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Chapter 6 – Question 5 – P. 36

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Chapter 6 – Question 5 – P. 36

  • This topic has 7 replies, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 8 posts - 1 through 8 (of 8 total)
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  • October 25, 2015 at 11:38 am #278836
    sano1987
    Member
    • Topics: 32
    • Replies: 15
    • ☆

    Dear Sir,

    Could you please kindly explain this question?

    Chapter 6 – Question 5 – P. 36

    Thank you very much.

    October 25, 2015 at 12:21 pm #278842
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51532
    • ☆☆☆☆☆

    From the budget figures, each unit should take 8000/20000 = 0.4 hours.

    So the actually production should have taken 25,000 x 0.4 = 10,000 hours.

    It actually took 11,000 hours, so the efficiency ratio is 11000/10000 = 110%

    October 25, 2015 at 1:30 pm #278854
    sano1987
    Member
    • Topics: 32
    • Replies: 15
    • ☆

    I see. I am a little confused right now, because in your notes results, p.172, it goes as follows:

    actual hours worked = 11000
    standard hours for the actual production= 25000 / 20000 × 8000= 10000
    Efficiency ratio = 10000 / 11000 = 90.9%

    What’s the correct one?

    Thank you

    October 25, 2015 at 6:27 pm #278904
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51532
    • ☆☆☆☆☆

    Sorry – I mistyped.

    I should have written 10,000/11,000 🙁

    (However I am confused – since you have the formula in the lecture notes, and since you have the answer at the back of the lecture notes, then why did you ask this question???)

    October 25, 2015 at 7:07 pm #278914
    sano1987
    Member
    • Topics: 32
    • Replies: 15
    • ☆

    Because I don’t understand the logic behind this step

    “standard hours for the actual production= 25000 / 20000 × 8000= 10000”

    October 25, 2015 at 7:56 pm #278918
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51532
    • ☆☆☆☆☆

    Why have you not read my earlier reply!

    Each unit should take 0.4 hours (from the budget figures).

    Therefore to make 25,000 units should have taken 25,000 x 0.4 hours = 10,000 hours.

    Using simple arithmetic it is slightly faster to say they should have taken 25,000/20,0000 x 8000 = 10,000 (but how you get to the 10,000 hours is completely irrelevant (except for the fact that there is enormous time pressure in the exam).)

    October 25, 2015 at 8:22 pm #278919
    sano1987
    Member
    • Topics: 32
    • Replies: 15
    • ☆

    Ok, now I understand why I got confused.

    Because in the notes results it is written

    “standard hours for the actual production= 25000 / 20000 × 8000= 10000”

    While it should be written 25000/(20000/8000)=10000.

    Now I got it.

    October 26, 2015 at 6:39 am #278942
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51532
    • ☆☆☆☆☆

    It can be written either way – what is printed in the notes is equally correct 🙂

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