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LMR1006

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  • September 3, 2025 at 7:52 am #719794
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
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    • ☆☆☆☆☆

    C. The credit period allowed to customers is reduced

    This would actually decrease working capital because it reduces receivables as customers pay their debts more quickly, leading to less cash tied up in accounts receivable.

    D. The credit period taken from suppliers is increased

    This would also decrease working capital because it increases payables, which are current liabilities. An increase in payables means that the company is delaying cash outflows, but it does not increase the net working capital.

    September 1, 2025 at 9:21 pm #719753
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
    • Topics: 4
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    • ☆☆☆☆☆

    Your most welcome

    September 1, 2025 at 7:38 pm #719752
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
    • Topics: 4
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    • ☆☆☆☆☆

    Your welcome

    September 1, 2025 at 7:37 pm #719750
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
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    • ☆☆☆☆☆

    https://opentuition.com/acca/pm/planning-and-operational-variances-part-2-variance-analysis/

    If a variance is under the control of the organisation it can be called an Operational Variance, whereas, if it is not under the control of the organisation it can be classified as a Planning Variance.

    Operational variance a variance in which non-standard performance is defined as being that which differs from an ex-post standard.
    Actual versus revised

    Planning variance a variance caused by ex-ante budget allowances being changed to an ex-post basis.
    Revised verusus budget

    August 31, 2025 at 9:46 pm #719701
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
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    • ☆☆☆☆☆

    The high-low method is not applicable here because it typically estimates variable costs based on the highest and lowest activity levels without considering fixed cost step-ups.

    In this case, the fixed costs change at a specific production level (15,000 units), which requires a more precise calculation using the equations derived from the budgeted costs.

    Since the variable production cost per unit remains constant between 10,000 and 20,000 units, we can determine it from the budgeted costs at these levels.

    For Level 1 10,000 units = Total cost of $81,900

    For Level 2 20,000 units = Total cost of $126,060

    The fixed costs increase by 15% when production reaches 15,000 units. Therefore, we can find the fixed costs for both levels of production. Which means 0.15 so the formulas are something like:

    FC + 10,000V = 81,900
    FC(1 + 0.15) + 20,000V = 126,060

    Solve the equations simultaneously
    Calculate the total cost for 16,000 units

    August 30, 2025 at 9:37 pm #719684
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
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    • ☆☆☆☆☆

    You are most welcome

    August 29, 2025 at 8:59 pm #719658
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
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    • ☆☆☆☆☆

    Have a look at the ACCA Formula Sheet given in the exam.

    And then have a look through the textbook to see what is not on the sheet.
    There are a lot not given that you have to know:
    ROI = (Net Profit / Cost of Investment) x 100.
    Gross Profit Margin = (Revenue – Cost of Goods Sold) / Revenue x 100.
    Efficiency, liquidity, investor ratios like:
    Debt-to-Equity Ratio = Total Liabilities / Shareholders’ Equity.
    EPS = (Net Income – Dividends on Preferred Stock) / Average Outstanding Shares.
    Etc …

    August 29, 2025 at 8:56 pm #719657
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
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    • ☆☆☆☆☆

    We calculate the interest saved at the same rate as the overdraft interest because it allows for a direct comparison between the cost of borrowing through the overdraft and the savings achieved by reducing the overdraft through advances received from the factor. When advances are received, the company saves overdraft interest, which is typically at a higher rate.

    August 28, 2025 at 10:22 pm #719643
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
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    • ☆☆☆☆☆

    Calculate the new earnings (profit after tax)
    You start with profit – $55 million.

    The interest on the bank loan that will be redeemed is calculated as 50 * 1.5 * 0.08 = 6
    Tax so 6 * 0.8 = 4.8
    New earnings after tax 55 + 4.8 = 59.8

    Total of shares in issue 100m + 50m = 150m
    Then 59.8/150m = 0.399

    August 26, 2025 at 9:57 pm #719611
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
    • Topics: 4
    • Replies: 1569
    • ☆☆☆☆☆

    Your most welcome

    August 26, 2025 at 9:22 pm #719610
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
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    • ☆☆☆☆☆

    Because it asks for:

    What is the estimated value of an KualaCo share?

