Forum Replies Created
- AuthorPosts
- April 29, 2024 at 8:04 pm #704710
Hi,
Hoping you have passed this exam.As an Open Tuition tutor, I dont have access to the mock exams from other tuition providers such as Astranti.
However, all practice is good practice.
Dont forget to use the CIMA authored practice assessment on the Pearson website ( thats the only one written by CIMA themselves – there is one for every subject).
April 29, 2024 at 8:02 pm #704709For this one we compare the making cost ( the manufacturing in house cost – not including the fixed overhead)
to the supplier buy in priceSo we compare
Dim $2 vs $2.5 – so making in house is cheaper
Dom $5 vs $4 – so buying from supplier is cheaper
Dem $3 vs $4- so making in house is cheaper.Main principle here is we ignore general fixed overhead in relevant costing situations because if we decide to buy in (the fixed cost will not be saved).
Hope thats ok
April 29, 2024 at 7:58 pm #704708Hi, Sorry for the delay and definitely a weird format question.
So the principles of sensitivity is that its the change in variables needed to ‘reverse’ the decision.
Im assuming you are happy that, initially the EV of the project is positive (0.4*!50k) _ (0.6*-80k) = 12k positive (accept)
If the EV drops to zero then thats the point where we would start to reverse the decision.
So we need to find a probablity of earning the 150,000 that is exactly netted off by the result of probability of earning (80k).
The values of 150k and (80K) loss dont change.
Also remember in a two-situation outcome then probabilities have to add up to 100%So that fancy formula above calculates that
34.78% * 150,000 = 5,217,000
then the loss probability (100 – 34.78 = 65.22%)
65.22% * (80,000) = approx the same (5,217,600)
Therefore making a loss and change of decision.
ITs not working out exactly as zero due to rounding so presumably the question asked for the closest full percentage point or similar ( hence the answer is 35%)
Overall though id say dont worry about that one too much – it’s an unusual question format! 🙂
January 2, 2024 at 1:30 am #697583Hi – Thanks for your question.
Presumably you were given a model answer in the book? Can you tell me what the answer says and which part you need explaining? (this is better than me writing it all out).
Many thanksJanuary 2, 2024 at 1:29 am #697582Hi there,
Thank you for your question but unfortunately as tutors we can not answer test-type questions such as this ( we dont want to be providing a service where we simply answer homework for students).We are always happy to help, but this tutor forum operates best when you post the answer from which ever source you obtained the question above- then you explain why you disagree or dont understand the answer provided to you, so that the Open Tuition tutors can help to resolve your particular aspect of misunderstanding.
Please reply to this post with the answer to the question above and let me know some more detail as to why it is causing you doubt.
Thanks
CathJanuary 2, 2024 at 1:24 am #697580Hi,
Thanks for your question but this is a CIMA P1 forum and investment appraisal (eg payback period etc) has moved from the P1 syllabus when it updated in 2019.This topic is now on CIMA P2 syllabus so if you are preparing for the P1 exam please ensure your study materials are up-to-date for the current syllabus
Thanks
CathOctober 30, 2023 at 1:19 am #694161You’re welcome + great to help,
CathJuly 10, 2023 at 12:38 pm #687820Hi,
Im afraid we are unable to confirm when those videos will be added.
However, those topics are all dealt with in similar respects to CIMA P2 assessments by ACCA papers FM and AFM ( sometimes referred to as ACCA F9 and P4).Here is a link to John from Open Tuition explaining value-at-risk for this purpose.
https://www.youtube.com/watch?v=4T-vwZHDaAs
Hope that helps
Thanks
CathJuly 8, 2023 at 10:33 pm #687776This is because the overhead costs are released to the profit and loss account only when the product is sold, so sales income is matched with costs.
The other option would be marginal cost where overheads are invoiced in each period. Meaning that in months of high production – large overhead deductions will be made from profits, even though the products are not necessarily sold that period ( can be stocking up for next season)l
Deducting all the costs in full in the period can cause swings in profit .Hope thats ok & thanks for you question
CathMay 22, 2023 at 8:34 pm #684845Hi,
Thanks for your question.
Im not quite sure what you mean. There is no need to work out the debit & credits for job costing for CIMA BA2.
Instead you need an understanding of the principles in that only the material and labour + overhead costs that relate to the job will be collected and transferred to find the job cost.If its the basic principles you need (and its CIMA BA2 syllabus orientated) then our BA2 lectures will help.
Otherwise, I dont believe the journal entries are needed for BA2.
Many Thanks
CathMay 22, 2023 at 8:24 pm #684844Hi,
Im afraid we cant answer that in the CIMA P2 forum.
CIMA P2 is the lead paper in the management case study, but as far as I know all areas of P2, F2 and E2 are potentially examinable.I dont advise question spotting, but if you were trying to pin down the most-examined areas then an analysis of past MCS recent exams (available on CIMA website) would be a good place to start.
