[kirit]

Thank you.
Thank you for the full explanation as well. Gratefully appreciated.

[kirit]

100% or 1 ($44210)
It’s the total DL + DM isn’t it ? The prime cost ?

[kirit]

Hello,

I need your help please. I’m going over this question again. Thanks.

$44210 (100%) What does this represent please ?
Does it represent the 100% completed job BA ?

[kirit]

OT PREMIUM is indirect cost
OT BASIC RATE is direct cost

If the customer specifically requests that OT is worked, perhaps to complete the order on time, then the entire OT- BOTH BASIC AND PREMIUM is a direct cost

[kirit]

I always thought that OT was IL unless it was worked at Cust req, in which case it was then DL?

[kirit]

Thank you for the formula sheet. I’m grateful.

[kirit]

Am I correct please?

Basic hourly rate: 35 hrs x $5.50 = $192.50
OT: 4 hrs x $7.5 = $30
So 39hrs = $222.50

39hrs / 3hrs per unit = 13 units

$222.50 / 13 units = $17.12 (Hourly Labour unit cost)

Automation process hourly rate: 35 hrs x $5.50 = $192.50

35hrs / 2.5hrs per unit = 14 units

$192.50 / 14 units = $13.75 (Automated unit cost)

The effect of new system on unit labour cost:
$17.12 – $13.75 = $3.37 decrease

[kirit]

I’m really stuck on this question as well.

I’m even more confused because the answer mentions 50 employees and then refers to the 50 employees throughout the answer.

But it doesn’t mention 50 employees in the question.

[kirit]

Thanks.Well.That pretty much sums that up.
I was wondering how similar the i-pass questions are to the real CBE questions.
I shall purchase it, find out and let you all know.

I would like to add you to whatsapp please, as I know you’re not on FB. I know you posted your number previously.

Good luck with F2

[kirit]

Hi there, I’ve read through the notes in Chapter 8 Labour Costs and Remuneration Methods, Page 62.

I’m guessing that the errors have already been corrected ?

Thanks.

[kirit]

Thank you for your help John. The question has not been taken from a Revision Kit.
I felt it wise to practice as many F2 questions as possible, taken from a variety of sources.

[kirit]

Taking what you have stated above:

The difference in profit is always equal to the change in inventory multiplied by the standard fixed production cost per unit.
[Change in Inventory] x FPOH

Difference in Profit = AC Profit= $2000 – MC Profit = $3000 = $5000

You know the difference in profit, and you know the fixed cost per unit.
You can therefore calculate the change in inventory.

Working backwards, I would assume (and I could easily be wrong as I’ve not come across this before)

Change in Inventory = $5000 / $2 = 2500 units

Since you know the sales, when you know the change in inventory you can calculate the production.

Again I’m uncertain about the following, however:

Where AC Profit > MC Profit then CI > OI. This applies here

I’m uncertain about the production part, so if I do get this part wrong can you please tell me what the correct answer is, and how I should have arrived at it please John.

However, I would assume that:

As production is greater than sales because here CI is greater than OI then:

Sales = 10,000 units + [2500] = 12,500 units = Production

[kirit]

Thank you John I’m grateful.

[kirit]

Hi John, thanks for your guidance and assistance.

Unfortunately I failed to understand the answer provided in the study text due to its brevity.

Thanks

[kirit]

Thank you for your guidance John.

Thus, I shall also presume that
“Budgeted overheads were $615,000”
is ancillary information and need not be used within any required calculations for this question.

[kirit]

As a brief follow-on from the above query. I’ve noticed that the following information was also included in the question:

Budgeted overheads were $615,000

Should I presume that the above has been included as a “red herring” ?

[kirit]

Thank you John. I’m grateful to you for your assistance.
I shall watch the free lectures provided. Thank you

[kirit]

Thank you both for your assistance. I’m grateful to you both.

Although I was certainly confused when working through the question, I feel a great deal clearer about the question now.

Thank you both once again for your guidance. It’s gratefully appreciated.

[kirit]

I had to think about that question a bit more carefully and read the question more carefully.
I think I got quite confused with other similar question on bonus schemes with unit productions and basic rates.

I’ve also realised that with all other questions that I have previously encountered, although there is a basic rate per hour, the employee has always worked the full hour, but has been more effective in terms of unit production whilst still working the full hour. Hence another reason for my confusion.

Thank you for your patience, and guidance in this question.

[kirit]

My apologies John,

I’m still very confused.

Am I wrong in assuming that the basic rate should remain at $6 an hour, regardless of the time spent on the job ?

My assumption was that the allowed time for the job was 1 hour (60 mins) but the employee completed the job in 40 mins and thus was awarded a bonus for the time saved in completing the job.

If the bonus premium is calculated as follows:
Rowan scheme: Bonus scheme = Time Taken / Time Allowed x Time Rate x Time Saved

Bonus=
60-40= 20mins
40/60 x $6/60 x 20mins
0.66x 0.1 x 20mins =$1.33 (Bonus Rate)

If this is added onto the basic rate of $6 an hour, then wouldn’t the total payment be:

$6+ $1.33 = $7.33

However, if I look at the answer you have kindly provided above:

The basic pay is $6 per hour.

Since they only worked for 40 minutes (and there are 60 minutes in an hour) their basic pay is 40/60 x $6.

It would almost appear as if the employee is “penalised” for completing the job in under an hour, as they have managed to complete the job in 40 minutes, as opposed to the standard time of 60 minutes ?

My apologies, I think I may have misunderstood the question, or the answer. I would be grateful for your clarification. Thank you.

[kirit]

John,

Does the above sort of mean that to obtain 5 hours of productive work , the factory employer must pay the workforce for 6.25 (or 6hrs 25 mins) of work ?

Thanks

[kirit]

Thanks John,

It’s taken me a while to get my head around this one.
The first time I read what you wrote about, I thought it would be 80/100 x 24,000 hours. But it’s not

I’m starting to understand. They pay their workforce for 30,000 hours, of which, only 24,000 are productive hours.

(100/80) x 5 = 6.25
6.25 x 4800 = 30,000
30,000 x $10 = $300,000

[kirit]

I’m very grateful to you for your help so far with the other questions that I have requested help with.

I would be really grateful if you could kindly assist me with the above question that I have unfortunately become stuck with. Thank you

[kirit]

Morning John,

Thank you. I completely agree. I got the question from:

Kaplan F2 Exam Kit 1st Sept 2015 – 31 Aug 2016
Section A type questions Section 1
Syllabus Area B – Cost A/C Techniques Accounting for Materials
P27 Question 86 & Answer on P153

Although it’s from the exam kit, I think I will give this question a miss and focus on the other areas of the chapter. I’m guessing that’s probably a wiser move. Who knows it could possibly be some sort of error on their part, either the publishers or the exam board.

I didn’t recognise the formula they used. It wasn’t in my text book and I haven’t come across a similar question before.

[kirit]

A large store stocks chairs. The following info is available

Then it proceeds to give the info above.

[Author]

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