    A share means equity

    Share value is calculated by dividing a company’s total equity value by the number of outstanding shares, or more simply, by multiplying the number of shares owned by the current market price per share to find the total value.

    August 26, 2025 at 7:46 am #719598
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
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    • ☆☆☆☆☆

    To approach make or buy questions with a limiting factor, follow these steps:

    Identify the Limiting Factor: Determine what resource is limited, such as material, labour, or machine hours.

    Calculate Costs: For each product, calculate the variable cost of making it in-house. This includes direct materials, direct labour, and variable overhead.

    Determine Savings: Calculate the savings per unit by subtracting the variable cost of making the product from the purchase price offered by an external supplier.

    Calculate Savings per Limiting Factor: Divide the savings by the amount of the limiting factor required for each product. This helps in ranking the products based on their contribution to savings relative to the limiting resource ensuring that you maximise the use of the limited resource.

    Consider Fixed Costs: If there are direct fixed costs associated with the products, assess whether they should be included in the decision-making process, depending on their relevance to the specific scenario.
    By following these steps, you can effectively analyse make or buy decisions in the context of limited resources.

    Rank Products: Rank the products based on the savings per limiting factor. Start with the product that provides the highest savings per unit of the limiting factor.

    Make Decisions: Based on the rankings, decide which products to manufacture in-house and which to purchase from external supplier. ensuring that you maximise the use of the limited resource.

    Consider Fixed Costs: If there are direct fixed costs associated with the products, assess whether they should be included in the decision-making process, depending on their relevance to the specific scenario.

    August 26, 2025 at 7:39 am #719597
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
    • Topics: 4
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    • ☆☆☆☆☆

    This is a make or buy question not a simple limiting factor question

    Because it clearly states

    An external supplier has offered to supply units of Natural, Fruity and Luxury for $11, $17 and $25 per unit respectively.

    So you have to consider the cost of buying it externally versus the variable cost of making it.

    Watch John’s video and then return to the question

    https://opentuition.com/acca/pm/short-term-decision-making-make-or-buy-decisions-acca-performance-management-pm/

    August 23, 2025 at 11:14 pm #718957
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
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    • ☆☆☆☆☆

    Convertible loan notes

    After-tax interest payment = 6·5 x (1 – 0·26) =$4·81 per loan note

    Conversion value = 11·09 x 1·065 x 8 = 14·84 x 8 = $118·73 per loan note

    The conversion value of $118·73 per loan note is greater than the redemption value of $100·00 per loan note and, as shareholders are assumed to choose the option that maximises their wealth, conversion is expected to occur.

    Then use IRR to find cost of debt.

    August 22, 2025 at 10:31 pm #718925
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
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    • ☆☆☆☆☆

    What are you struggling with?
    You cannot expect us to do a complete question for you
    Where is the question from …do you not have an answer to work through?
    Watch John videos for assistance

    https://opentuition.com/acca/fm/discounted-cash-flows-net-present-value-acca-financial-management-fm/

    https://opentuition.com/acca/fm/discounted-cash-flow-internal-rate-return-acca-financial-management-fm/

    If you still require help please let me know….what it is you need guidance with.

    August 22, 2025 at 7:50 am #718904
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
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    • ☆☆☆☆☆

    Because it relates to a graph and says quantify your answer
    Kaplan must have decided not to disclose an answer to this.

    https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/f5/exampapers/f5pbe-2018-marjun-a.pdf

    August 19, 2025 at 9:41 pm #718858
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
    • Topics: 4
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    • ☆☆☆☆☆

    Watching all the videos
    Working through the open tuition notes
    Have a good text book for reference
    Work through as many questions as you can – from an exam kit and the ACCA hub
    This should prepare you well

    August 19, 2025 at 7:12 am #718837
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
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    • ☆☆☆☆☆

    No the variances is based on the actual units produced at the standard

    AQ. AP

    Gives you price

    AQ. SP

    Gives you usage

    Au * SQ * SP

    It’s a flexed concept

    What did we actually make!

