Home For AAT student members AQ 2013 AAT Level 3 (Level 6 in Scotland)
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ECR thread

2

Comments

  • F123F123 Just Joined Registered Posts: 2
    O i like your answer... I dread to think what i wrote... It was an essay thow haha!!
    Yep i did a 10% disount on the Sales Revenue above 5000 miles? It took me a good 10mins to work out who was giving who a disount... :-( ...And its probably still not right lol.. ooo and the worse thing is im not a stupid girl lol i got A* In Maths and Statistics...haha So i have come to the conclution that AAT is destroying my brain cells ha!!
  • Memelly78Memelly78 New Member Registered Posts: 6
    I took 10% off the sales revenue and then completely messed up on the target profit part! Not good!
  • PAMDILLPAMDILL Experienced Mentor Registered Posts: 717
    Did I read it right and it was only 10% off the difference - i.e. 1000 and 2000 miles?
  • twinmeistertwinmeister Well-Known Registered Posts: 122
    ECR exam - what I put

    From memory so apologies if I get the numbering wrong
    Section 1
    1.Stock card - FIFO (had to be careful as costs per unit were asked for in pence not pounds)
    2.Stock policy - hadn't been followed in that stocks had fallen below minimum allowed. EOQ waffled - we were specifically told by tutor this was no longer on the syllabus
    3.Wages control - couldn't believe it was as simple as just copying down info already provided. Used all 6 lines - Dr Maintenance Cr Wages Control 7000, 4000, 3000 I think
    4. Apportionment - Relatively straightforward until Pilot and Crew wages. Wasn't sure whether I should used miles travelled as basis or employee numbers. There were employee numbers for the other cost centres which were irrelevant so I decided to simply add Charter and Schedule employee numbers and apportion on that basis. Wrote a note giving my reasoning, but of all the paper this was the shakiest bit for me.
    5. OAR - Scheduled £317 (or £319 can't remember) Charter £300
    6. Under-absorbed by £12,000 - Dr Profit and Loss and will reduce reported profit

    Section 2
    1. 5000, 6000, 7000 bit - This question out of all of them was the most fiddly, but I found this relatively straightforward once I got over the £000's issue. The two tricky bits were the semi-variable costs - fixed £600,000 then £50 per mile travelled for landing fees. Put that the revenue was £2,500,000 plus £500 x 0.9 on all miles traveled over 5000 to get the 10% bit. In the stress of an exam situation though it was a bit too much to be this fiddly I think. I agree with others that there was a big jump between the different profitability per mile between 5000, 6000, 7000, but can't remember exact figures.
    2. Relevant, Irrelevant costs - not studied or found in books, but guessed relevant were variable costs as those that increased with output and were therefore relevant to the scenario and irrelevant were fixed as those remained constant and were therefore irrelevant to the scenario decision.
    Included variable part of landing fees as relevant with other variable costs and fixed part of landing fees in irrelevant.
    3. Target profit £60,000 - forgot to add in fixed part of landing fees, but added fixed costs to target profit then divided result by contribution per unit. Got something like 4995?
    4.Limiting factors - again the £000's was a bit nasty. C 1st, A 2nd, B 3rd. 8000 hours for B, which was 50% of miles traveled. The fact that 1/2 a flight isn't really viable as others have spotted didn't even enter my head, so may have got that wrong?
    5.Fleet investment calcs - starightforward. Included 'scrap value' as a revenue in year 3 for both and then worked out discounted cash flow accordingly.
    6. Memo - advised A because it had greater NPV (£380 as regards £320 not sure of figures?). Rate increase from 16% to 18% said it would reduce the NPV, but as long as it remained positive the investment would be viable although less attractive. Gave answer of 'Payback period' for the alternative method.

    Interested to see if others put what I did, especially on 1.4
  • LaylaLayla Feels At Home Registered Posts: 40
    I took 10% off the sales revenue too, but only for the addtional miles above the 5000.
    As for the semi variable part of that question i didnt know what the hell it meant!
  • Elena22Elena22 New Member Registered Posts: 6
    I ve got the same answer for task 1.5
    Do not remember 1.4 but u could not do task 1.5 without figures from 1.4
  • Focus2FocusFocus2Focus New Member Registered Posts: 10
    Layla wrote: »
    I took 10% off the sales revenue too, but only for the addtional miles above the 5000.
    As for the semi variable part of that question i didnt know what the hell it meant!

