MAC PEV and PCR Revision Game
AVic
Registered Posts: 6,970 Beyond epic contributor 🧙♂️
Hey All
Just an idea i have come up with to help us lot sitting the above exams next month lemme know what you think?
Ok a way we can test each other by asking a question and the first person that gets it right gets to ask a question and so on.
Ok i'll start it and hope you get the idea!
Q, What is lifecycle costing?????
Just an idea i have come up with to help us lot sitting the above exams next month lemme know what you think?
Ok a way we can test each other by asking a question and the first person that gets it right gets to ask a question and so on.
Ok i'll start it and hope you get the idea!
Q, What is lifecycle costing?????
0
Comments

Hey All
Just an idea i have come up with to help us lot sitting the above exams next month lemme know what you think?
Ok a way we can test each other by asking a question and the first person that gets it right gets to ask a question and so on.
Ok i'll start it and hope you get the idea!
Q, What is lifecycle costing?????
life cycle costing is where you look at the costs a product incurrs during its life through it's introduction, growth, maturity,decline.
what is activity based costing?0 
life cycle costing is where you look at the costs a product incurrs during its life through it's introduction, growth, maturity,decline.
what is activity based costing?
This is a method of absorption costing which uses methods of allocating overheads to costs units.
Q, What is the materials usage variance???0 


If incorrect answer given please correct us0

this could be down to either bad quality of materials bought or not enough skilled labour used i.e agency workers and wastage accurs (i think)
Q, What is a rolling budget
not completly sure but is it when the same budget is used each year as it doesn't require major changes. (bit of a stab really)
Q. back to basics, what is contribution?0 
not completly sure but is it when the same budget is used each year as it doesn't require major changes. (bit of a stab really) 
a rolling buget is a budget continusly updated by adding a futher accounting period each time the current accounting period is completed
Q. back to basics, what is contribution?
A, Sales  minus materials and labour
what is ment by a key budget factor0 
Key budget factor
ah ha I know this one  an element/resource of a business likely to place limitations on its activities
When settinmg standard cost fro direct materials what influences outside the organisation should be taken into account?0 
ah ha I know this one  an element/resource of a business likely to place limitations on its activities
When settinmg standard cost fro direct materials what influences outside the organisation should be taken into account?
Inflation indexation i think but will look up
what is the debtors days ratio?0 
Now you're just guessing lol
Set on the basis of ideal working conditions, not allowed for wastage of materials or idle time etc0 
what is the formula for laber rate variance?0

Dont know about everyone else but starting to get a bit disheartned by mac i finally manage to nail an aspect that i was struggling with but then move on to something else finding that am struggling again then go back and have forgotten everything else again aggghhhhh.
Sorry winge over0 
what is the formula for laber rate variance?
More than one correct sequence of calculations, (but the same answer) Primble
My approach is:
The standard cost of the hours paid less the actual labour cost
(hrs paid x standard rate per hour)  actual costSandy
sandy@sandyhood.com
www.sandyhood.com0 
I think you forgot to post a new question Sandy0

