Pcr Past Papers - Help!!!!!

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Celtic Angel
Celtic Angel Registered Posts: 17 New contributor 🐸
in AAT Level 4 (Level 8 in Scotland)
Last minute revision and gave up on the more recent papers as the answers seem to keep changing - so hit the older papers! Discovered a flaw in my knowledge in that when it tells you to put overhead premiums to overheads I was adding this in as well as the overhead absorption rate - I know I should have known better!

Anyway thought I'd finally got my head around this - can someone confirm that even if overtime hours/premium are charged to overheads you don't show this as a cost! You only include the amount for the rate that is being charged - ooh help it sounds like waffle but do you get what i mean?

Stressing just want to get this nailed down once and for all!!!

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  • mowzer
    mowzer Registered Posts: 67 Regular contributor ⭐
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    It took me a while to get my head around this as well, not 100% about the logic, but you're right, even when the premium is charged to overhead it isn't shown as a cost, the only difference is whether or not its charged to direct labour.

    When you say the answers keep changing, is it the figures or the report type questions??

    AAT don't do anything to help my confidence if they don't even know the right answer! :001_unsure:
  • Emma1708
    Emma1708 Registered Posts: 217 Dedicated contributor 🦉
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    Hiya,

    I am having a day on past papers too!

    The way I understand it is you just use the rate it gives you - for example, overtime premium of £3 per hour is charged to overheads - overheads are charged at £10 per hour you would multiply the £10 x the number of hours worked and effectively ignore the overtime premium cost

    I hope thats right anyway!
  • Emma1708
    Emma1708 Registered Posts: 217 Dedicated contributor 🦉
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    Do other answers keep changing besides the June 2007 ones?

    I am up to December 2006 now
  • Celtic Angel
    Celtic Angel Registered Posts: 17 New contributor 🐸
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    Hi

    Thanks to all who have replied on this one - think I've almost got it. As for the changing answers I believe the worst one is the June 2007 paper however, I have been informed by a friend at college that June 2006 has also changed at some point!

    I would agree that it doesn't instil great confidence in us - if the body who set the papers aren't sure of the answers!

    I believe the changes are always around methods of calculations I'm not aware of any of the wordy questions changing - does anyone know any different or is anyone aware of any of the answers changing other than the ones mentioned above!
  • Cortez
    Cortez Registered Posts: 76 Regular contributor ⭐
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    Emma1708 wrote: »
    Hiya,

    I am having a day on past papers too!

    The way I understand it is you just use the rate it gives you - for example, overtime premium of £3 per hour is charged to overheads - overheads are charged at £10 per hour you would multiply the £10 x the number of hours worked and effectively ignore the overtime premium cost

    I hope thats right anyway!

    Have you been working on June 06 paper? ;)

    It's the one I've just been working on and recognise those figures. I added in the overtime premium cost into overheads as well as the "normal" overheads and then realised you didn't have to.

    No idea why but will try and remember it in case it comes up tomorrow!
  • Emma1708
    Emma1708 Registered Posts: 217 Dedicated contributor 🦉
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    :laugh: yes I had just finished that one!
  • MattC
    MattC Registered Posts: 7 New contributor 🐸
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    Hi People

    I dont know if anyone has had a look at the june 2006 PCR, but I feel there is an issue with the labour calculation on this paper:

    Basically the overtime has been charged at the same rate as the standard rate
    why?????

    when its supposed to be 50%!!

    normally all hours (inc overtime) are multiplied by the standard rate and then the overtime hours by the premium- this total figure then forms the the labour cost

    But, when the stadard absorption cost is calculated, just the total hours at normal rate is included:

    I know its quite long winded, but I have added part of the question and AAT answers below:

