Home For AAT student members AQ 2013 AAT Level 4 (Level 8 in Scotland)

Financial Performance

Shell BShell B Feels At HomeRegistered Posts: 95
Hello

I am revising for the above and i am getting stuck with two things which i think maybe easy to sort out.

1) Standard cost cards, for the life on me i can never get my answers the same as the past papers.
2) Target costing

Can anyone help me please?????

Shell B

Comments

  • SandyHoodSandyHood Font Of All Knowledge Registered, Moderator Posts: 2,034
    Shell

    Are your answers right?
    If so, the fact that you have different answer to the past paper is of no consequence.

    Are you finding the standard cost of a unit of a product using 4 columns?
    1. The inputs Materials, Labour, Overhead
    2. The amount of each input needed per unit of finished product
    3. The cost per kg/hr etc
    4. the cost per unit of out put with the total cost at the bottom of the column.

    Are you finding target cost by selling price less required profit?
    And then the individual cost elements, once you have the target cost?
    Sandy
    [email protected]
    www.sandyhood.com
  • Shell BShell B Feels At Home Registered Posts: 95
    Thanks for answering your help is much appreciated.

    for the cost card i have been doing the following, think its more or less how you have said.

    QTY Cost per unit Total
    Material
    Labour
    Overheads
    total

    for example if it says prepare a cost card for 10,000 bars of soap, am i doing cost for just 1 bar????? i think i am getting somthing really simple wrapped around my head i am looking at the june 2009 paper task 1.2

    As for target costing i understand you have to take the target profit away from the selling price but i just dont understand the tables in the osbourne workbooks, not sure if you have one but in assessment 1 at the back there is a table which looks like this

    Sales price per unit
    Profit Margin
    Total cost
    Fixed cost per unit
    Material cost per unit
    Max labour cost per unit
    Target labour time per unit (minutes)

    is that enough info for you to help me or do you need some more????

    Thanks for the help again
  • SandyHoodSandyHood Font Of All Knowledge Registered, Moderator Posts: 2,034
    Shell
    The cost card would be for 10,000 bars of soap.

    So Material (amount needed for 10,000 bars in kgs) cost per kg Cost
    etc

    Then add them up

    The target cost question appears to be asking for the maximum time you could take making each unit

    So:
    • Find the target total cost per unit
    • take off the fixed cost per unit
    • this leaves the total variable cost per unit
    • take off the material cost per unit
    • this gives you the max labour cost per unit
    • Then divide the labour rate per hour by the max labour cost per unit
    • That ought to give you the max labour time

    See what you make of this:
    Market price per unit: £25.00
    Required profit margin: 20% of price

    Fixed cost per unit (at forecast volume) £11.00
    Material cost per unit £5.25
    Labour rate per hour £15.00

    How much time can be allocated to producing each unit?
    Sandy
    [email protected]
    www.sandyhood.com
  • Shell BShell B Feels At Home Registered Posts: 95
    hello Sandy

    this is what i got (sorry for late reply)

    Sale Price £25.00
    Profit Margin £5.00
    Total cost - £20.00
    Fixed cost - £11.00
    Material - £5.25
    Labour - £3.75
    Time 4mins

    I hope thats right
  • SandyHoodSandyHood Font Of All Knowledge Registered, Moderator Posts: 2,034
    £3.75 per unit = 0.25 hours per unit (which is where I would leave it) but if you insist on minutes then x 60 = 15 mins
    £15.00 per hr
    Sandy
    [email protected]
    www.sandyhood.com
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