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Wow, I can’t believe how much you guys remember, impressive ????????
Section A:
I too messed up the ROI & RI so I’m hoping for some lucky guesses.
The majority of questions were reasonable & there was only a few a really had to guess.Section B:
Q1 – ABC, thought this was a decent question. I got similar prices to the costs in the question (think one was $30 odd out & the other $50 odd) I therefore recommended that it was not worth implementing ABC.
Q2 – Total horror, made a right mess of this one, basically 3 pages of scribble. Somewhere I mention the contribution of $80 & also state M should do 30,000 each to internal & external, also that S should buy 30,000 internal & 5,000 external, apart from that I just made a mess so fear I have scored very low here.
Q3 – ok (ish), think I got 2.42 on learning curve though, & not 2.08 like you guys mention, perhaps I’ll pick up a few marks for my workings. Not confident on the variances either.
Q4 – Pricing. Did ok on a) I think (is this the Hi Lo bit), I got $800,000 fixed & $3 variable, don’t understand where sone have you have got $21 variable from?? Didn’t answer b) if that was the formula bit as I didn’t have a clue. & I think on c) I may have waffled some rubbish??
Q5 ZBB – my mind went blank here but we did implement this last year at my work place so I based my answer around my personal experiences, I think I may have picked up some marks here?
Overall realistically I’m hoping I’ve got 8+ on Q1, 2-3 on Q2, 4-5 on Q3, 4-5 on Q4 & then 8-10 on Q5.
So if I can scrape around 25 on section B really hoping I’ve done good enough on A to get 25/40? Guess I’ll have to wait & see eh?Good luck everyone, really enjoy reading your thoughts on the exam.
Q4 – The last bit of the requirement was for total profit based on the optimum price you’d calculated. I reckon a few people might have missed it.
Q4 – $3 was the variable overhead per unit. Materials & labour per unit came to $18, hence the $21 total variable costs.
@acca145 said:
i took learning rate on 460 units and my hours were 1268 something what about you?
And me ditto. Dint consider 1000 at all@lynnecart said:
Q4 – $3 was the variable overhead per unit. Materials & labour per unit came to $18, hence the $21 total variable costs.Oh right, I get you now, yet I added materials & labour separately, I didn’t, bulk them together, is that ok to do that? I did like a statement at the end ????
@lynnecart said:
Q4 – $3 was the variable overhead per unit. Materials & labour per unit came to $18, hence the $21 total variable costs.Oh right, I get you now, yet I added materials & labour separately, I didn’t, bulk them together, is that ok to do that? I did like a statement at the end ????
@lynnecart said:
Q4 – $3 was the variable overhead per unit. Materials & labour per unit came to $18, hence the $21 total variable costs.Oh right, I get you now, yet I added materials & labour separately, I didn’t, bulk them together, is that ok to do that? I did like a statement at the end ????
Q5. ZBB steps- quite easy
Part B. Problems that may arise when changing to ZBB are
1. Resistance from staff as they are already used to the current system and may have even built in slack so may not want to change to another system.
2. Training will be needed
3. Information for ZBB may not be easily available
4. Management may not have the skills to rank decision packages
Part C. Benefits of ZBB.
1. Leads to better allocation of resources
2. Difficult for employees to add budget slack as the decision package will be rejected if too expensive
3. Present errors and inefficiencies will not be perpetuated in futureI messed up with Part A of the question on pricing. My high low was funny.
Part B. b was .001, a was 310 or so. The profit maximizing qty was about 14,600. I got my price. Can’t remember what it was now.
I did a profit statement. Sales revenue was the profit maximizing price multiplied by the profit maximizing quantity. Then less material costs 12 and labor of 6 and variable overhead.
Part C. Market skimming was a suitable option for the company because
1. The product is differentiated and people would like to own it immediately after its launch to be one up on those who do not have it
2. The company had invested heavily in R$D and to recoup the investment,they could use market skimming
3. The product life cycle is short;3 years,therefore market skimming would be a good pricing strategy
4. I tried to calculate the elasticity of demand so as to comment because it seemed that the product had inelastic demand and that meant a further suitability, but unfortunately,I ran out of time.Sorry, don’t know why that’s gone on 3 times??? Don’t know how to delete, sorry peeps ????
