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well, generally the paper is okay for those that actually cover the syllabus, but tough for those that question spot because many people thought the examiner will repeat throughput,examine cvp, eviromental accting
Q1. did it very well, i think is ok. 18mks
Q2. scantily done. 5mks
Q3 would hav been the best paper but made a mistake by writing planning and control cycle but well explained.7mks
Q5. did very well but couldn’t balance 15mks
Q4. did very well but made mistake. 12mks
with God on my side i shd pass atleast 50mks@manosal said:
@perist1984 did you change the demand for division b? falls from 200.000 to 180.000, if you do this did you change the labour and material cost then, adjusted to the new demand?I changed the demand to 180.000, but left the labour and material cost for 200.000 units…
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@perist1984 said:
I changed the demand to 180.000, but left the labour and material cost for 200.000 units…ya, the same
but suppose smth should be around opportunity costs – missed it totally
finally I came out with profits for both divisions to be more “attractive”‘ if used external opportunities and when just stuck on comments…Actually, I am not sure that my answer is correct, but my assumption was that as maximum production capacity of Division B was 200 000 units and maximum demand from external customers comprised 180 000 units, I recalculated sales revenue of Division B as 180 000 * $80 (price to external) and 20 000 * $ 75 (to Division A), and cost of fittings of Division A as 20 000 *$75 (bought from Division 🙂 and 60 000* $65 (bought from external supplier). Was it correct, how do you think?
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I did the same way except instead of $75, I used the optimum transfer price of $20 instead. So trf price to Division A is $20. I think the same answer will be derive since the Qns is only asking for effect on profit of the whole
Organization as a whole.For the first part of the transfer pricing question, I said A buys all its items from B at $75, B sells 80,000 to A at $75 and the remaining externally.
Was that wrong? Did A only buy 20,000 from B at $75? I thought the question said A had to buy all it’s stock from B which implied B sells the amount A needs first.
@olga0912 said:
Actually, I am not sure that my answer is correct, but my assumption was that as maximum production capacity of Division B was 200 000 units and maximum demand from external customers comprised 180 000 units, I recalculated sales revenue of Division B as 180 000 * $80 (price to external) and 20 000 * $ 75 (to Division A), and cost of fittings of Division A as 20 000 *$75 (bought from Division 🙂 and 60 000* $65 (bought from external supplier). Was it correct, how do you think?I said B sells 180,000 externally at $80 and 20,000 to A at $65 this will maximise profit overall.
What you said was wrong I think as 20,000 units A wouldn’t buy from B for $75 as they can get those units for $65 elsewhere. They would buy it from B at $65. This will keep the cash in the company.
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@guest107 : Are the mix and yield variance meant to add up to the usage variance? – nope, i dont think see below how i did it
For mix variance we should have sum all the quantities aquired and then to do the proportion for each material used in the total quantity used ex sugar: [0.02 kg (sugar used) / 0.45 kg (total material used)] * with sum of the quantity aquired (from actual figures). After you compare this result with the one from the actual budget => variances
Yield – The sum of the quantity aquired should have been divided by the yield of the materials (i.e. 0.45 kg – sugar + syroup + i dont rember the 3rd one) and in this way you would have obtained how many products should have been obtained from the materials aquired. And the variance is the difference between this figure and the actual one multiplied by the standard cost.
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@ hamsterham For the first part of the transfer pricing question, I said A buys all its items from B at $75, B sells 80,000 to A at $75 and the remaining externally – I said the same 😀
I experimented with transfer prices but seemed to get the same overall profit for all options!
Div A would obtain its fittings @ $65 per unit either way once allowed to source externally so the price needs to get the best contribution for Div B.
Contribution for Div B with fittings @ $80 price was $60 per unit and contribution @ $65 price was $45 per unit so you could either sell 180,000 with $60 contribution (= $10.8m) or 80,000 with $45 contribution and 120,000 with $60 contribution (also $10.8m).
I can’t remember the exact numbers but the overall profit came out the same as part a when the contribution for Div B was $10.8m if my calculations were correct.
On my way home I wondered if there was some way of limiting the target price of $65 to 20,000 units and selling the rest externally @ $80 which would increase Div B’s contribution to $11.7m…dal1buc said 3 hours, 52 minutes ago:
@ hamsterham For the first part of the transfer pricing question, I said A buys all its items from B at $75, B sells 80,000 to A at $75 and the remaining externally – I said the same 😀
😀
For the second part B sold 180,000 externally for $80 and 20,000 to A for $65
Did you do that?
When i saw the questions I was disappointed none of the subjects that i was confident came up.
I spent too much time looking for link between part a and b of question 5 then i realised it was separate question. i have done the variances ok. part b= efficiency i thought for 800 unit one set up budgeted for actual unit it should have been 400 set up.actuall no of set up was less so i said it is Favorable.
Q3 – i was shocked i did not know what to write. i could have wrote lots but i froze.
Q1- i did it but i dont know if labour bit was correct. i was reading and reading i could not understand what was asked. part b- i said items that effect cash flow:)
loads of rubbish i wrote probably.
q2- life cycle i totalled all the cost and devide to no of units and took out from sales.i did the learning curve bit but i have no idea again. this was the topic i did not revise except one or two question.
q4- again i dont know. i had not much time think. first part i took it as it was written. 80K unit at transfer price 120K sales to outside. part c i did not write anything and exam was over. so i dont know whether i will pass or fail.For 1, did you add the lost contribution and the penalty together for one of the bullet points? I did, not sure if that was right. I think it was.