    funnily enough I have the revision paper clearly showing that Semi Variables will not be in the exam. Did it wrong the first time then relooked and saw it. Intial fixed is 600 (000s), then £50 per mile, straight forward once u noticed it. 10% discount wa a little confusing however I too it to mean on Sales revnue for every m over 5000
  • Focus2FocusFocus2Focus New Member Registered Posts: 10
    From memory so apologies if I get the numbering wrong
    Section 1
    1.Stock card - FIFO (had to be careful as costs per unit were asked for in pence not pounds)
    2.Stock policy - hadn't been followed in that stocks had fallen below minimum allowed. EOQ waffled - we were specifically told by tutor this was no longer on the syllabus
    3.Wages control - couldn't believe it was as simple as just copying down info already provided. Used all 6 lines - Dr Maintenance Cr Wages Control 7000, 4000, 3000 I think
    4. Apportionment - Relatively straightforward until Pilot and Crew wages. Wasn't sure whether I should used miles travelled as basis or employee numbers. There were employee numbers for the other cost centres which were irrelevant so I decided to simply add Charter and Schedule employee numbers and apportion on that basis. Wrote a note giving my reasoning, but of all the paper this was the shakiest bit for me.
    5. OAR - Scheduled £317 (or £319 can't remember) Charter £300
    6. Under-absorbed by £12,000 - Dr Profit and Loss and will reduce reported profit

    Section 2
    1. 5000, 6000, 7000 bit - This question out of all of them was the most fiddly, but I found this relatively straightforward once I got over the £000's issue. The two tricky bits were the semi-variable costs - fixed £600,000 then £50 per mile travelled for landing fees. Put that the revenue was £2,500,000 plus £500 x 0.9 on all miles traveled over 5000 to get the 10% bit. In the stress of an exam situation though it was a bit too much to be this fiddly I think. I agree with others that there was a big jump between the different profitability per mile between 5000, 6000, 7000, but can't remember exact figures.
    2. Relevant, Irrelevant costs - not studied or found in books, but guessed relevant were variable costs as those that increased with output and were therefore relevant to the scenario and irrelevant were fixed as those remained constant and were therefore irrelevant to the scenario decision.
    Included variable part of landing fees as relevant with other variable costs and fixed part of landing fees in irrelevant.
    3. Target profit £60,000 - forgot to add in fixed part of landing fees, but added fixed costs to target profit then divided result by contribution per unit. Got something like 4995?
    4.Limiting factors - again the £000's was a bit nasty. C 1st, A 2nd, B 3rd. 8000 hours for B, which was 50% of miles traveled. The fact that 1/2 a flight isn't really viable as others have spotted didn't even enter my head, so may have got that wrong?
    5.Fleet investment calcs - starightforward. Included 'scrap value' as a revenue in year 3 for both and then worked out discounted cash flow accordingly.
    6. Memo - advised A because it had greater NPV (£380 as regards £320 not sure of figures?). Rate increase from 16% to 18% said it would reduce the NPV, but as long as it remained positive the investment would be viable although less attractive. Gave answer of 'Payback period' for the alternative method.

    Interested to see if others put what I did, especially on 1.4

    correct me if Im wrong, isnt lower NPV better, I said higher but reread after exam and I read lower is better?????
  • James CristianoJames Cristiano AAT Web Team Unregistered / Not Logged In Posts: 48
    ECR Thread

    Dear AAT Forum users,

    Please refer to the following link:

    http://forums.aat.org.uk/announcement.php?f=78

    The Thread in question was reported to us by another forum user as it contravened the above AAT announcement.

    Kind Regards,
    James, AAT Web Team
  • PAMDILLPAMDILL Experienced Mentor Registered Posts: 717
    Higher NPV is better as that is the amount the value of the company's balance sheet increases by during the economic life. (OR some blurb like that)
  • DaveIOWDaveIOW Feels At Home Registered Posts: 85
    Dear AAT Forum users,

    Please refer to the following link:

    http://forums.aat.org.uk/announcement.php?f=78

    The Thread in question was reported to us by another forum user as it contravened the above AAT announcement.

    Kind Regards,
    James, AAT Web Team

    13 hours after the 8pm cut off time?
  • FingersanFingersan Feels At Home Registered Posts: 84
    What a load of nonsense. Why did it take some 17 hours to delete then ? (from the time it was first started)
  • KellyGKellyG Feels At Home Registered Posts: 51
    correct me if Im wrong, isnt lower NPV better, I said higher but reread after exam and I read lower is better?????

