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Dear Mr Gromit
Question 1 December 2013, Lopten, has given a note from the appendix 1 stated that “The allocations of fixed costs are based on a recent activity-based costing exercise and are considered to be valid”.
Would you please help me in understanding this note in the context of that question please. If it had not given this note, what would have been the possible answers with regards to the safety margin ?
Many thanks.
Hanhvn
All it means is that you do not have to start trying to play around with the fixed costs when assessing performance.
If you alter the allocation of fixed costs you will alter break-even points and therefore safety margin. The alteration of the safety margin would depend on what you decided to do with the fixed costs – and there could have been different options, I suppose.
The examiner was trying to make it easier for you.
Dear Mr Gromit,
I finally have passed P5 in September 2015 session and completed ACCA exams.
I would like to thank you and opentuition who helped us a lot during our P5.Wishing all the best to you, Mr Moffat, other tutors and opentuition. You all make us more confident to fighting with the exams.
Thank you very much!
Best regards
Hanhvn
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