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BPP MA Revision Kit 2020-2021, Accounting for Material, 5.17 & 6.2

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › BPP MA Revision Kit 2020-2021, Accounting for Material, 5.17 & 6.2

  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by John Moffat.
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  • Author
    Posts
  • March 3, 2021 at 6:03 am #612886
    Asif110
    • Topics: 53
    • Replies: 104
    • ☆☆

    Greetings sir,

    In 5.17, I do not understand why they explained in the answer section that Point D is the holding costs at the EOQ.

    What happened to the ordering costs ? Is this curve not representing the total costs ?

    In 6.2, to find the expected hours, if I total the standard machine hours and divide the answer by the total of budgeted units to get budgeted hrs per unit and then multiply the result with the total of the actual units produced to find the expected hours needed to produce those actual units, I get a slightly different (higher) value , thus leading to 98.3% efficiency ratio as a percentage, compared to the method provided in the answer page where they do the working for Product W, X , Y & Z separately, leading to the answer 96.2%.

    Why does this difference occur ?

    Thankyou.

    March 3, 2021 at 9:44 am #612942
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49595
    • ☆☆☆☆☆

    5.17: It is a typing error. Point D is the total costs at the EOQ. However the answer to the question remains correct as Point C.

    6.2: You cannot just take the total hours and divide by the total units – that makes no sense. Suppose in an extreme they ended up only producing Product W. In that case every unit produced should have take 0.2 hours – you would not use the average for all 4 budgeted products.

    March 3, 2021 at 6:35 pm #613144
    Asif110
    • Topics: 53
    • Replies: 104
    • ☆☆

    Thankyou.

    March 4, 2021 at 8:02 am #613233
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49595
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
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