[johnpinto]

thanks sir………….

i want to know can a company revalue there assets even when they are not shutting down cause showing the assets at fair value means its opposing the going concern concept which states that asset should not be shown at break-up value unless we are stopping the operation .

[johnpinto]

IAS 2- states inventory should be valued on the basis of absorption costing (including fixed manufacturing o/h). In financial accounting do we still use the pre-determined o/h absorption rate to value the goods or we use actual o/h cost?

[johnpinto]

also in variance ch. u said we value closing inventories at standard cost ignoring the actual cost. so does that mean next month when that becomes opening inventory we value it at standard cost only. right

[johnpinto]

so that means when we prepare budget we don’t account for idle time separately and include it into the standard labour time.
We only record idle on actual basis when it incurrs. Am i right?

and in any question related to budget will we put idle time into direct labour cost budget unless its specified

[johnpinto]

actually alng with ot i also refer to study text of kaplan where they define direct cost as

Direct expenses are expenses that can be directly identified with a 
specific cost unit or cost centre.So i told that in that sense.

another thing i want to know keeping apart the rent, all the overheads are first allocated to the cost centers and then they are further apportioned to the production centers and then we find out overhead absorption rate.

i wanna know not getting into detail to get the logic- it how overall step by step its done?

[johnpinto]

okay
one thing sir can u plz clarify me the exact meaning of opportunity cost

is it the profit forgone from next best alternative or

it is the best among all the alternatives………..and if the best one chosen then there is no opportunity cost. as the example given. The man choose the option of getting return of $140, which was best among the 2 option.

and another question does relevant cost also consider the future cash inflow which may have been earned if a alternative is chosen or it only refers to the future incremental cash outflow and not cash inflows.

[johnpinto]

Answer given $13 (relevant cost)
the net cost of moving the labour to process B
is ($25 – $10 – $2) = $13 per unit.

My first question is opportunity cost is the loss of other alternatives when one alternative is chosen.So does it mean the total sales revenue forgone i.e; $25 is the opportunity cost or (revenue – expenses) will be opportunity cost.

and why the labour expenses haven’t been deducted from that i,e; $6

[johnpinto]

im not asking from data information perspective.

I want to know in labour chapter this Total Labour Hours worked,what does it mean by that

example
Say a company whose normal labour working hours is 40/week
and there are 10 labours working

So total labour hours worked
will be 40 hrs/week
or,
it will be (40×10)=400 hrs/week

i mean to say does it denotes the normal working hrs/week for a particular labour that is 40 inthis case
or it includes each of the labours working hours/week in that company added up .

which one this total labour hrs denotes?

[johnpinto]

ok i understand it well now

so just total of production and electricity or sales doesn’t make it an information , though it is processed but its not that useful unless it been made more clear or we do further analysis of this total cost which would make it more useful or add meaning to that , and then it can be termed as information as it will help the managers to take decisions.

[johnpinto]

i think i got the logic.

even this data might be found out thru calculation but
This total purchase of a period is not of any use for the manager to take decisions.So is it the reason of this being a data and not an information . Please tell if im right?

[johnpinto]

over that the total purchase also informs the manager about how much units they have bought on a particular period

[johnpinto]

thanks sir john ,i got answer to 1 and 3 question.

related to 2nd question……………so was i right on this that i stated
production rate/hr is a data,
total production last month is an information as we get that thru multiplying the total hours worked last month with production rate/hr.

and u said something that is useful for managers is an information.But i actually looked into it on basis of whether its processed or not. is it okay to do that.

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