Best Of
Re: Costing system ruby dale
Hello,
I was told by my tutor to always suggest a standard costing system.
Give a definition of what a standard costing system is, how it works and how to apply it to the business.
Then structure a standard costing system to the question asked.
I put in my synoptic exam the below:
Standard Costing System
A standard costing system is the preperation and use of standard costs, their comparison with actual costs, and the analysis of variances to their causes.
Main purpose of a standard costing system are:
- Compares what costs should be and what costs actually are
- Compares budgeted costs VS actual costs
- Shows adverse variances + favourable variances (set a threshold and investigate any variances over the threshold)
- Work out a standard cost for each product then compare to selling price and work out profit.
- Set a standard cost for any new products and compare selling prices to see profit made.
I was asked about costing systems in the budgeting question, put the above and passed with 77%.
Thank you
I was told by my tutor to always suggest a standard costing system.
Give a definition of what a standard costing system is, how it works and how to apply it to the business.
Then structure a standard costing system to the question asked.
I put in my synoptic exam the below:
Standard Costing System
A standard costing system is the preperation and use of standard costs, their comparison with actual costs, and the analysis of variances to their causes.
Main purpose of a standard costing system are:
- Compares what costs should be and what costs actually are
- Compares budgeted costs VS actual costs
- Shows adverse variances + favourable variances (set a threshold and investigate any variances over the threshold)
- Work out a standard cost for each product then compare to selling price and work out profit.
- Set a standard cost for any new products and compare selling prices to see profit made.
I was asked about costing systems in the budgeting question, put the above and passed with 77%.
Thank you
Re: Reinvesting income in assets
If they are investing what has already been paid then it would just be added directly from the bank to the non-current asset account when it's bought. In the example above from what you said I'd assumed they had never seen the revenue that was invested.
It would depend on the business. You will have come across the concept of materiality if an asset is going to be used over multiple years and is a significant amount to the business then it wants to be capitalised to give the most realistic position of the business. In this case you could advise capitalsing the items especially if significant. It might be there are reasons for not doing so which would be worth asking about.
Anything not capitalized effectively becomes an expense which reduces the profit, if the amount is large it would distort the figures in the accounts. By capitalizing the assets are accounted for over mulitple years and effectively smooths out the purchase.
Depreciation doesn't alter tax as it is added back onto the P/L before tax is calculated. If it was an expense it would either be reducing corporation tax or income tax (sole trade + partnership) by reducing the profit. If capitalized then the tax is reduced through capital allowances instead, this has a set of rules which would effectively reduce the tax liability for the year by a set amount per year based on the type of asset.
I'm not 100% on the law so wouldn't want to comment incorrectly on this.
It would depend on the business. You will have come across the concept of materiality if an asset is going to be used over multiple years and is a significant amount to the business then it wants to be capitalised to give the most realistic position of the business. In this case you could advise capitalsing the items especially if significant. It might be there are reasons for not doing so which would be worth asking about.
Anything not capitalized effectively becomes an expense which reduces the profit, if the amount is large it would distort the figures in the accounts. By capitalizing the assets are accounted for over mulitple years and effectively smooths out the purchase.
Depreciation doesn't alter tax as it is added back onto the P/L before tax is calculated. If it was an expense it would either be reducing corporation tax or income tax (sole trade + partnership) by reducing the profit. If capitalized then the tax is reduced through capital allowances instead, this has a set of rules which would effectively reduce the tax liability for the year by a set amount per year based on the type of asset.
I'm not 100% on the law so wouldn't want to comment incorrectly on this.
Re: Reinvesting income in assets
Hi Gary
I'm assuming in the 1st part that the person never sees the revenue in the bank or on a customer ledger. In which case it'd be a journal between the Revenue (credit) and the appropiate non-current asset (debit). This means the revenue would still be accounted for and you get the appropiate amount in the NC assets. If it was in a debtors ledger then the journal would be against that.
The second part is a bit harder the captilising amount depends on the company and the materiality. If the company you are looking at only makes about £10k then £100 is much more significant than if the company makes £1 million. It has to be discussed and agreed with the client.
Hope this helps.
