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I am surprised that there seems to of been quite a wide range of questions. A lot of what people are talking about was not on my exam?
@aglong said:
I’d be interested to know how other people approached the last question – as there was no BS sheet info, couldnt perform ROCE (etc.) calculations… apart from gross and net profit margin %’s, what other calculations did other people use?Thanks
I looked at the fact that without North America they would of lost a lot more (calculated that) Looked at the cost of debt and how much it would save them in the next 12 months based on both results and there prediction. can’t remember the 6th one
@meva2002uk said:
I am surprised that there seems to of been quite a wide range of questions. A lot of what people are talking about was not on my exam?same here…how come we had different exams?
@anastassiya777 said:
same here…how come we had different exams?Theres 2 sessions a morning and afternoon, both with different questions, i did afternoon and i think most of these about the morning paper.
THe North America question was in the afternoon paper.
@sal2222 said:
Theres 2 sessions a morning and afternoon, both with different questions, i did afternoon and i think most of these about the morning paper.THe North America question was in the afternoon paper.
and purpose to do it?
@sal2222 said:
Theres 2 sessions a morning and afternoon, both with different questions, i did afternoon and i think most of these about the morning paper.THe North America question was in the afternoon paper.
Our last C question was about travel agent and flights to North America, are talkung about the same one? I had it in the morning session…. The other C question was about vacuum cleaners and variances
@chuebapu said:
How did you calculate OAR figure for the two profits?If you are talking about the vacuum cleaner question, I just added up the budgeted units of production for both types of vacuum cleaner and apportioned out the rent, rates and depreciation costs that way.
@odean20 said:
I think it was lowest figure between the current purchase price 120000 and the resal value of 9000. Therefore 90000it was 120000.if u resale the machine,u will have to buy a new machine which will cost 120000,making it replacement cost.
@heychi said:
I’d be interested to know what people put for:Characteristics of service question. I actually thought they were all characteristics lol.
Figures for the Variances – sales mix was favourable for me and sales quantity was averse.
Figures for profits: $301 or something and $449 for the other budgeted.
OAR – $146 per unit. yes exactly profits 301 and 449…..OAR $146 per unit
Did anyone get the same?
What I did was,I added all the three fixed cost and divide by the budgeted number of units of each vacuum cleaner.
@beloslava said:
I got the same as contribution forgoneThis question was tricky. Everyone had different answers for this.
Anyway, my logic is that sales revenue isn’t really relevant I don’t think, but the contribution from the sales would be. Did the question say $110k was the contribution or just the sales?
Let’s say $110k is a relevant cost, then surely the $120k used to buy the replacement machine in the 1st place should have been as well..? Making a total of 230k. But this wasn’t an option. If it’s just sales of $110k and no further information, then wouldn’t it be a loss of $10k because the machine costs more?
The question said they needed extra capacity for the project, and already had in stock this machine they hadn’t used for 2 years which they could use for it. In my mind, it means they don’t use that machine often. So they could have resold it for the $90k had it not been for the project. They didn’t actually need to buy the new machine.
It would be really good if this question comes out in the next specimen/practice paper so I can see what the answer was. Anyway, If anyone passed F5 I don’t think they’d be interested in looking back anymore! Myself included haha.
@schon1234 said:
it was 120000.if u resale the machine,u will have to buy a new machine which will cost 120000,making it replacement cost.I think it was the Highest of NRV and Value in use. in this case the NRV was higher thus $110,000
@heychi said:
This question was tricky. Everyone had different answers for this.Anyway, my logic is that sales revenue isn’t really relevant I don’t think, but the contribution from the sales would be. Did the question say $110k was the contribution or just the sales?
Let’s say $110k is a relevant cost, then surely the $120k used to buy the replacement machine in the 1st place should have been as well..? Making a total of 230k. But this wasn’t an option. If it’s just sales of $110k and no further information, then wouldn’t it be a loss of $10k because the machine costs more?
The question said they needed extra capacity for the project, and already had in stock this machine they hadn’t used for 2 years which they could use for it. In my mind, it means they don’t use that machine often. So they could have resold it for the $90k had it not been for the project. They didn’t actually need to buy the new machine.
It would be really good if this question comes out in the next specimen/practice paper so I can see what the answer was. Anyway, If anyone passed F5 I don’t think they’d be interested in looking back anymore! Myself included haha.
………………………………it was written in the end that the machine can be used for other project which will give 110k profit
@schon1234 said:
………………………………it was written in the end that the machine can be used for other project which will give 110k profitRemember profit is not a relevant cost.
Profit is non cash therfore not relevant
@odean20 said:
Remember profit is not a relevant cost.Profit is non cash therfore not relevant
………………..profit is not relevant but company will have to buy 120 machine for that project.it means this existing machine can be used in the future.
@schon1234 said:
………………………………it was written in the end that the machine can be used for other project which will give 110k profitMy understanding is that. We had 2 options
A) Either to use the exiting one B) get a new one
A) Using exiting one would mean that we will not be able to sell it (at NRV for 90k) or use it in a project which generates net income of 110k (i guess question said net income) – Remember, we always forgo the next best opportunity – in this case higher of 90k or 110k , which is 110k
B) Buying a new one will result in us spending 120k.
So the one making decision would select the option that minimizes the cost, so lower of A or B , which is A – 110k.
Hope we all pass, I don’t want to attend this annoying paper againnn!!!
@schon1234 said:
………………………………it was written in the end that the machine can be used for other project which will give 110k profit……………………….It said 110k income not profit which is what I thought and someone else has just confirmed it.
@rajeshram said:
My understanding is that. We had 2 optionsA) Either to use the exiting one B) get a new one
A) Using exiting one would mean that we will not be able to sell it (at NRV for 90k) or use it in a project which generates net income of 110k (i guess question said net income) – Remember, we always forgo the next best opportunity – in this case higher of 90k or 110k , which is 110k
B) Buying a new one will result in us spending 120k.
So the one making decision would select the option that minimizes the cost, so lower of A or B , which is A – 110k.
Hope we all pass, I don’t want to attend this annoying paper againnn!!!
I definitely had the same understanding. I really wish they publish the answer to this in future. There is no point speculating over this question anymore. Good luck to you too and I hope we all do too!
@rajeshram said:
My understanding is that. We had 2 optionsA) Either to use the exiting one B) get a new one
A) Using exiting one would mean that we will not be able to sell it (at NRV for 90k) or use it in a project which generates net income of 110k (i guess question said net income) – Remember, we always forgo the next best opportunity – in this case higher of 90k or 110k , which is 110k
B) Buying a new one will result in us spending 120k.
So the one making decision would select the option that minimizes the cost, so lower of A or B , which is A – 110k.
Hope we all pass, I don’t want to attend this annoying paper againnn!!!
My point also was that spending £120k to generate £110k, is that not a loss of 10k already? So not the best alternative? nobody has answered that.
@heychi said:
My point also was that spending £120k to generate £110k, is that not a loss of 10k already? So not the best alternative? nobody has answered that.From my understanding, is why should we buy a new one when we can use the old one instead and incur the opportunity cost of the higher of nrv and value in use.
@chally said:
From my understanding, is why should we buy a new one when we can use the old one instead and incur the opportunity cost of the higher of nrv and value in use.Exactly. We didn’t have to buy the new one and if we did, there would be a loss.
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