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hi mr.moffat i passed F2 Cbe on 20…thanks for your lectures…these lecctures helped me a lot…..but I Didn’t make clear some concepts…
1)flexed budget is a budget which is flexed to the actual activity but i saw a question in exam kit in which budget is flexed to different activity(i.e 77%67%,87%)..why flexed budget flex to different activity
2)Variable absorbtion rate:In most questions we got variable absorption rate per labour or per machine hour so my question is how calculate variable absorption rate because variable absorption rate is vary with labour hour or machine hour
3)In budgeting we make sales forecast to make sales budget so why we dont make forecast for labour budget overhead budget ….and for non production overhead……….?waiting for you reply sir……thanks
Congratulations on passing F2 – that is good news 🙂
1. A flexed budget is written for the actual level of activity. Without seeing the actual question I cannot tell you why it is flexed to different levels! (I would guess the question gave different levels because it wanted you to calculate the variable and fixed costs)
2. A variable cost is a fixed cost per unit or per hour (depending on the type of cost and the question). If you are given the total variable cost then to get the variable cost per hour you divide by the total hours.
3. Having forecast the sales, then the other budgets will depend on the level of sales (because the sales dictate the level of production). My budgeting lectures explain this.