I will Help!!!!

111beckstar111

Hi guys,

If anyone needs assiting on any questions on PEV, BTC or PTC please send them my way (by private messaging or replying to this post) and I will try to answer everyones quieries as good as I can.

It helps me to revise too!!, by actualling getting out my books and searching for your answers!!

Feel free to private message me

Good luck everyone!!!!:thumbup:

joerd84

Thanks Beckstar

I've been stuck on the cost card on pev December 07. i couldnt understand why the labour quantity was 0.2 hours or the production overheads price was 50. But then im no good at cost cards. Can you help?

111beckstar111

Yes Joe, give me two minutes and I'll try and crack your query for you.

111beckstar111

Relating back to the 100 tea bags in secion 1 firs page the cost card is for 100 tea bags therefore for to make 1000 tea bags which you were asked to do in this question ... 1000/100 = 10 therefore...

Direct Labour - 0.02 HOURS X 10 = 0.2 units (Quantity) and 0.2 x £10 gives £2

Likewise with

Fixed Production overheads - 0.02 x 10 = 0.2 x £50 = £10

I think you overlooked this one which is very easy to do so....

Always in section 1 refer back to that frst cost card to see if you not missing a trick

Hope I helped

joerd84

Thats great thanks a lot, just couldnt get my head round it.

Think its the whole of section 1 for that exam which confuses me, if pev on monday is anything like that i might make a run for it.

Jossie

Hi

Can you help me with the following variances

Dec 08

Fixed overhead efficiency variance

Dec 07

Fixec overhead capacity variance

Dec 06

Direct labour efficiency variance
Fixed overhead volume variance
Fixed overhead efficiency variance

111beckstar111

Yes, I will look now and get back to you asap

111beckstar111

I will answer each question in turn-

December 07 - Fixed overhead Capacity

This is actual hours - budgeted/planned hours x absorption rate.

Firstly lets calculate the absorpion rate -
To get the absorption rate we need to calculate the budgeted fixed overheads and divide these by the budgeted labour hours so......

The cost card shows 100 tea bags although the budgeted production is for 80,000 tea bags therefore you have to divide 80,000 by 100 = 800

to calculate the labour hours you need to multiply the direct labour quanity hours of 0.02 by 800 = 16hours

As a result 800/16 = £50 which is your absorption rate.

Furthermore, in order to work out the fixed overhead capacity variance, we take the actual hours worked of 1,800 (states this in the writing) and minus the budgeted hours for 80,000 tea bags.....so like we said before 80,000 tea bags dvided by 100 tea bags is = 800, mutliply 800 by 0.02 hours on the standard/budgeted cost card and this will give you 16 which you then multiply by 100 to get 1,600 bugeted hours

As a result take the actual hours 1,800 minus budgeted hours of 1,600 and times by the absorption rate to get £10,000 F. It is favoursable because they have over absorbed and made more.

Hope this help, i will answer your other quieries now.

111beckstar111

December 08 - Fixed overhead efficiency variance

Here we need to work out the absorption rate again so....
Budgeted fixed overheads of £120,000 / 4000 labour hours = £30, this is our absorption rate (*take note the third bullet point above the data it mentions production overheads are fixed and absorbed on a labour hours basis hence what we have done)

Efficiency ratio is working out the standard cost of actual production minus the actual cost of actual production, therefore.....

To get the standard (or should have done) hours you take the 4000 budget hours divide them by the 2000 budget units an x by the 2100 actual units this gives = 4200

The actual hours worke is stated in the table as 4000

As a result 4200 x absorpion rate £30 = £126,000 less...

4000 x £30 = £120,000 = £6,000 Favourable.

This variance is favourable becasue they were quicker at proucing units i.e. should have aken 4200, acual took 4000.

Hope this helps

111beckstar111

December 06

Direct labour efficiency variance

For this ratio you take the standard hourly rate which is worked by dividing the budgeted £252,000 by the 28,000 hours and getting £9.

Then you work out the standard amount of labour hours for actual production by dividng the 28000 budgeted hours by 112,000 meals and x by the actual 117600 meals to get = 29,400 hours (this shows the amount of hours based on thebudget that they should have worked to achieve the 117,600 meals).

As a result we can now calculate the varaince -

29,400 - 27930 (the actual hours worked) x £9 = £13,230 F
This variance is favourable because the labour force worked less hours - may have been due to a better trained workforce

Hope this helps

I will follow with your other answers


Fixed overhead volume variance

Fixed overhead efficiency variance

111beckstar111

First of all lets start with the absorpion rate -

84,000 budgeted fixed overheads divided by 28,000 budgeted labour hours as it states on number 3 bullet point) = This gives £3 and this is the absorpion rate!

Fixed overhead efficiency variance

standard hours for actual production = 28000/112000 x 117600 = 29,400 minus actual hours of 27930 x £3 = £4,410F. This is favourable becasue the labour force worked quicker (28000 rather than 29400)

Fixed overhead volume variance

This compares the budgeted hours to the stanard hours for actual production which we know are 29400. Budgeted hours are shown in the table as 28,000

therefore.....29400-28000 x £3 = 4,200 F

This is favourable they produced more and more quicker than budgeted!!!

Hope my answers have helped....feel free to ask me anything....

Jossie

Thank you very much, it all looks straight forward when you have worked it out. Wish I had you knowledge then I would pass. I might need your help with the PCR exam, but will get this out of the way first.

