costs of that amount."
Thank you for the amazing work you are doing over there. I really enjoy your videos.
Please, I do not understand the analogy used under the 'closing/continuing operation' part of this video. Shouldn't I be continuing operations where my saved cost is greater than my lost revenue? Confused.
Thanks in advance for your clarification