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- This topic has 8 replies, 2 voices, and was last updated 3 years ago by John Moffat.
- November 7, 2019 at 8:18 am #551748
Example 1 from opentuition
At part D- calculate the purchase material .
why didn’t you place the difference of inventory from Y ( decease 200 unit ) when calculate the decrease in inventory ?
Why only X and Z work out in this one ?
Thanks Mr JohnNovember 7, 2019 at 7:58 pm #551798
We use the change in the inventories of finished goods in order to calculate how many units of each product we produce.
When we know how many of each product we produce, then we can calculate how much wood and varnish we need to use.
To calculate how much wood and varnish we need to purchase, we take the amount of wood and varnish we need to use and adjust by the change in the inventory of wood and varnish.November 9, 2019 at 2:22 pm #551873
Thanks for your reply .
Btw , chapter 17 and 18 will solve questions from budgeting , budgetary process and making budget work in BPP ? As the title is different so I’m a little bit confused …
Thanks Mr John.November 10, 2019 at 5:15 pm #551970
1- Question 10a 13 from BPP
Can you pls explain why the answer of this question is option D ( B8+B7+B4) ?
when sale – variable = contribution
The answer should be A ( B2-B3 ) ?
2- Question 10 a11 and 10 a12
In chapter absorption and marginal costing , we take contribution cost p.u multiply with budget unit , but we multiply with actual unit in these ones ?
Thanks Mr JohnNovember 10, 2019 at 8:33 pm #551984
I cannot comment on the way BPP separate their questions. Our lectures cover everything needed to be able t o pass the exam well.
Q10A 13 The contribution is the sales less all variable costs, as I explain in my lectures. Not just the variable production costs.
Q10a11 and 12 The questions ask about the flexed budget profit, which is the standard profit for the actual sales.November 11, 2019 at 2:47 pm #552216
I’ve already calculated the budgeted production of competition units .
And I m starting to be confused with that allowance for defective units 1.600 . I don’t understand ” 10% of output = 1/9 of input )
That 10% should be 1.440 ?
Should I understand the word ” allowance ” is like the ” allowance” in F3 ?
Thanks Mr.JohnNovember 11, 2019 at 3:42 pm #552219
For every 100 units that are produced, 10 are defective and therefore only 90 will be kept.
So for every 90 they end up with, 10 will have been rejected and 100 will need to be made.
They need to end up with 14,400 units. So it will mean that 10/90 x 14,400 (= 1,600) will have been rejected, and they actually need to produce 100/90 x 14,400 (= 16,000).
No – it is not the same as allowances in Paper FA. It simply means that they need to produce more because they know that some will end up being defective (and, of course, you do not need to use any word to describe it in the exam!).November 12, 2019 at 8:06 am #552285
Oh thank you . You’ve made the rest of all related questions is much easier …
Question 10b.18 from BPP
When we calculate fixed overhead , why do we subtract depreciation of $2280 from fixed production overhead cost incurred ? As depreciation is also fixed overhead cost ? Should it be included ?
Thanks Mr. JohnNovember 12, 2019 at 5:00 pm #552340
It is because the question asks what the payment is (i.e. how much cash will be paid).
Although depreciation is indeed a fixed overhead cost, it does not involve the payment of any cash.
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