Cannot express how glad I am of your help. Thanks

111beckstar111

Thank you

No problems, I will try to help you as much as I can.

I did PCR a while back now but I passed so I;ll try and help if I can, not promising anything though...I've probably forgot everything about it !!!

I can help you mos certainly on PEV, BTC or PTC

renae

I don't supose you know how to calculate the debtors payment period in days?
I did know, now I can't remember anything!

111beckstar111

Yes its

Trade debtors / Credit Sales x 365

111beckstar111

That's the problem you revise too early and forget everything ...so when it comes to your exams your in a mad rush to try and remember everything...pain in the a**e!

renae

tell me about it - thanks very much......had to get up early to see if you had resolved my mystery!!
YOUR A STAR

SugarPuff

Im feeling quite confident in section 1 but as my brain is totally frazzled i cant seem to see a pattern to what were required to know in section 2 apart from calculating performance indicators the following questions seem to be totally different in every paper! Please can you give the main things i need to know life cycle looks promising to come up?.

111beckstar111

No problems renae I'm here to help you all today so if you need anything just ask

Thanks very much !

renae

Thanks,
I was gona ask you about the dec 07 paper, but came to the conclusion that because I struggled on EVERY QUESTION IN EVERY TASK, that I am going to pretend I forgot to look at that paper & crack on with another!

I am also revising from dawn - dusk today so no doubt I will keep your brain ticking over!

Thanks again

111beckstar111

Section 2

I would say things they might come up with:

Performance Indicators for two companies

A report discussing the performance indicators (they normally select a few for you to talk about)

LifeCycle Costing and the use of Discount factors

I have also seen questions where they suggest a few changes to the company and ask you to prepare a new profit and loss account

Target Costing and working it out. (Example on June 06 Q2.2)

Overall I would say that they are the most juicy questions likely to come up!

111beckstar111

Was that the tea bag one Most people struggled with it - th main reason being that the standard prouction is for 100 instead of 1 single product. I will help you on this exam if need be.

Cheers

wolfe

hi
i just did d june o4 paper n in the last task i explained how to reduce cost by value analysis! while in the answers they said value engineering
i know they almost similar. but in my bpp text it says that value analysis is used for products which are already being produced. while value engineering done before a product is made. can u help? i used value analysis coz the desks are already being produced. does it make sense
thanks

lala2009

Hi Beckstar!

Dec 2008 - PEV - Q2.3 - Life cycle costing

This question is really annoying me - why is year 5 -£20,000? I get that it's £30,000 minus the residual value of £50,000, but dont really understand why that is? Can you please explain this to me in layman's terms?!

Thank you!! Hope the revision is going well!

111beckstar111

Both of these are COST REDUCTION PROGRAMMES

VALUE ENGINEERING -THIS IS COMPLETED BEFORE PRODUCTION STARTS
Ensuring that new products or services are designed for quality bu at low cost, by analysing how every part of the design enhances value.

VALUE ANALYSIS - WHEN THE PRODUCT IS ALREADY ON THE MARKET
Analysing the value of every part of the design of an existing product or service, and questioning whether its function can be achieved some other way at a lower cost.

For both consider;
Can the function be achieved another way?
Are the functions essential?
Can the products be made smaller/lighter - fewer materials?
Can components be standardise across a range of products?

They both aim to reduce costs whilst maintaining value and quality.

ADVANTAGES to proucer/provider
continuous improvements in design and methods
higher profits
more efficient use of resources
enhanced reputation
extended product life
improve customer service - no more returns!!!
improve employee motivation

ADVANTAGES for customer
proces may be reduced without loss of quality
better design
improve performance and realibility
quicker delivery - service
standards components for servicing

So for your example it asks how value engineering or analysismay be use to reduc ethe producion cost of a desk.

At the end of the day the examiners are looking for your knowledge of the key terms. f I were to answer this I would focus on getting across my poin of what the terms mean. It is one of those questions where you have to open your mind lol

The answer states that using value engineering because the gross profit is down is a good way of reducing costs. It then goes on to explain what Value enginerring is...
and the talks about reducing certain costs e.g. labour , production overheads

Hope I helped!
Thanks for your question...

111beckstar111

Hi Lala, I have just recently done this exam and was thinking the exact same thing- you would expect this to be a positive figure although.....

You know you have a -£30,000 running cost
And then a residual value £50,000

I presumed that i meant becaues your doing a lifecycle cost any money in woul be a minus figure....therefore

-£50,000 + £30,000 = -£20,000

Hope this helps

lala2009

Thanks Beck, that makes sense - sometimes you just need someone else to explain it!

I was never too good at lifecycle costing so fingers crossed it wont appear in the exam!

111beckstar111

Just to help aswell
Lifecycle Costing

This inolves considering the full costs for the whole life cycle of a product
Research and Development
Production
Selling and Distribution
Customer Services
De-commissioning

The sales revenue must cover the total life cycle costs; otherwise the prouct is no viable.

Problems with lifecycle costing-
predicting the length of the products life cycle and its various stages
estimating future costs (inflation)
estimating future demand for products
allowing for possible costs e.g. legislation

Lifecycle costing helps with future planning and decision making!!

lala2009

Beck, you really are an absolute star!! I don't think you will have any problems in the exam thank you!

111beckstar111

Thank you lala ...

I hope not

Primble

Btc

Hi

I am struggling with most things but in particular working out NIC.

Also what are badges of trade?

thanks