    I've just checked my text book and it does say to choose the item with the highest NPV as it adds value to the company.
    If it was a Net Present "cost" then you would need to choose the lower of the two.... I think??
    really dont know anymore, felt quite confident when i walked into that exam yesterday - had the explanation for Internal rate of return firmly fixed in my head (as it was asked for in pretty much every exam since 2003!) and NOTHING... I saw EOQ and just thought... erm... Did I miss this lesson!?? Waffled my way through that and the relevant and irrelevant costs (which are not explained in my Kaplan text book!) luckily it seems I was right but the semi variable costs stumped me.... Oh well... nothing we can do about it now... just an agonising wait for the results! Hopefully if everyone did badly the pass mark will be lower??? we can hope hey!! :001_tt2:
  • mikesmikes Trusted Regular Registered Posts: 254
    Hi Twinmeister

    I didn't take the 10% off the sales rev, just on the difference for the fuel and landing fees, ie fuel was 0.8 and reduced to 0.72, for landing fees reduced the cost per mile to £45. Then for 6000 miles calculated 5000 at normal rate and 1000 at reduced rate.

    For the EOQ, i made a note of the calculation in case it came up, but then had a mental block and couldn't remember it mentioned that it covered holding cost, ordering costs and admin costs, left out the bit about the annual usage.

    For the salary charges in the appointment, i just entered the figures in the data according to the departments, rather than divide them out.

    Made a complete pigs ear on the target revenue, i couldn't remember the formula for working out the required number of miles needed, i knew it was fixed costs + target profit, but then i could not rember what it was meant to be divided by. I thought it was by target profit again, but that didn't seem right, in the end it just divided 5000 miles by 0.96 i think and got 4800 miles, which seemed close as the profit for 5000 miles was £70.

    It's all a bit hit and miss, hopefully the examiners will be full of christmas spirit when it come to marking the papers and think "oh stuff it, that's close enough" and give us a pass. :001_tt2:
  • agathaagatha Feels At Home Registered Posts: 41
    ""A relevant cost relates to future expected costs that will differ with each alternative used.

    Because of the difference amongst alternative, hence it has a bearing on the decision to be made.

    Irrelevant costs simply are costs that will not affect the decision. By analyzing these type of irrelevant costs, management will be wasting their time and efforts as these costs do not affect the decision they are going to make.
    FEATURES or CRITERIA of Relevant Costs:

    · Relevant cost is a cost that will be incurred in the future. Historical costs are sunk costs which has no relevancy in the decision making.

    · The costs must differ between alternatives. If a cost is the same whether we choose alternative A or B then this is an irrelevant cost. A good example is factory rental which remains the same irrespective of management wanting to manufacture product A or B.

    · Only CASH flow item And Incremental fixed costs are relevant. Non cash item like depreciation and absorbed fixed overheads are not relevant costs as they do not involve any additional cash flow.

    AREAS OF SHORT TERM DECISIONS WHERE RELEVANT COSTS ARE APPLIED:

    · Limiting factor due to scarce resources;

    · Make or Buy decision;

    · Accept or Reject special order;

    · To continue or discontinue or shut down decisions;

    Pricing""
  • FingersanFingersan Feels At Home Registered Posts: 84
    Wow... thanks for that Agatha, shame I didn't know it for the exam !!!
  • agathaagatha Feels At Home Registered Posts: 41
    shame i didnt know it either, just googled it, one addition to my post: INCREMENTAL COST is also referred to as "marginal cost". :crying:
  • LaylaLayla Feels At Home Registered Posts: 40
    James Cristiano -

    I understand your reasons however nothing relating to the questions in the paper was posted before 8, just posts saying the exam was hard thats it.
    Not only that, it was deleted off this morning so the time period for not talking about the exams had already lapsed ?

    we are not amused.
  • DaveIOWDaveIOW Feels At Home Registered Posts: 85
    Layla wrote: »
    James Cristiano -

    I understand your reasons however nothing relating to the questions in the paper was posted before 8, just posts saying the exam was hard thats it.
    Not only that, it was deleted off this morning so the time period for not talking about the exams had already lapsed ?

    we are not amused.

    exactly, there was one post on the first page & that single post was removed...
  • Focus2FocusFocus2Focus New Member Registered Posts: 10
    KellyG wrote: »
    I've just checked my text book and it does say to choose the item with the highest NPV as it adds value to the company.
    If it was a Net Present "cost" then you would need to choose the lower of the two.... I think??
    really dont know anymore, felt quite confident when i walked into that exam yesterday - had the explanation for Internal rate of return firmly fixed in my head (as it was asked for in pretty much every exam since 2003!) and NOTHING... I saw EOQ and just thought... erm... Did I miss this lesson!?? Waffled my way through that and the relevant and irrelevant costs (which are not explained in my Kaplan text book!) luckily it seems I was right but the semi variable costs stumped me.... Oh well... nothing we can do about it now... just an agonising wait for the results! Hopefully if everyone did badly the pass mark will be lower??? we can hope hey!! :001_tt2:

    fantastic so I got the NPV right, thats the problem with reading your texts after - thanks guys
  • PinchyPinchy Feels At Home Registered Posts: 38
    Overheads Apportioning