    Watch John’s video on this
    Try to move on from this
    It’s a 2 mark question

    The favourable material usage variance means that we used less material than expected which could have been caused by reduced levels of wastage in the production process.

    August 18, 2025 at 10:27 pm #718834
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
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    • ☆☆☆☆☆

    The answer is in the book

    Measures whether more or less material than expected during production, and it’s a key part of variance analysis.

    It’s calculated by comparing the actual amount of material used to the standard amount that should have been used, based on actual production output, and then multiplying the difference by the standard cost per unit of material.

    Usage looks at the……Difference between
    AQ at Std Price
    Std qty at Std Price

    AQ. SP

    408.5 / 152 / 10

    1.80 / 2.2 / 20

    735.30 / 334.4 / 200

    = 1269.70

    SQ SP – 950 @ 1.34 = 1273

    Is 3.3F

    August 17, 2025 at 9:49 pm #718817
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
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    • ☆☆☆☆☆

    The solid line of the Period 5 PV chart typically represents the cumulative profit/loss as each product’s contribution is added to the sales mix.
    The average profit which will be earned from the sales of three products in this mix.

    This is because the profit-volume chart illustrates how profits change with varying levels of sales, and the solid line reflects the average profit derived from the combined contributions of the products being sold.

    Each product contributes to the overall profit, and the average profit line helps visualise the profitability of the sales mix over the specified period.

    August 17, 2025 at 9:43 pm #718816
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
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    • ☆☆☆☆☆

    The relevant cost statement for the engineers’ costs should include the penalty of $500 for missing the contractual deadline on Contract X.

    The salaries of the engineers are considered sunk costs and therefore irrelevant, as they will be paid regardless of whether they work on this contract or not.

    Since there is no other work scheduled for the engineers in that week, the lost contribution from Contract X is not considered relevant because the engineers will still be able to complete it later.

    Thus, the only additional cost incurred is the penalty for the delay.

    August 17, 2025 at 9:30 pm #718815
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
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    • ☆☆☆☆☆

    To calculate the labour rate operational variance for product MN, we need to compare the actual labour rate with the revised standard labour rate.

    Budgeted Labour Rate: $8 per hour
    Actual Labour Rate:
    8×1.25=10 per hour (due to the 25% inc)
    Actual Labour Hours: 798,000 / $10 = 79,800 hours
    Labour Rate Variance = (10?8) × 79,800
    So it is 2×79,800=159,600 Adverse
    Thus, the labour rate operational variance for product MN for the last quarter is $159,600 Adverse.

    August 17, 2025 at 9:19 pm #718814
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
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    • ☆☆☆☆☆

    The correct approach is to consider the total savings and how they affect the overall loss.

    Total Loss:
    (100m)+(10m) = $(110m)

    If the overall savings from closing Division A are $75m then
    Revised total divisional loss:
    (110m)-75m = $(35m)
    Thus, the revised total divisional net loss is indeed $35m, as stated in the answer you provided.

    August 17, 2025 at 9:09 pm #718813
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
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    • ☆☆☆☆☆

    Option D, is consistent because TOC emphasises maximising throughput while minimising operating expenses.
    By keeping conversion costs low, organisation’s can improve their overall efficiency and profitability.
    This focus on minimising costs aligns with the TOC principle of optimising the system’s performance by addressing constraints and ensuring resources are used effectively.

    August 17, 2025 at 9:04 pm #718812
    259370296da07911609929636fafb2ceea4a9427b3e32f05c72e333a167cc341 80LMR1006
    Keymaster
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    • ☆☆☆☆☆

    While JIT is a pull system that aims to produce only when there is an order, having a reliable forecast helps in planning and timing orders to avoid stockouts and production delays.
    Thus all three components are integral to the effective functioning of a JIT system.

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