Using these you will notice patterns of frequently examined vs rarely examined areas to help you to focus. The past exams available by CIMA also include lengthy examiners reports which can hold some clues as to what the markers are looking for etc.
Hope that helps
CathMay 22, 2023 at 8:20 pm #684843Hi Jacobi,
thanks for your question.
Im afraid because CIMA is a computerised objective test bank of questions (created in 2019 and 60 randomly assigned questions, in syllabus weighting per exam) there are not any past-papers.We advise you to obtain a Cima-approved exam kit, such as Kaplan/ BPP/ or another publisher to practice questions. You dont need the latest version of these exam kit books, anything from 2019 will be current syllabus, so second hand market place versions are fine.
CIMA themselves have for sale some practice electronic questions that they have authored:
https://cimastudy.com/cima-levels/aptitudeApart from that there is only one free resource that CIMA have officially published & that is the Pearson Vue practice exam. There is one for each paper & it does give you a % score at the end (link is below)
https://home.pearsonvue.com/cima/questiontutorials
Hope that helps & you have been finding Open Tuition resources and practice questions of use also.
CathMay 22, 2023 at 8:10 pm #684842Hi, Thanks for your question.
First thing to say is thet investment appraisal techniques have been removed from CIMA P1 syllabus since 2019.
Also all CIMA questions in dollars (not £s) so Im thinking this is not a CIMA P1 specific question.If youd like to gain more insight over investment appraisal techniques – you could watch the relevant section in the CIMA P2 video have available (this area is on the CIMA P2 syllabus)
However, incase it helps you, ive done a quick calc ( yr0 value of the investment being £60,000 then reducing every year by 25% reducing balance) – ive got the end of year 4 balance to be £18,984 so according to the text you have posted above, in year five we are disposing of it for £4,000. This leaves a balancing allowance of £14,984 which with a tax rate of 35% you will have a tax saving in year 5 of £5244 (£14,984 *0.35). So I do agree with you – I cant see where a figure of £7500 has come from.
I hope this helps
CathFebruary 19, 2023 at 9:15 pm #679155Hi – thanks for your question & hope you are enjoying our CIMA resources.
We dont generally answer questions directly like this – previously we have been used as a homework-resource, where students post the full question and expect us to answer.
We assume you will have an answer in your textbook and you may then have a query or clarification needed based on the answer given.This seems very long for a CIMA BA2 question also- plus CIMA questions all in dollars – so not sure about the RM currency.
However, top tips to approach this question will be that only the future, INCREMENTAL costs and savings will be relevant.
So when you create your NPV calculation ( please use the videos for BA2 – ch19) make sure you only include the cashflows such as the 50 pence saving on the variable cost for example RM3 less 2.50 ( not the full RM2.50)
Hope that helps
CathFebruary 19, 2023 at 9:09 pm #679154Hi,
Thanks for your query,
I can see your thinking – but its more that a decision whether to accept the contract.
Eg compare the average expected value of the different demand levels to see which contract level is worthwhile.
So the demand cant be predicted – but the contract quantity has to be agreed in advance.
Hope that makes sense + also this should be covered by the P2 recorded videos for a full working.
Many Thanks
CathOctober 31, 2022 at 11:30 pm #670435Hi – this is a duplicate post, please see other response (this requires more info + is unclear what help you need from this alone) Thanks
October 31, 2022 at 11:29 pm #670434Hi, Im not quite sure what you are asking.
This forum (with the current date of Nov2022 would be applicable to FireWorks preseen operational case study scenario) so you would not be asked about this type of situation without application to the current preseen.Id like to help and I perceive this must be a relevant costing question, but even so – Im sorry but I cant follow the post as it stands.
Presumably you have an answer available to you in the same textbook you have found the above.
This guidance on this forum works best when you post the question AND the answer + let me know what aspect you dont follow or need further explanation.Hope thats ok + please post again with an update if you need further help.
Thanks
CathOctober 31, 2022 at 11:23 pm #670433Hi, really sorry but this forum is for CIMA students only. This question is not reflective of the CIMA BA2 syllabus or exam style + so is not applicable here.
Thanks
CathJune 5, 2022 at 12:42 am #657392Hi Khawa,
Im afraid I cant help you with this question.
This is not a CIMA exam standard question for the current P2 syllabus. The length and nature (linking to working capital) does not fit with the P2 syllabus.
Therefore there is no need for you to worry about solving this.Please note for future, that have had some students who post us the accounting homework problems and expect us to solve them – which is not a service we can realistically provide.
Therefore, please ensure that all questions are current and CIMA standard ( short objective style and from recent 2019+ exam material). Also, it is presumed that you will have a solution provided to you with the source of the question (eg in the back of the question book etc)., so it saves time if you can share this answer and then specifically detail which part of the answer/ workings that you can not understand.
