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hello,
Could you answer my two questions, please?
1. i do many practices in BPP revision kit and for activity based costing, i do not know what is the cost driver for cost pool in some cases, i know that we will choice machine hour/labour hour/number of units for the cost pool with volume-related overhead , in quetion 8 , Admer in BPP, i don not know why cost driver of ware staff wages is number of items sold, and why one cost pool can have 2 cost driver in case that administration staff wages have number of consultants plus purchase of order is cost driver
i wonder, in real exam, whether has 2 cost driver for 1 cost pool or not?2. cost of goold sold in ABC is total production cost, so why sales staff wages, administration staff wages is included in cost of goods sold, i think it is not production cost? and in ABC is only production overhead is absorbed?
and could you explain to me the difference between cost of goods sold and and full cost?thank you very much!
yoursI do not have a BPP revision kit and so I cannot help you specifically with question 8 without more information.
In the real exam it is always made clear somewhere in the question what the cost driver is for each of the cost pools.
Certainly, cost of goods sold only includes production costs (total production costs as adjust by any opening and closing inventory). In every real exam question you have only ever been required to calculate the production cost per unit and so you will only be using ABC on the production overheads. Selling, distribution, and admin costs are not part of the cost of production.
It is possible in practice to use an ABC approach on non-production costs as well (if there is an identifiable cost driver). This has never been required in the exam, and if it was then the question would make it very clear.
(You will appreciate from my lecture that the real objective of ABC is not really to get a ‘correct’ cost per unit, but to examiner why costs are being incurred and therefore be able to look for ways of becoming more efficient and saving costs)Again, without having more details of exactly what the BPP question asked for, I cannot really say more. But I repeat the chances of being asked to deal with non-production costs in the exam are very unlikely and if you were wanted to deal with them then the question would make it very clear.
sir, can you show me the difference between cost per unit, cost of sold and what is used to value inventory, thank you
The cost per unit is the cost of producing one unit. The cost of goods sold is the total cost of those units that are sold. Inventory is valued at the cost of production of those units left in inventory.
As you work through my lectures we go through all the ways of calculating these.
in addition, I want to know the difference between cost of gold sold, full cost, cost per unit, what is used to value inventory,
in lifecycle costing, i see that selling cost (non-production cost) is included in cost per unit, so i want to know the reason it is appear in cost per unit,
thank you very much!Hi Tran,
In 8 Admer, they don’ include the non-production overhead in COG, however, the requirement is asking to arriving the final profit, so they have to include the non-production overhead to fullfil the requirement. If you notice, after the line of COG is the contribution, i think ” contribution” is so called “gross profit “, after calculate the “gross profit” they have deduct for non-production overhead to achive net profit for purpose of management.Again, i’m not a tutor, so i don’t have a right to post in here, i just want to express some idea because i see ur name like name used in my country, i take F5 exam in June 2014, my yh is dm_leostopaz, could you please add me !
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