It thought it was an ok paper, but made a mess of questions, hopefully get attempt marks on most. Attempted transfer pricing and variance question very poorly. Hopefully sec A i got 30% out of 40%, if not i’ll struggle to pass.
@dskinner83 said:
I did overall profit too, so hoping that was the question! Now I’m starting to doubt myself and wondering if I misread the question!I also thought it was overall profit based on optimum price and quantity.
Hey did anyone get the maximum transfer price as $820 and minimum as $800? And the maximum units that M would sell to be as 30K units to B? And for the Abc question did you guys multiply the total number of procedures with the denominator before finding the driver rate? If it weren’t for this question and transfer pricing I’d have aced the paper.
@kanika01 said:
@acca145 said:
i took learning rate on 460 units and my hours were 1268 something what about you?
And me ditto. Dint consider 1000 at allI have done the same thing but showed working for for 1000 and 999 units and also showed working for 460 so I am hoping either way to score some marks for working plus I think 460 was more appropriate and I have based my working on it and I have not taken marginal in this case as like 449 and 450 as learning didn’t stop.
Let’s see….
@melitachester01 said:
Oh right, I get you now, yet I added materials & labour separately, I didn’t, bulk them together, is that ok to do that? I did like a statement at the end ????It doesn’t matter whether you included labour and material costs into High/low or just added them at the end, you end up with £21 total variable costs either way. I forgot to take fixed overheads off the final profit figure at the end oops.
Q1 ABC I recommended not to implement as costs were so similar and implementation costs would likely outweigh benefit.
Q2For transfer price question I got the transfer price as £740-£800 and stated that for overall company profit the actual transfer price is irrelevant so long as it’s between that range, e.g. higher divisional profit for one division = lower divisional profit in equal measure for the other division.
For the same reason I got Div M to supply full quota of 35,000 to Div S and 25,000 to external customers. My understanding of Transfer Pricing is that by improving Div M’s profit by supplying external customers you would be reducing Div S’s profit by forcing them to buy externally, therefore reducing overall company profit.
Q3 Was this the learning curve/variance questions? I can’t remember my calculations but consequences included:
– incorrect selling price due to cost-plus pricing method so will affect demand.
– negative affect on sales manager performance as harder to sell it higher price so he may not achieve bonus.
– production manager rewarded with bonus incorrectly
– appointing of temporary workers unnecessarily resulting in higher costs
– demotivated workforce due to easy task
– workforce and fellow managers may question production managers judgement in future.Q5 – just gave text book answers, rambled on and didn’t particularly link it to the organisation.
@tothornton said:
It thought it was an ok paper, but made a mess of questions, hopefully get attempt marks on most. Attempted transfer pricing and variance question very poorly. Hopefully sec A i got 30% out of 40%, if not i’ll struggle to pass.I’m same as you Tomas ;(
For the learning effect. To calculate the revised hour, which should we used, 460th or 1000th unit? So confused with this number 3 questiom
I did a lot of crossing over like 2-3 pages as I had time and I just rewritten the answers so that it is neat. Will I be penalized?
I think this exam is challenge, and obviously more difficult than previous in Dec2014.
Q1: Using ABC, overhead allocated to procedure A increase while to procedure B decrease because each procedure B require more activity.
Don’t remember exact numberQ2: internal sales first => profit of Div M 5,85 mil something
External sales first, take maximum external sales demand => profit of Div M 5,7 mil sth, however Div S would save 250k cost => total profit of group 5,95 mil sth
recommend change sales policy of div M to take maximum external demandQ3: don’t remember exactly
Q4: MC = 21$
P=310-0.001Q => MR=310-0.002Q
=> profit maximising selling price 165.5 sthQ5: terrible for me
@Barcelona said:
Q5: terrible for me
And me 🙂
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