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Included in the fixed costs are depreciation costs of $165,000 and $460,000 for Divisions C
and E respectively. 30% of the depreciation costs in each division relates to assets controlled
but not owned by Head Office.—————————————————————————————————————————-
Sir, I understand how to derive controllable profits for each division. But I want to know whether the asset base would be reduced as well when calculating ROI. For example, 30% of Division C’s depreciation costs (which is $49,500) would have to be reduced from its closing asset figure since that portion of asset is controlled by head office rather than the Division C?
I pondered over their maximum inventory thing for a long time, and my thought always ended up with 120 chairs, just as you explained to me. Huge relief to hear from you! Thank you!
I watched all of your lectures(which is super helpful!), and some I watched several times to sort out my brain.
Thank you for clarifying. I forgot that there would be the adjustment for the under-over-absorption of fixed overheads. In fact I often forget this when I tackle the exam kit, but I think I remembered it firmly this time:)But this problem doesn’t specify which costing method to use. If absorption costing is used, the flexed fixed overhead should be 5 x 6000 = 30000, resulting in a flexed profit of 6000 x 12 = 72000. Sir, how can I determine if the question expects the answer using marginal costing instead of absorption costing?
So If I don’t take up my rights, the rights will definitely go to someone else(ex I can sell the rights to someone else?) instead of just expiring or something and disappearing in vain?
In that case, I understood.
Thank you!
I also think the answer is A. Because if the volume of sales remains with the major customers take advantage of the extended credit terms, then receivables will increase but at the same time cash will decrease since the amount of cash which the company could have received earlier before offering extended credit terms is now confined in receivables. So current ratio should not be affected when the total of numerator(Receivables and cash and inventory) remains same(upward receivables counteracts downward cash)?
Please tell me what I am misunderstanding here.
Could you kindly tell me which FA video lectures contain explanation of equity accounting as there are many lectures on group accounts from chapter 22 to chapter 25?
But If preference shares are irredeemable, shouldn’t it be classed as equity along with ordinary shares? Hence the total equity in the question should add in 8% $1Preference share $100,000?
So the total payments credited to the cash account is understated by 10,000 while the total debits posted to the individual accounts is not understated therefore the suspense account arises. I got it. Thank you very much.
I got it.
What matters is the meaning of the figures rather than the names.Thanks 🙂