    Thursday 15 June 2006 (morning)
    Labour

    Nutpin employs 20 production employees who work a standard 35-hour week.
    7 Sigmas can be made in one labour hour and 4 Thetas can be made in one labour hour.
    The basic labour rate is £6 per hour and overtime is paid at a premium of 50 % of this rate
    per hour.
    Any overtime premium is charged to production overheads rather than to the cost of
    direct labour.
    Production overheads
    Overheads are charged to production at the rate of £10 per labour hour.
    Task 1.1
    Prepare the following information for period 7 (the five weeks to 28 July 2006):
    (d) direct labour hours budget
    (e) cost of direct labour budget
    (f) total cost of production based on full absorption costing



    (e) Cost of labour budget
    Basic hours: 3,500 x £6.00 £21,000
    Overtime: 805 x £6.00 4,830
    £25,830
    Alternative answer:
    Actual hours Sigma: 1,365 x £6 = £ 8,190
    Theta: 2,940 x £6 = 17,640
    £25,830

    (d) Direct hours labour budget
    Sigma: 9,555/7 1,365
    Theta: 11,760/4 2,940
    4,305
    Basic hours available: 20 x 35 x 5 3,500
    Overtime 805


    (f) Total absorption cost of production
    Sigma Theta
    Materials 438,750 720,000
    Labour 8,190 17,640 = £25830
  • hunter
    hunter Registered Posts: 54 Regular contributor ⭐
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    June 06 pcr labour

    I agree, the labour calculation appears to be wrong in the answers to this question. The AAT cant seem to decide what on earth the answer to anything is!!! My answer sheet for the June 07 paper that I downloaded a while ago is nothing like the answer paper that is on the website today. Why are closing and opening stocks included in the operating statement task 1.1g? I have lost the will to live this past week, how can we revise when answers on past papers are confusing us so much. Then Dec 07 exams are totally baffling (PEV Monday) do the AAT not want us to pass? I think someone needs to take a long hard look at what is going on. Sorry to moan but I have spent hours and hours studying and revising and really cheesed off with it all.:thumbdown::thumbdown::thumbdown:
  • LouLou143
    LouLou143 Registered Posts: 74 Regular contributor ⭐
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    I know how you feel - like you I downloaded the answers to this paper and they are different when I look at it today.

    However, in absorption costing, you do include opening and closing stocks if it asks you to do an operating statement. Our lecturer only told us this last week.

    Section 2 then tests you the opening/closing stocks on mariginal costing, where you adjust your actual figures to compensate this. If you have to flex the budget using absorption costing, then they state that there are no opening or closing stocks!

    So confusing!!!!! Just hope the paper is kind to us all!!!!

    GOOD LUCK EVERYONE x
  • acky2106
    acky2106 Registered Posts: 52 Regular contributor ⭐
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    There is nothing wrong with the question, it specifically states under the labour information:
    Any overtime premium is charged to production overheads rather than to the cost of
    direct labour. Therefore, you would take the hit of all hours at the basic cost and it would be the same value put into your cost of labour budget. In the accounting system the overhead costs would be debited to production overheads account, these costs form part of the overhead charges that are credited from the overheads account and put in your cost of labour.

    I hope that makes sense?
  • MattC
    MattC Registered Posts: 7 New contributor 🐸
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    Hi

    to be honest, no it doesn`t really make sense, i f you look at june 05 paper.
    Same kind of question, labour and overtime.

    In this question, it again says overtime prmium is charged to fixed overheads, but the overtime elemnt is initially included in the labour budget??
  • acky2106
    acky2106 Registered Posts: 52 Regular contributor ⭐
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    Mat, it will do. If you have a cost of direct labour budget, you have for example 100 hours @ £5 basic and there is 10 hours overtime @ £15. Both of these go into the cost of labour budget UNLESS it specifically tells you not to include the premium in the direct labour budget?

    It is confusing and that's why the AAT test it. If your paying for overtime then it is a cost to direct labour but it may ask you to account for it elsewhere.

    The June '05 paper... you would show both the basic hours and the full cost of overtime in the cost of labour budget however, in the cost of production you would show the labour as gross hours x basic pay as the premium is accounted for in the production overheads account, in theory you are receiving this back as part of the production overhead charge.

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