Questions to ask regarding PYQs (Dec 2008 – June 2011)

1) December 2008 – The Ornamental Company (TOC) – Q5 (b)
I have attempted this question. It’s just that after referring to this ACCA answer, I was not sure how they calculate variable overhead cost; for material and labour related for the current basis for Fountain and Goblin. I can’t get the $90 and $157.50 for the Fountain and $15 and $26.25 for the Goblin. I really hope you can explain to me if this calculation really crucial in this question? because I just take the given figure of total variable costs in order to get contribution. As for me, I don’t think this calculation matters most. Please enlighten me 🙂

>> Total material costs = 450 + 150 + 1,200 = 1,800,000
30% of TOC relate to material ie 720,000. This will be absorbed using material costs.
Therefore TOC per fountain relating to material = 450,000/2000 x 720,000/1,800,000 = 90. Similarly for labout and the Goblin

2) December 2009, Benjamin Education College (BEC) Question 1 (ii) (asking on Fitzgerald & Moon’s building block model- Dimensions of Performance)
Referring to ACCA answer, can you please explain to me what is it meant by ‘block delivery’ under Flexibility answer?
This answer was explaining the number of different modes of delivery offered to students of BEC for e.g. full-time, weekend, and there is this block delivery words, which I can’t understand.

>>Block delivery would be training delivered over, say, a block of 5 days – ie. a full week.

3) June 2011 – JHK Coffee Machines Co. – Question 1 (b) the two methods discussed to calculate TP
For answer under Market based pricing, in the ACCA Answer, the last paragraph, it was stated “It should be noted that the current quote from the outsourcer demands a minimum volume of work and so their work may need to be repriced.” <- I can’t understand these phrases. I was asking if that explained; since the outsourcer(local engineering firm) has quoted a flat price of $200/warranty service repair provided they obtain a contract for ALL of the warranty repairs from JHK, is it meant if $200 is to compare with equivalent contribution to current recharge agreement (service division being paid from M/S division)of 10m(annual fee)/39600(9%x440k) repairs=$252.53,so, the $200/warranty repair is TOO LOW for all warranty repairs from JHK(service division) to get from the outsourcer if it obtained the contract? Please explain

>>The outsourcer will charge $200/warranty repair but requires all warranty work is outsourced. If some warranty work were carried out internally, and the outsourcer got the extra, then they would presumably want to charge more than $200.

4) June 2010 – LGHD – Question 3;
(ii) What is meant by ‘subsidiary’ under effectiveness of ACCA answer? in which it explains Effectiveness requires the achievement of the objectives (both principal and subsidiary)? Is subsidiary refers to all parties that can be categorised as recipients and agents? Please enlighten me 🙂

>>A subsidiary objective is simply one that is of less importance than a principal objective. For example, better heating/ventilation might be a principal objective and noise reduction a subsidiary one.

(iii) under Perishability ACCA answer, these phrases made me confused; ‘Will there be any provision in the contract to ensure that the contractors will provide additional help – especially during the initial two year period?’
My question is what is it meant by ‘additional help’ above?Is it explaining because of the extreme weather conditions (hot or cold) lead to an overload of the air-conditioning units, so additional help here means if the contractors could provide extra air-conditioners? in case of the above weather conditions? I am not sure about these.

>>Perishability means that a service cannot be stored. In extreme weather, there is likely to be high demand for the services of engineers. This can be met only by overtime/temporary employees. With a product, you can meet high demand by making steadily through the year and using material put of inventory. If additional help had been promised during the first two years (I assume repairs and maintenance) then there could be problems supplying that promptly and economically.

Lecturer is John, but I now deal with P5 queries. No probs. Glad it was helpful.

The formula linking P and Q can be written as P = a + bQ, but you will realise that to sell more items (ie Q increases) P will have to decrease. So b must be negative

If a = 10,000 and b = -3, the formula would be: P = a – 3Q. The important thing is to end up with a negative in front of the Q term. Some people write the formula as P = a – bQ to remind them of that.

Similarly, MR can be written as MR = a + 2bQ, but again b will be negative. IN the example above, MR = 10,000 – 2 x 3 x Q.

Again, what matters is that the Q term ends up with a negative in front of it.

Grreat