Scenario
Rinske Ltd produce a product (the PEV) and record the costings using a standard absorption costing system. Fixed overheads are absorbed using a direct labour hour basis.
We are now looking back over the results for April 2010. The budget was 5,000 labour hours
 the firm produced 900 units and each unit has a standard of 5 hours per unit produced
 the production workers worked 4,200 hours in April
Is the overhead capacity variance favourable or adverse?
I have deliberately not given any money values, so you cannot say how much the variance isSandy
sandy@sandyhood.com
www.sandyhood.com0 
Scenario
Rinske Ltd produce a product (the PEV) and record the costings using a standard absorption costing system. Fixed overheads are absorbed using a direct labour hour basis.
We are now looking back over the results for April 2010. The budget was 5,000 labour hours
 the firm produced 900 units and each unit has a standard of 5 hours per unit produced
 the production workers worked 4,200 hours in April
Is the overhead capacity variance favourable or adverse?
I have deliberately not given any money values, so you cannot say how much the variance is
I would say its favourable. However thinking about this it is under absorbed so shouldn't that be adverse. This is one area I struggle with.0 
There isn't enough information to know whether it is under absorbed or not.
If the budgeted overhead was £50,000 then the overhead absorption rate would be £10 per direct labour hour.
So 900 units x 5 hrs per unit at £10 per hour would absorb £45,000, but we don't know what the actual overhead was so we can't say if it was under absorbed or not.
Look at the question again.Is the overhead capacity variance favourable or adverse?
If you want, look at a series of stepping stone questions first: what is capacity?
 what is the capacity variance comparing?
 what would make the capacity variance favourable or adverse?
It is an area a lot of students struggle with, but once you grasp it it gives you a lot of help with the variances.Sandy
sandy@sandyhood.com
www.sandyhood.com0 
There isn't enough information to know whether it is under absorbed or not.
If the budgeted overhead was £50,000 then the overhead absorption rate would be £10 per direct labour hour.
So 900 units x 5 hrs per unit at £10 per hour would absorb £45,000, but we don't know what the actual overhead was so we can't say if it was under absorbed or not.
Look at the question again.
If you want, look at a series of stepping stone questions first: what is capacity?
 what is the capacity variance comparing?
 what would make the capacity variance favourable or adverse?
It is an area a lot of students struggle with, but once you grasp it it gives you a lot of help with the variances.
Yeah I knew I shouldn't have even attempted to answer that, I was going on 4500 hours covered the overhead and they'd only worked 4200 but that was completley wrong.
Am at work so haven't got time to think about this now and will look at it tonight, if I still have the will to live that is. 3 weeks simply isn't long enough.0 
Right I've had a look at this while eating my lunch.
The capacity variance compares actual hours worked with budgeted hours valued at hourly absorption rate.
The variance would be favourable if the budgeted hours at absorption rate were less the the actual worked. I have checked my notes for this but am not understanding why.
This is what my notes say, is it correct?
"Fixed overhead capacity variance
Measures whether all available hours were used or if more hours were worked than budgeted for, valued at hourly absorption rate
Actual hours worked at absorption rate £112,000
Budgeted hours at absorption rate £104,000
Fixed overhead capacity variance £8000 fav"
So going back to your question the overhead capacity variance is adverse because the workforce worked less hours than budgeted, is that correct?0 
Excellent
The capacity budgeted was 5,000 hours but the actual capacity was only 4,200 hours, 800 hours less than budgeted. So the capacity variance must be adverse.
Next question:
What type of variance is the fixed overhead efficiency variance? Adverse
 Favourable
Sandy
sandy@sandyhood.com
www.sandyhood.com0 
Excellent
The capacity budgeted was 5,000 hours but the actual capacity was only 4,200 hours, 800 hours less than budgeted. So the capacity variance must be adverse.
Next question:
What type of variance is the fixed overhead efficiency variance? Adverse
 Favourable
So we're saying that the workforce aren't working at full capacity? But they produced the units in less time, isn't that a good thing or have I completely got the wrong end of the stick?0 
Excellent
The capacity budgeted was 5,000 hours but the actual capacity was only 4,200 hours, 800 hours less than budgeted. So the capacity variance must be adverse.
Next question:
What type of variance is the fixed overhead efficiency variance? Adverse
 Favourable
Ah the fixed overhead efficency variance is favourable because they produced the units in less time than budgeted.
So capacity, could you please explain what is the difference in nice easy languauge for me as I have my useless head on today!0 
Jill
Capacity is the capability to produce and for us that is the [size=+1]hours worked[/size]
Every time the [size=+1]actual hours worked are more than the budgeted hours[/size] we have more capacity than the budget expected us to, and [size=+1] every time the variance is favourable[/size]
In the same way, as in the Rinske Ltd exercise, where the hours worked are less than the budgeted hours we have less capacity than budget so must have an adverse variance.
Forgot the question, so a last minute addition
What do you do about usage variance if there are 3 different raw materials?Sandy
sandy@sandyhood.com
www.sandyhood.com0
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