    Is it just me or did anyone else think that Pilots Salaries were a direct cost and therefore not an overhead? I really deliberated and in the end did not include them in the table as we had a similar question on our simulation - our tutor told us not to include it as it was a trick question.
    Only Indirect labour is included in Overheads and we already had that so Pilot wages must be a Direct cost, so not an Overhead???
  • Focus2FocusFocus2Focus New Member Registered Posts: 10
    hmmm

    Im starting to think we are lookiong into this too deeply. Im starting to get confuzzled :confused1::confused1::confused1:
  • NikkihNikkih Settling In Nicely Registered Posts: 20
    On the Salaries for chartered and schuduled i just allocated them. I think the exam was more indepth than any of the Past Papers, starting to wish id taken the Exam in June 08 think i might of passed it then
  • jojo1966jojo1966 Settling In Nicely Registered Posts: 21
    i dont believe that the exam would be that complicated that we would have had to start doing things like adding the 600k fixed part of semi variable costs onto fixed costs when calculating mileage to give target profit. Not when we got questions like the wages split which was just a matter of copying down info from above !! Also - the 600k fixed part of semi variable costs had already been taken into account wheh working out contribution - they dont start expecting you to work out contribution by adding back the fixed costs element of semi variable - and if you have included this in your figure for calculating contribuition per unit - you cannot then include it on the top part of the calculation as well - surely????? or am i just being thick?? I reckon all calculations should have been done purely with the information as it was laid out.
  • hanapospishanapospis Well-Known Registered Posts: 111
    I have taken the 600k of fixed part of variable cost out and included it in fixed cost when calculating the contribution . When I was calculating the target profit I have taken as fixed cost £1645000 (420,625 and 600) plus 60000 profit divided by contribution.

    I have got:

    contribution £343 per mile
    target profit: 4971

    profit per mile for 6000 £60.50 and 7000 £93,71

    But I can be wrong....
  • jojo1966jojo1966 Settling In Nicely Registered Posts: 21
    thats probably right then - as long as youve been consistent i reckon - my contribution per mile was only 223 as i had the 600k included as variable but still got the answer to around 4900 mark - just think they are expecting a bit much to think we would all move the fixed element bit , dont think we did that in lessons at college, but as long as the answer is right dont suppose it matters does it??
  • jkcjkc Well-Known Registered Posts: 166
    as they took our previous thread just want to go on the record that the exam was awful. over complicated, not similar to the other papers. put this with awful teaching, huge class sizes and you are going to get lots of failures. I worked like a trojan and for what? I feel the teachers were waiting for every one to fail so they could get the class size down and everyone will leave. Its just made me hopping mad and even more determined to carry on even if its just for the knowledge fra here i come.
  • peugeotpeugeot Experienced Mentor Registered Posts: 624
    I think students should understand that examiners will only ever examine topics that are within the standards (the syllabus). If you find that the ECR examiner has examined a topic which is clearly NOT in the standards (which can be found on the AAT Students Resources Section) then the examiner CAN be held responsible because students found the paper too difficult, but I'm not sure this is going to be the case.

    If the examiner has examined within the syllabus framework, then responsibility lies with either the tuition provider or the student - not the examiner even though the paper might not mirror another one previously set.

    I'm sure you will be fine with your attempts.

    Kind regards
    Steve
  • dav_247dav_247 Just Joined Registered Posts: 1
    Disappointed!

    May I just take this opportunity to say how disappointed I am with AAT and in particular the ECR exam.

    I also studied very hard, revised in plenty of time and sat all past exam papers, to then find on the day a completely different format and with questions which are not even explained in the book?!

    May I also note that for a profession I am a cost estimator and do many of the associated topics in the module on a daily basis, but still found the exam very difficult.

    I can only suggest the Chief examiner was not all there the night he/she wrote the thing?!

    I hope they realise how difficult they made the paper and favour people who tried their best to answer the different questions.

    Bad AAT - Losing confidence in your abilities as an organisation.:thumbdown:
  • jkcjkc Well-Known Registered Posts: 166
    what i got today.
    lots of people being nice have said to me today ooh are you sure you failed
    how do you know you might have done better than you thought
    no i know
    bet youve passed really
    no i havent honest
    the conversation continues sigh. wish the answer was better but
    i got nearly every thing wrong from not changing the charge out rates back to pounds. to the 10% question and the targetprofit and the fixed costs/variable costs. I just brain stressed. got the fifo after what seemed like ages, the npv, journals and the apportionment and ranking(failed to finish this tho as i got kicked out. i wonder if im kidding myself by going in for it again in june what if its like this again? or should i like some one else said to day give it up as a bad job chelle?
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