This targeted approach to learning & problem solving is where this forum adds the most value to CIMA students,
Many Thanks
CathJune 5, 2022 at 12:42 am #657391Hi Khawa,
Im afraid I cant help you with this question.
This is not a CIMA exam standard question for the current P2 syllabus. The length and nature (linking to working capital) does not fit with the P2 syllabus.
Therefore there is no need for you to worry about solving this.Please note for future, that have had some students who post us the accounting homework problems and expect us to solve them – which is not a service we can realistically provide.
Therefore, please ensure that all questions are current and CIMA standard ( short objective style and from recent 2019+ exam material). Also, it is presumed that you will have a solution provided to you with the source of the question (eg in the back of the question book etc)., so it saves time if you can share this answer and then specifically detail which part of the answer/ workings that you can not understand.
This targeted approach to learning & problem solving is where this forum adds the most value to CIMA students,
Many Thanks
CathJune 5, 2022 at 12:34 am #657390Hi Waka, Thank you for your question, however, I cant help you here.
The length and detail of this means this is not a CIMA exam standard question. I can guarantee you will not have to solve anything of this length or detail in your CIMA objective test exam.Also the nature of the question content means it is a financial accounting/ taxation type question, whereas this forum is for CIMA P1 (management accounting topics).
Sorry
Thanks
CathMay 3, 2022 at 9:43 pm #654861Hi Komali,
Im afraid Im not able to answer this type of question – there have been cases where we have been sent student homework & that is not a service we provide.
Your example is not a CIMA P1 question ( all CIMA questions are in $ – not rupees) also they are 1.5mins per question – so this is way too long.
This forum is more to bring up or clarify a specific query not covered by our CIMA P1 tuition material or to provide us with a question (along with the textbook answer) that you would like further explanation or verification of how it should be solved.
Sorry we cant help on non-CIMA material such as the above
Cath
April 7, 2022 at 9:07 pm #652851Hi, Sorry for the delay, but this is a straightforward CIMA question that is dealt with entirely by our video lectures….
I also dont get same exact answer as your 0,1 ( I get more like 0.169 ..even allowing for rounding),
However,
1.2million split between 3 x cost pools of quality, purchasing and materials handling. So $400,000 overheads per activity.
The we find cost per cost driver by sharing that $400,000 over the total number of activity drivers relating to that cost..
Eg
$400,000 inspection costs for 84,000 inspections = $4,76 per inspectionWe do the same to find $33.33 per purchase requisition
And same to get $1.67 per kg of materials handled.
Now we have the ‘cost per cost driver rates’ above we can apply to product E.
This product line has
20 inspections @ 4.76 each = $95.20
28 purchase req @33.33each = $933.24
400 kg of mats handled @1.67per kg = $668Total overheads for product E = $1696.44
Then divided by 10,000 units = $0.17So I cant get back to your $0.1 per unit ( ive tried different ways of rounding – early or late – but no its definitely closer to 0,17)
I hope thats ok + explains
Thanks
CathMarch 23, 2022 at 3:01 am #651688Hi there,
Thank you for your question.
There is no reason why markup would be higher than the markup. They are just different formulaFor example if product cost is $60 as above the:
Selling price with 20% markup = 60 * 1.2 = $72
Selling price if we are told its a 20% MARGIN then will be calculated as below:
60 /1-0.2 = $75
You just need to be aware in CIMA questions which one is being asked ( markup or margin) a comparison between the two is not required.
Hope that helps
CathDecember 29, 2021 at 10:13 pm #645030Hi Kirsty,
Great question & sorry for the delay.One key consideration for this item is the adjustment of the cost of interest. The cost of interest is included in the finance charge (WACC*capital) that is deducted from NOPAT in the EVA calculation and
can be approached in two ways:Starting with operating profit, then deducting the adjusted tax charge (because tax charge includes the tax benefit of interest). Therefore,
we should multiply the interest by the tax rate and add this to the tax charge; or start with profit after tax and adding back the net cost of interest.
Therefore, we should multiply the interest charge by (1-tax rate).The reason we do this is that we are using WACC so otherwise we would essentially be deducting interest cost twice
So the accounting adjustments are to remove the distortions that accountants make to the figures.
expenditures on R&D, promotion, and employee training should be capitalised.Depreciation charge is added back to profit and instead, a charge for economic depreciation is made. This reflects the true change in the
value of assets during the period, unlike accounting depreciation.Accounts such as provisions, allowances for doubtful debts, deferred tax provisions, and allowances for inventory should be added back to
capital implied.Non-cash expenses should be added back to profits and to capital employed.
Operating leases should be capitalised and added back to capital employed.
Tax charge will be based on cash taxes, rather than the accruals-based methods used in financial reporting.
So its a cash based profit based calculation based on opening balances.
We want to know, what was the shareholder value before all the accounting
distortions?
Therefore, we would NOT adjust retained earnings brought forward because we are trying to establish the ‘value added’ for the shareholder.Hope that explains ok
Cath - AuthorPosts