MAC PEV and PCR Revision Game
Comments
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Im afraid it's standard hours
A - a profit centre is an area of a business which has costs and income and therefore a profit/loss can be ascertained
Q - State which budget should be used to take account of deterioration of raw materials whilst in storage
A: the raw materials purchases budget - we have to increase purchases by this much so that we have enough to issue to production.
Q: How do the calculation of fixed overhead variances differ under absorption and marginal costing?0 -
A: the raw materials purchases budget - we have to increase purchases by this much so that we have enough to issue to production.
Q: How do the calculation of fixed overhead variances differ under absorption and marginal costing?
Under margainl there are no capacity or efficiency variances
Q What is repsonibility accounting?0 -
Bumped
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variations that affect sales and are caused by the economic cycle
So for example butchers might find that sausage and minced beef sales rise during a recession and filet steak sales fall during a recession.
These are variations from the underlying trend over time.
You are given two budgets for an accounting period, and a set of results and have been asked to produce a flexed budget.
What steps would you take to find the costs to put into the flexed budget?Sandy
sandy@sandyhood.com
www.sandyhood.com0 -
variations that affect sales and are caused by the economic cycle
So for example butchers might find that sausage and minced beef sales rise during a recession and filet steak sales fall during a recession.
These are variations from the underlying trend over time.
You are given two budgets for an accounting period, and a set of results and have been asked to produce a flexed budget.
What steps would you take to find the costs to put into the flexed budget?
A) firstly you work out the selling price per unit
Then Materials and any other varible cost per unit
then any fixed costs per unit and semi varible costs have to be separated.
then you draw a table to compaire the budget for the amount of units bugeted on the above costs to the actual cost and another list for variances that arise.0 -
opps forgot a question
Q) what is productivity ?0 -
Hey A-Vic, just wanted to say what a great idea, loving the game. Very helpful0
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kerrifletcher29 wrote: »Hey A-Vic, just wanted to say what a great idea, loving the game. Very helpful
Glad you like jump in anytime 0 -
kerrifletcher29 wrote: »Hey A-Vic, just wanted to say what a great idea, loving the game. Very helpful
Agree on that one - I'm taking notes!!0 -
opps forgot a question
Q) what is productivity ?
Output per (some unit of input)
For example labour hours
20 units per labour hour would be an example
A long time ago there was an examiner who was concerned about the difference between productivity and efficiency. The current PCR MAC and PEV examiners take a more practical approach and don't split hairs.
So 20 units per £20 of labour time would be acceptable as another productivity measure
In a variance analysis question where you see:
• An unbudgeted repair to a machine cost £2,000.- which variance is most affected by such a fact?
- is the variance likely to be adverse or favourable?
Sandy
sandy@sandyhood.com
www.sandyhood.com0 -
Output per (some unit of input)
For example labour hours
20 units per labour hour would be an example
A long time ago there was an examiner who was concerned about the difference between productivity and efficiency. The current PCR MAC and PEV examiners take a more practical approach and don't split hairs.
So 20 units per £20 of labour time would be acceptable as another productivity measure
In a variance analysis question where you see:
• An unbudgeted repair to a machine cost £2,000.- which variance is most affected by such a fact?
- is the variance likely to be adverse or favourable?
Efficiency
Adverse
Q: what is the capacity ratio?0 -
Output per (some unit of input)
For example labour hours
20 units per labour hour would be an example
A long time ago there was an examiner who was concerned about the difference between productivity and efficiency. The current PCR MAC and PEV examiners take a more practical approach and don't split hairs.
So 20 units per £20 of labour time would be acceptable as another productivity measure
In a variance analysis question where you see:
• An unbudgeted repair to a machine cost £2,000.- which variance is most affected by such a fact?
- is the variance likely to be adverse or favourable?
A)
FO Expenditure - Adverse - due to the unexpected incresed cost of repairing the machine means increased cost and rise in the budget for fixed overheads.
FO Volume - Adverse - if the absorpbtion rate is based on machine hours, the machine been out of prodiuction to be repaired means that less time is available. Also will be backed up with the adverse FO capacity.
Also Labour variances could be afected due to idle time while the machine is been repaired afecting Labour capacity.
