CRS mock exams - conflicting answers given

Rebecca498

Evening All,

I've done the two cost and revenues CBT exams on AAT's website but I'm confused by the answers for reapportionment question on both exams.

One answer shows the reapportionment as minus figures and the other shows it as positive figures.

I've attached a word file showing both answers given.

Attachment not found.

Does anyone know which is the correct answer?

Also on that word document is another answer I can't quite understand. Why would the fixed costs per batch decrease? Surely they're fixed costs, so they don't change at all (until extra production is reached.)

I'd appreciate any help anyone could offer!

Thank you,

Rebecca

wbauk2002

Hi

The fixed cost doesnt decrease, its just spread over more units, so the more you produce, the cheaper cost of a unit becomes, e.g

Variable cost of item £2, then fixed costs £200, QTY 100, so £2 x 100 units = £200 plus £100 fixed costs = total £300, and cost per item is £3

Lets say we now produce 200, so £2 x 200 = £400, then £100 fixed costs = £500, the fixed costs didnt increase so unit price is now £2.50, just because fixed costs are absorbed into more units

janwal

Hi Rebecca

We have been taught at college always to show as a minus as you are deducting the total amount to make the column 0 , but as you don't include those columns in the main workings maybe it doesn't matter..... not sure

Will ask tomorrow at college as got exam next Tuesday.

Jan

wbauk2002

As for your first question, the minus figure is correct as its being absorbed into the 2 departments. Theres alot of error in these exams

You may find another in mock exam that i got stuck on, and i started a thread see here http://forums.aat.org.uk/showthread.php?34129-Cost-amp-Revenues-Question-Help&highlight=cost+revenues

Turns out it was an error

Jo Clark

Hello Rebecca

Read the instructions at the start of the exam and also any specific instructions for each question regarding the use of brackets or minus signs or that you may just be required to enter the amount.

You will find that this has been discussed before... so good luck and read the full question and read it again if unsure.

JC

Rebecca498

Thanks for all your help everyone.

I think I will enter the minus figures if it comes up in the exam then. It must just be an AAT error that one answer uses them and another answer doesn't!

Wbauk2002 - I thought the fixed didn't decrease either. It must just be another error. The other options available on that drop down box for the answer were;

Fixed costs decrease
Fixed costs increase
Variable costs decrease
Variable costs increase.

I chose variable costs increase, because they do as the batches produced increase. I'm not sure if I would say that was a reason for the profit increasing but I was wrong either way according to the answers!

Thank you all again for your help - all very prompt!

Thanks

omega man

The re-apportionment answer should have minus signs,so that is an error.
But the fixed cost answer is completely correct,wbauk gives a good example why above.

Rebecca498

Sorry yes you're right, I wasn't reading wbauk 's answer correctly, they're just absorbed over more units!

It all makes perfect sense now. Thank you!