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Oh yes sir mybad and one last thing sir for the first sentence after getting the value of scrap and cash flow discounted one, we are going to add it right? And then divide it from cash out flow which is $300,000 to get the discounted payback period
No sir i found this question posted by someone else in a different post, but no answer was provided reason why asked if my answer was correct, because I’ve not included idle labour hours, as it asks for direct labour cost
I’ve calculated the basic rate as 2300 hours are basic, but the overtime they’re working overtime premium wouldn’t be direct unless it’s specified on customer req, but we would calculate overtime basic
Aka 1 ×500 hrs ×$7.2, and for premium it would be 0.5 ×500×$7.2,
So in total it makes 1.5, so I’ve calculated overtime basic and the basic hours 2300 basic rate and got 19440 answer deducting idle time hrs from that. Please could you tell me if I’ve done it correctly, as my exam is scheduled tomorrow 27th
And if we do the opposite? Like deduct all variable costs( selling and production) at the start both from sales, would that be enough? Or we would have to deduct closing inventory after that? The rest i got it sir
And sir in discounted as we got just one cash flow each year 90,000 so we are going to discount it at annuity factor while for scrap we are going to use normal discount factor?
Also sir last thing you calculated accounting rate of return, using these values
Depreciation 300,000-20000/5=56,000
Deducting that from profit 90,000-56000=34,000 average profit after depreciation
But sir when we calculate average profit are we not going to divide it with number of years?
I got the average investment
I know you asked that question from sir, but because he has shared the knowledge with me, I don’t mind passing it to you
Capital employed = share capital+reserves+long term liability either that
Or you can calculate it doing it this way too
Total assets (current and non current assets) – current liability
Hope it helps 🙂
Sir this is the last question I’m confused about, because I’ve prepared every topic, please help me out with this one, I’ve tried to figure out what they’re actually doing but i think an explanation will clear it all, thankyou sir!
Yes sir i goofed up with perspective, but those dimension’s it wasn’t there in bpp text reason why i couldn’t figure out if learning is there or not, but I’ve just studied about the dimensions which are financial success, competitiveness, resource utilization, innovation, and quality
Thankyou sir i got it!
At first did think about that 4-8 years would be 5 years of receipt but i just confused myself further, really sorry for bothering sir! Thankyou for clearing the confusion
Mybad sir, really sorry i got confused because there were 2 different budgeted production, it’s probably because my exam is close which is why i couldn’t tell fixed doesn’t changes with level of production. Thankyou so much sir!
Oh okay sir sorry for being annoying, but those variable selling costs, at first if we deduct all the variable costs (production and selling) from selling cost we are going to get contribution, either that or if we deduct closing inventory from variable cost of production to get variable cost of sales and then deduct that from sales, isn’t that enough? That we have to further deduct variable selling cost as well? This is the only thing confusing me
What is the present value of $2000 per annum, receivable for a total of 8years time with the first receipt being in 3 years time, with interest at 5% per annum? To the nearest (000’s)
This question sir I’ve just attempted the tests of open tution, sir in this answer it’s done like this
Because first receipt is in 3 years time and the 8 receipt will be in 10 years time, I don’t get this as well, if we are doing it like this, then in my previous question since first amount is received in 4 yrs time, 2nd will be in 5 and goes till 11 years to get the 8 because it has total cash flows till 8 years
If we do like that calculate 11 years annuity and then 3 years to get 8 years, that is also incorrect sir, please could you explain me what actually we are doing in both of these questions, i really would rewatch your lecture but that will just panic me further because my exam is by 27 I don’t have much time left
No no sir i know those are budgeted fixed overheads of task 1, $120,000, that’s why i typed they’re using 5000 budgeted tones which is multiplied by 24 to get 120,000 for budgeted production as they’ve written that 120,000 is budgeted production and 6000×24 is 156000 actual production
Because it asks us for volume, for fixed overheads budgeted ones which we calculated in task 1, we used that to find fixed overhead expenditure variance, but for volume we need budgeted production and actual, but we got 2 budgeted production lvls 5000 and 9000, and they’re using 5000, I can’t understand
Yes it shows the working sir but I did try to understand what figures they’re using still I couldn’t get why are they using certain figures that’s why i wanted to get clear, i got it now thankyou sir!
Sir i am aware of this subtraction but i just don’t understand because it says first amount will be received in 4th year and also it says cash flows will be each year from 4 to 8, but if we just deduct 3 years it will leave us with 5 years? I have exam by 27th otherwise i would re watch your lectures where I’ve confusion sir and I didn’t get why aren’t we adding that amount being received in first year? As that is a cash flow as well?
Yes sir indeed we subtract closing inventory from variable cost of production to know variable cost of sales and then we deduct that from sales in order to obtain contribution but sir in that lecture you’re deducting variable cost of sales twice, that’s why I’m a bit confused, once we deduct variable cost of sales from sales that is contribution and then we deduct all the fixed costs to get profit
Sir i just watched both of your lectures on this absorption and marginal costing, and one thing i didn’t get that is in marginal costing, first you deduct variable production costs from closing inventory when we do that, we get variable costs of sales and then you deducted that from sales and i thought it’s contribution, but sir again from that value you deduct variable cost of sales, why that?
In exam if in standard cost card they provide us with variable cost of sales and variable production cost are we supposed to deduct all of them from sales? To get contribution? Also sir if we already got variable cost of sales, why do we have to deduct closing inventory? As we do that only to find cost of sales, I’m confused here. could you please explain me that
No sir i didn’t ask for any other answer just net cash flow, as with the other figures I’m clear about them, but I can’t figure out net cash flow but I’ve tried it again because it asks to calculate npv of the new technology so I’ve done it like this
75000 cash inflows each year so for the 5 years 75000×3.791= 284325 less fixed cost each year will be 15k for the 5 years it will be 75000
209325 and then adding the sale proceeds at the end 60000=269325 but that is present value sir? New technology costs $250000 we are going to deduct that from this value to get net present value?
Answer 19325 npv positive, am i right sir?
Sir i calculated net cash flows please correct me if I’m wrong
Cash flows per year 50000 cost of capital 10% present value of cash flows =189539
Cost =250,000-189539=60461
Npv is still negative, or did i do something wrong sir?