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Second question :
A contract requires 100 hours of skilled labour.
Labour is paid $5 per hour.
Labour is currently fully occupied making another which is generating a contribution of $8 per unit.
Each unit of the other product requires 2 hours of skilled labour.What is the relevant cost for labour? (Answer is 900 but how?)
Correct me if my understanding is right : the general apportionment of $20k is to be excluded from the $64k for keypads is because it is not relevant fixed cost?
Could you kindly explain the heat and power costs under note 3 for me also? Why is it considered as attributable fixed costs? What are the variable and fixed costs in that note and why do we take into account of fixed cost into this costing.
Sir, I’m not sure but you did mention in your lecture that whenever a question has a fixed cost (just like this question), it’s considered not relevant. But why is it the otherwise here?
Sir, why do we deduct the $1,235,000 with $900,000 instead of the $400,000 for the incremental cost for cost of sales?
Well, never mind. I think i’ve figured it out. its not about the cuts or treatments involved. its how many senior stylists there are for the bottleneck activity. the total salon hours per year is 2,400 and senior stylists’ time has been described as the bottleneck activity and there are 3 senior stylists. so 2,400 x 3 = 7,200 hours. correct?
Sir, past year (December 2013) question 2 : TPAR part b).
I do not know why in the given answer by the examiner its stated as 1,000 units for small panels and 1,500 units for large panels.
I did mine according to the ranks of the return per factory hour which is Large panels is 1 and small panel is 2.
So the units I put large panel as 1,800 units (maximum) multiplied it with its machine hours per unit and the remainder from the 2,700 bottleneck hours will be the hours for small panels resulting to 300 units.
Am I wrong using the method which you’ve used for your lecture notes?
To be honest, I don’t get the whole part B for this question. Even after trying to refer it to the exercises and examples that I did on the lecture notes on “Transfer Pricing” countless of times.
Let me try again as this is how I understand the question.
$5,340,000 is the contribution to C Co and then, it is added to the marginal cost (variable cost of $884k ($2,210,000 x 40%) from the remaining internal sales of $2,210,000 ($7.55mil – $5.34mil) making it $6.224mil for the minimum transfer price to Gearbox division??
Yea, I thought so but I had no choice coz I was given this kind of question by my own lecturer although I’m taking ACCA, not CIMA 🙁
In part b) as per the answer : 1,983 units are unsatisfied from the non contract demand of 4,000 units and it requires more of Material B than is released. I’m stuck at why product K should be manufactured at 1,050 units.
That explains it. Sir, for the relevant selling price per unit.. which column should i see for each product? Is it the one with 3k units or 5k units? Coz no matter which one I choose to calculate out the sp/unit, it gives the same figure.
I’ve watched the F2 lectures but I didn’t know we are to use the high-low method for this kind of question >.<
Ooohh! How come only overheads we are to use the high low method and the rest are different?
And Sir, the overhead on note 4. I divided $6k with 3k units resulting to $2 per unit but the answer showed $1 per unit. I don’t get it 🙁
Sorry, my bad. I didn’t intend of posting it but it was difficult to type the entire question down.
Here, you used ‘budget price per unit over original cost’ formulae to get the budgeted unit?
Alright. Sir, one last thing on this question. what’s the difference between B and D?