I thought the exam was tough but ok compare with previous exams
Q1 relevant costing, the scenario was endless with loads of details, I left this for last
Q2: transfer price, calculation were relative easy but the written part i struggled a bit
Q3, Budgetary system control, 20marks, WTF? I agree with previous comments BPP didn’t put any emphasise on this at all, fortunately somehow I remember PRIME
Planning
Responsibility
Individual
Motivation
Evaluation
I totally missed co-ordination and I’m not really sure how well i explained those points.Q4, Life cycle and learning curve, first part was fairly easy, tricky calculation for the learning curve and time consuming but overall i feel good about it
Q5 Material price, mix and yield Variances + ABC variances
this was by far my favourite question and that’s were i started the examI was surprise there was no question about performance but I was very happy that CVP & EMA didn’t came up.
Overall i think went ok but you never really know.Now F9 on friday and that will be for sure another beast of exam, I have concentrate so much on F5 in the last week that I may have neglected F9 to much…… well let’s hope for the best.
@hamsterham said:
For 1, did you add the lost contribution and the penalty together for one of the bullet points? I did, not sure if that was right. I think it was.there was no lost contribution or penalty because on the next paragraph was quoting ” there is no job planned for the coming week and engineers can finish the job”
Like you i first included them in the calculation but then when i was writing the notes i realised that I shouldn’t had so i crossed out……………. was I right? Anyone remember that part?- Topics: 0
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Quote:my lecturer said the optimum transfer price is variable cost to produce if the division have spare capacity. In this case $20? if i still remember the figure. But in that case, Division B would not make any profit from the transfer. Since the question only ask for the overall increase in net profit of the company, i just assume that internal transfer price is $20.@hamsterham said:
For 1, did you add the lost contribution and the penalty together for one of the bullet points? I did, not sure if that was right. I think it was.Yeah I did, together with the engineers salaries that made their relevant cost.
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Are you sure about the engineers salaries, cause they were full time employees so it would be paid to them regardless of the new job…??
Penalty was there for sure because one week delay caused them, but lost contribution – I’m not sure… As someone said before they were free next week and could finish the job, so contribution wasn’t really lost, just delayed…
Thus I calculated with delay penalty as only relevant cost for that matter…And for Q2, in revised model, I’ve used full capacity for divB, 180K externally @ 80$ (I think that was the price, correct me if I’m wrong) and the rest 20K units they were selling to divA @ 65$, same like market price divA could get.
I think that B selling A for 20$ (mat 5$ + labour 15$ if I remember correctly) would loose B’s money that couldn’t be recovered through A’s contribution in consolidated figures… Hence this approach gives highest total result… Still not sure if that was wrong, please share your thoughts…Variances – someone asked about correct approach, material usage variance is made out of mix and yield, so if you’ve calculated these two separately and then added the up to get the total material usage var should give you correct answer, no matter what that approach should be fine I think…
Does anyone know when are they gonna publish exam questions?
@jaffarkhan1 said:
Yeah I did, together with the engineers salaries that made their relevant cost.I included only penalty $500 as relevant expense because engineers’ payroll is a fixed part of Company’s expense and wouldn’t depend on the contract with Push Co, contribution $5*40hours*2 engineers wasn’t included because ‘there is no job planned for the coming week and engineers can finish the job” so Company will receive contribution later and it is not relevant cost
@nebojsha0603 said:
Are you sure about the engineers salaries, cause they were full time employees so it would be paid to them regardless of the new job…??
Penalty was there for sure because one week delay caused them, but lost contribution – I’m not sure… As someone said before they were free next week and could finish the job, so contribution wasn’t really lost, just delayed…
Thus I calculated with delay penalty as only relevant cost for that matter…And for Q2, in revised model, I’ve used full capacity for divB, 180K externally @ 80$ (I think that was the price, correct me if I’m wrong) and the rest 20K units they were selling to divA @ 65$, same like market price divA could get.
I think that B selling A for 20$ (mat 5$ + labour 15$ if I remember correctly) would loose B’s money that couldn’t be recovered through A’s contribution in consolidated figures… Hence this approach gives highest total result… Still not sure if that was wrong, please share your thoughts…Variances – someone asked about correct approach, material usage variance is made out of mix and yield, so if you’ve calculated these two separately and then added the up to get the total material usage var should give you correct answer, no matter what that approach should be fine I think…
Does anyone know when are they gonna publish exam questions?
Yeah only penalty for q1 makes sense.
Hopefully only 1 marked lost for adding the contribution.
What was the remaining 6 marks for in q1? Was it explaining relevant costing?I did the same for q2.
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Can anyone advise on the Life cycle cost per unit? 6
@deborahmcgleenan said:
Can anyone advise on the Life cycle cost per unit? 6Everyone I spoke to after the exam did it the way I did.
Added up all the costs and divided by 300,000 units.
Then did the learning curve and worked out 100 and more units took 0.33 hours and worked out the labour cost that way.
@nebojsha0603 said:Does anyone know when are they gonna publish exam questions?
They do it after 24 hrs, but for some reason, they haven’t! Weird, since they have already uploaded all the other papers, only F5 is remaining
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