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Hello.
How do i solve these?
Q1.
Y plc produces widgets.
Each widget should take 0.5 hours to make. The standard rate of pay is $10 per hour. Idle time is expected to be 5% of hours paid.
They actually produce 10800 units. They pay $50000 for 6000 hours , of which 330 hours are idle.
What is the excess idle time variance?Q2.
A company has budgeted on selling 7000 units of product X at a selling price of $30 per unit, and 3000 units of Y at a selling price of $40 per unit.
The standard contribution per unit is 30% of selling price for both products.
They actually sell 8000 units of X and 7000 units of Y.
What is the sales quantity variance?Sir please help me out here as well..
A company is starting to produce a new product.
The first unit take 25 hours to produce.
The learning rate is 75%.
How long will it take for the company to produce an additional 7 units ( to the nearest hour)?I am confused as to when I am supposed to use the tabular form and when to use the graphical formula y=ax^b
I have deleted the answer from Vivieeene and others. They should not be answering in this forum – it is Ask the ACCA Tutor and they are not tutors. (Especially when they give the wrong answer!!)
Question 1:
The standard idle hour are 5% x 6,000 = 300. The actual idle hours are 330. So there are 30 excess hours.
The pay rate is $10 per hour. However the standard hours worked are only 0.95 hours for every hour paid. So the standard rate per working hour is 10/0.95 = $10.53.
So the variance is 30 x 10.53 = 3159
It would help you to watch the free lecture on this!
The actual total sales are 15,000. If they had been sold in the same proportions as per the budget, it would be X 7000/10,000 x 15,000 = 10500 units; Y 3,000/10,000 x 15,000 = 4,500 units.
If you calculate the standard contribution for the actual sales at standard mix (above) and calculate the difference from budget sales at standard contribution, then you will have the sales quantity variance.
Question 3:
If they make an additional 7, then they will have made 8 in total.
To get the time for the additional 7, you need to calculate the total time for 8 (which is 8 times the average time) and subtract the time for the first.
To calculate the average time when we make 8, you can use the formula but it makes much more sense to use the doubling rule.
(And if you had watched the free lecture you would have seen that I go through an almost identical example, explaining the approach)
Yes, i got it.
Thank you so so much.Sir i am having so much trouble constructing the pay off tables. What do i do? I am attempting the specimen paper and there’s a question Cement Co. I am totally stuck 🙁
I know what it is and why we construct it but i can’t actually construct it.There is no special rule for setting up the table.
You can list the possibly outcomes in any form that you want.
Hello sir.
I came across this question in the specimen paper.
Truffle Co makes high quality, hand-made chocolate truffles which it sells to a local retailer. All chocolates are made
in batches of 16, to fit the standard boxes supplied by the retailer. The standard cost of labour for each batch is $6·00
and the standard labour time for each batch is half an hour. In November, Truffle Co had budgeted production of
24,000 batches; actual production was only 20,500 batches. 12,000 labour hours were used to complete the work
and there was no idle time. All workers were paid for their actual hours worked. The actual total labour cost for
November was $136,800. The production manager at Truffle Co has no input into the budgeting process.
At the end of October, the managing director decided to hold a meeting and offer staff the choice of either accepting
a 5% pay cut or facing a certain number of redundancies. All staff subsequently agreed to accept the 5% pay cut
with immediate effect. At the same time, the retailer requested that the truffles be made slightly softer. This change
was implemented immediately and made the chocolates more difficult to shape. When recipe changes such as these
are made, it takes time before the workers become used to working with the new ingredient mix, making the process
20% slower for at least the first month of the new operation.
The standard costing system is only updated once a year in June and no changes are ever made to the system outside
of this.
Required:
(a) Calculate the following variances for Truffle Co:
(i) Labour rate planning variance
(ii) Labour rate operational variance
(iii) Labour efficiency planning variance
(iv) Labour efficiency operational varianceSir, for part (a)(i), i was able to calculate the standard rate, but i can’t calculate the revised rate. Can you please tell me how it is to be calculate and whats the solution?
Also in part (a)(ii), why are the standard and actual rate same?
I went through the marking scheme and i couldn’t make sense of it.
Please tell me how to solve it.Thank you.
The question says that workers agreed a pay cut of 5%, so the revised rate is $12 – 5% = $11.40 per hour.
It also says that the workers accepted the pay cut, so it means that the actual rate is also $11.40.
@johnmoffat said:
Question 1:
The standard idle hour are 5% x 6,000 = 300. The actual idle hours are 330. So there are 30 excess hours.
The pay rate is $10 per hour. However the standard hours worked are only 0.95 hours for every hour paid. So the standard rate per working hour is 10/0.95 = $10.53.
So the variance is 30 x 10.53 = 3159
It would help you to watch the free lecture on this!
But in Mock Exam the right answer is $2.712 (favorable). Why is your answer different? Which one is fair?
ThanksThe right answer in the mock exam is certainly not shown as 2,712 favourable!!
You are looking at a question that has the same figures but asks for a different variance.
The excess idle time variance is 30 x 10.53 which is 315.9 (or 316 to the nearest $)
hello Sir.
I just started practicing for F5 after finishing the lectures.
so I thought to begin with the Test questions given in the end of each chapter from the opentuition notes.
Sir I have a doubt in the test questions 4 and 5 of chapter 17
In Q4 for the residual income, we multiplied the sales to be generated per year with operating profit margin and then multiplied the capital investment required with the cost of capital. Then we subtracted both the answers we got,
but in Q5 the case was different
they gave us return on investment percentage instead of operating profit margin
so to find out the residual income: we had to multiply the capital investment with ROI and then with the cost of capital as well. then the last was same to subtract both the values you got,
I’m really confused, I didn’t even write down the formula for Residual income. And I also can’t remember the concept clearly. Why we had to do it differently in both the questions?We do it the same in both questions.
The residual income is always the profit less (cost of capital x investment).
The only difference is as to how we calculate the profit. You should know from the earlier lectures (and from Paper F2) that the operating profit margin is profit as a % of sales (which is how we get the profit for Q4); and that return on investment = profit as a % of the capital invested (which is how we get the profit in Q5).
Hello sir,
Please help me solve this. Why answer is $110?
External selling price x:$80 y:$100
Variable cost x:$60 y:$70
Contribution x:$20 y:$30
Labours hour per units x:5 Hours y:10 HoursThe company have limited labours hours available, and another division requires product y.
What is the minimum transfer price that should be charged to achieved goal congruence?You really do need to watch our free lectures, because I work through this very example in the lecture !!
Our lectures are a complete course for Paper F5 and cover everything you need to be able to pass the exam well.
When selling externally, they prefer to sell X (because it generates the greatest contribution per hour at $4 per hour).
If instead they produce Y and transfer it to the other division, then as per the normal rule they need to charge a minimum of the marginal cost (70) plus the lost contribution (10 hours x $4 per hour).
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