I'm assuming in the 1st part that the person never sees the revenue in the bank or on a customer ledger. In which case it'd be a journal between the Revenue (credit) and the appropiate non-current asset (debit). This means the revenue would still be accounted for and you get the appropiate amount in the NC assets. If it was in a debtors ledger then the journal would be against that.
The second part is a bit harder the captilising amount depends on the company and the materiality. If the company you are looking at only makes about £10k then £100 is much more significant than if the company makes £1 million. It has to be discussed and agreed with the client.
Hope this helps.
Re: Results day!
I passed!! 85% just waiting on my treasury results now
Re: Can someone show me the working out for the following question please?
Overhead absorbtion rate:
Total Overhead Costs/ Total of absorbtion factor e.g for Labour £245,000/17,500 = £14
Your direct materials and direct labour are as stated in the question
The overhead cost is the Absorbtion rate (from the 1st row) * amount of factor used e.g for labour £14*2 =£28
Final row just add the costs
Hope this helps.
Total Overhead Costs/ Total of absorbtion factor e.g for Labour £245,000/17,500 = £14
Your direct materials and direct labour are as stated in the question
The overhead cost is the Absorbtion rate (from the 1st row) * amount of factor used e.g for labour £14*2 =£28
Final row just add the costs
Hope this helps.
Re: Anybody studying or just studied with Eagle?
Hi,
I'd recommend Eagle. I've almost finished level 3 with them and will probably use them for level 4. The tutors are so helpful, very knowledgeable and reply quickly (by email). The study material is also helpful. The "Study Buddy" makes learning much more simple than just a text book. They use Osborne books which I prefer over Kaplan.
I hope this helps,
Lydia
I'd recommend Eagle. I've almost finished level 3 with them and will probably use them for level 4. The tutors are so helpful, very knowledgeable and reply quickly (by email). The study material is also helpful. The "Study Buddy" makes learning much more simple than just a text book. They use Osborne books which I prefer over Kaplan.
I hope this helps,
Lydia
Re: Outstanding transactions-level 2
@Martaj I've outlined my working below if you need further help. Remember you can select things in the table as you eliminate them.
1. Start by removing any balancing figures.
2. Find Amounts that must be in the new cheque figure
3. Compare the amounts remaining to what needs to be found
4. Answer with the outstanding invoices as requested.
So you need to start be removing the transactions that are already balanced. The B/fwd balance is a good place to start £1349-480= 869 so those 3 balance each other.
This means that the cheque for £1567 must be made of the others. The amount for 1208 has to be included in this otherwise you can't reach 1567 with the other sections. 1567-1208=359
From this it's fairly clear that the other involved transactions are invoice 1268 and credit note 91 (391-32=359)
This means the outstanding transactions are invoice 1223, credit note 96 and invoice 1281.
1. Start by removing any balancing figures.
2. Find Amounts that must be in the new cheque figure
3. Compare the amounts remaining to what needs to be found
4. Answer with the outstanding invoices as requested.
So you need to start be removing the transactions that are already balanced. The B/fwd balance is a good place to start £1349-480= 869 so those 3 balance each other.
This means that the cheque for £1567 must be made of the others. The amount for 1208 has to be included in this otherwise you can't reach 1567 with the other sections. 1567-1208=359
From this it's fairly clear that the other involved transactions are invoice 1268 and credit note 91 (391-32=359)
This means the outstanding transactions are invoice 1223, credit note 96 and invoice 1281.
Re: How to get in the door?
Hi Monstro,
I worked as a Bingo hall Manager and was in this industry for 14 years. Then I decided to change to accountancy.
I volunteered a few mornings per week at a mental health charity on their accounts. Four months into this, I went for my first accountancy-related interview and landed the job.
Try asking credit unions or any non-for-profit organisations if you are able to come in for a few hours a week (you can then ask to volunteer more often), to shadow staff and get some insight and experience.
I wish you all the luck in the world :-)
I worked as a Bingo hall Manager and was in this industry for 14 years. Then I decided to change to accountancy.
I volunteered a few mornings per week at a mental health charity on their accounts. Four months into this, I went for my first accountancy-related interview and landed the job.
Try asking credit unions or any non-for-profit organisations if you are able to come in for a few hours a week (you can then ask to volunteer more often), to shadow staff and get some insight and experience.
I wish you all the luck in the world :-)