Q) What is the Gearing ratio and what is it telling us?0 -
A formula made up of a fixed element (a) and a variable element (bx)
x would be the independent variable and b would be the rate that x increases
y = a + bx
For a semi-variable cost
y = the cost
a = the fixed element (total fixed cost)
b = the variable cost per unit
x = the number of units produced
It is also used to predict future sales trends
y = sales trend value
a = the basic volume of sales in period 0
b = the rate of increase in sales from one period to the next
x = the number of the period
How would you find the amount of overhead under/over absorbed?Sandy
sandy@sandyhood.com
www.sandyhood.com0 -
A formula made up of a fixed element (a) and a variable element (bx)
x would be the independent variable and b would be the rate that x increases
y = a + bx
For a semi-variable cost
y = the cost
a = the fixed element (total fixed cost)
b = the variable cost per unit
x = the number of units produced
It is also used to predict future sales trends
y = sales trend value
a = the basic volume of sales in period 0
b = the rate of increase in sales from one period to the next
x = the number of the period
How would you find the amount of overhead under/over absorbed?
A) Using the total fixed overhead variance ?
Q) How do you calculate the overhead absorbtion rate?0 -
No question Primble
Question: whats the formula for Fixed Overhead Efficiency Variance and list some likely causes0 -
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No question Primble
Question: whats the formula for Fixed Overhead Efficiency Variance and list some likely causes
A, OAR x (standard for Actual production - actual taken)
Idle time less/ more hours taken than bugeted
Unskilled workers
Higher grade of materials used
Q, How can you over come this variance0 -
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A, OAR x (standard for Actual production - actual taken)
Idle time less/ more hours taken than bugeted
Unskilled workers
Higher grade of materials used
Q, How can you over come this variance
budget 0 hours for work and actually do not do any work therefore Budget = Actual meaning no variance to over come
LOL sorry couldnt resist this
Idle time less/ more hours taken than bugeted - budget for idle time - do not allow workers to take breaks
Unskilled workers - use skilled workers
Higher grade of materials used - not really sure0 -
budget 0 hours for work and actually do not do any work therefore Budget = Actual meaning no variance to over come
LOL sorry couldnt resist this
Idle time less/ more hours taken than bugeted - budget for idle time - do not allow workers to take breaks
Unskilled workers - use skilled workers
Higher grade of materials used - not really sure
????????0 -
have the questions died on here?0
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A, OAR x (standard for Actual production - actual taken)
Idle time less/ more hours taken than bugeted
Unskilled workers
Higher grade of materials used
Q, How can you over come this variance
bump.... lets carry on with the game....forget what i post after this i just had a crazy moment0 -
Just to save scrolling right back to the question
and in my own way, my interpretation of the question I will state what I think has been asked.
The Fixed Overhead Efficiency Variance is adverse, how can we overcome this?-
Assuming that the overheads are absorbed on a labour hours basis, the cause has been that the actual hours worked were more than the standard hours needed for actual production. So was so much produced that the workforce were working flat out and because they were on 12-14 hour shifts there average output per hour wasn't as good as it had been when they worked 7-8 hour shifts (tiredness).
- So reduce the length of the shifts either by recruiting and training more staff, or reduce the level of production
If it was because the machinery kept breaking down and hours worked were not all worked on production. - Then look at replacing the equipment
Not an exhaustive list but a clue about how to think about this type of question.
What might happen (as a logical sequence of ideas) if a firm reduces the price charged for the products produced and sold?Sandy
sandy@sandyhood.com
www.sandyhood.com0 - So reduce the length of the shifts either by recruiting and training more staff, or reduce the level of production
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Just to save scrolling right back to the question
and in my own way, my interpretation of the question I will state what I think has been asked.
The Fixed Overhead Efficiency Variance is adverse, how can we overcome this?-
Assuming that the overheads are absorbed on a labour hours basis, the cause has been that the actual hours worked were more than the standard hours needed for actual production. So was so much produced that the workforce were working flat out and because they were on 12-14 hour shifts there average output per hour wasn't as good as it had been when they worked 7-8 hour shifts (tiredness).
- So reduce the length of the shifts either by recruiting and training more staff, or reduce the level of production
If it was because the machinery kept breaking down and hours worked were not all worked on production. - Then look at replacing the equipment
Not an exhaustive list but a clue about how to think about this type of question.
What might happen (as a logical sequence of ideas) if a firm reduces the price charged for the products produced and sold?
A) Turnover Reduced - meaning output may have to be increased to cover reduced contribution.
Stock levels may have to be increased with the possiblity of increased sales
To increase productivity staff training may have to be given for staff to work more efficiently
With the reduction in turnover standards have to be revised if the reduced price is to be long term ?.
Q) How do you deal with a limiting factor0 - So reduce the length of the shifts either by recruiting and training more staff, or reduce the level of production
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