Task 2.2

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Did eveyone put that sub contracting was a good idea? I didn't, maybe I misunderstood the question but I read it as the savings were there against the current figures and that if we did subcontract then irrelevant of those saving we still had to pay the £180 per stove thus reducing the gross profit down to £40 per machine which reduced the %, how can the savings be applied against this figure when obviously all the costs have gone because we have subcontracted to someone else??<BR><BR>As Terry Wogan would say, "Is it me?".

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    i suppose we can only hope that the feedback is taken on board when marking
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    I didnt even think about working out profit I just looked at the comparable costs of making Model H using the ABC overheads because thats what they referred to in the question. Also they referred to the actual variable unit cost for April remaining in the future so I assumed that would be the variable cost of making the Model. I ended up with unit price of £199 chime and 200 bell. Goodness knows if this makes any sense.<BR>Roll on Thursday
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    £the £79,000 came from the managers meeting info. they said that £12k a year , £1,000 per month, would be saved from not storing closing stock. then £78,000 per month would be saved from set up costs and supervisor costs ect. this amounts to £79,000 per month. <BR><BR>lisa
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    General consenus at college seemed to be that contracting out was not good idea, but not enough time to consider the question properly! I thought the £180 per stove was actually more than £12 more expensive because the standard price needed revised and this would have made the standard cost even cheaper.with about £83 variable cost per unit. Was I looking to deeply into it??<BR>Totally exhausted by then with all those memos though!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    I know for a fact I didnt get this right but i interpreted this question was looking at cost of quality - which you get in TQM. I did a side by side P+L account's one saying Before sub-contracted basically re-writting the figures and one p and l with sub-contracted model with Chime Ltd<BR><BR>I added back the costs we would save (what the managers quoted) which would increase our contribution and then our gross profit and GPM. I said on the basis of gross profit margins I would say yes to sub-contract the model to Chime Ltd. i calculated a GPM of 45% which was probably the wrong answer but im sure i calculated the ratio right even tho im 100% sure my final answer was wrong but i was running out of time. <BR><BR>The exam was well too long!! it reminded me of FRA i sat in June 2004, didnt have enough time to do it all properly, lets hope credit is given on workings and written theory as half my final answers were wrong!<BR><BR>Good luck peeps.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    I agree with you... this will be my 4th sitting on PCR. The past papers seems so easy, yet I cannot get over the finishing line!!!!!<BR><BR>This and DFS left... pfffftttt. (some b'day I will be having on wednesday!!!)
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    I'm totally fed up now that was the third time I've sat PEV and <BR>previously failed on section2 <BR>Looks like i've done it again !!!!!!!!!<BR>I should have done CIMA foundation level (5 exams in total)at least it's all mutlipal choice questions and it is the same level as AAT Technician<BR>sorry AAT just fed up of trying to pass this last paper
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    Hi I too added the savings to the Gross Profit from the Actual Statement, however after waffalling for a bit, ended by saying that they need further indepth anaylsis before making a decision. eg will more of the fixed overheads pass to the other Model as the factory will still be being used.<BR><BR>I thought section 1 was rather confusing, and not at all like pratice papers nor past papers.<BR><BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    <br><br><< <i>Me DUBSTAR and Lofty went for a few pints (three to be precise) after the exam and I can reccommend that to everyone. Im having a night off tonight then pick up revision tomorrow for DFS and then thats it, August will see what happens until then, theres not much <BR>we can do, as long as the AAt are listening to our comments!!</i> >><br><br><BR><BR>It's alright for some - I've got BTC in the morning, then DFS on Wed. No rest for me until Wednesday evening.<BR><BR>Can't wait to read the "Chief Assessor's Report" on the PEV paper later in the year: "Q 2.2 was generally well answered by those who were psychic. Other candidates experienced some difficulty determining what was required..." :-)<BR><BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    Me DUBSTAR and Lofty went for a few pints (three to be precise) after the exam and I can reccommend that to everyone. Im having a night off tonight then pick up revision tomorrow for DFS and then thats it, August will see what happens until then, theres not much we can do, as long as the AAt are listening to our comments!!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    no idea at all.<BR><BR>That task was so difficult. I was running out of time anyway so didnt help - I kept misreading the quotes and information. Wasnt sure what figures I was meant to be referring to.<BR><BR>Ended up with recommending to keep in house then did lots of crossing out and changed it 5 mins before the end to say to sub contract. Did a few random sums and came up with a £50,000 ish extra profit figure, but dont know how i got there. it was a real last minute panic!<BR><BR>That whole exam was AWFUL, and section 1 seemed to go on forever.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    <br><br><< <i>Yes very ambigious. because in the previous question about ABC the costs to Model H totalled 98000. Did they want us to assume that ABC was going to be taken in account from the previous question in the months following April. Don't blooming know.</i> >><br><br><BR><BR>That's exactly what I thought, I assumed ABC was taking place. I don't see how you could save £78000 when there were only £43200 fixed costs in the first place!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    Hi All.<BR><BR>I worked it out that whether you took ABC into account or not, it was still better to out source the work so i said yes.<BR><BR>Scott.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    What was the deal with the question mentioning that the actual variable costs could be assumed to remain the same in the future - was it because there was a favourable variance that you had to take into account or that you should calculate a new standard cost or what? I mentioned it in my "report" but didn't really get the significance! <img src="i/expressions/face-icon-small-confused.gif" border="0">
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    exactly what i thought
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    When I came out of the exam there were a mixture of for's and against's. I can't see how AAT are going to mark this one. My report looked like a dogs dinner because I was running out of time. Didn't even have time to say about the ABC but oh well nothing can be done now. <BR><BR>If only AAT would let us know how much weight was on the question 2.2 it would help me sleep a little better. All that work to fail because of one stupid ambigious question because I felt the rest of the exam was ok. (apart from the mammoth memo writing competition of course).
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    i assumed that was what they wanted, but surely these costs were reflected in the standard variable costs ( as after these costs it showed the variance, so i assumed these costs related to the cost card) and these costs were apparently not going to change in the future. so even if you saving these overheads you must have been spending elsewhere in the standard cost if it werent to change.<BR>hope that makes sense cause if it dont to you , it wont to them
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    MaryJSage - are you agreeing with desperate? I think they were struggling with backward variances.Easiest part of the paper for me.<BR>The masterclass paper we received was not particularly the same as this paper, except for a few variances.<BR>Task 2.2 was difficult, but lets hope we did enough work on the previous tasks.<BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    sera21uk,<BR><BR>This is what I did too, so at least we can take comfort in numbers!! 2 anyway!!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    Have no idea if this is correct but i done the following<BR><BR>Gross Profit £60,800<BR>Less increase in standard cost (12 x 850) £(10,200)<BR>Plus decrease in other costs (78,000 + 12,000) £99,000<BR><BR>Revised profit £140,600<BR><BR>Increase in profit £79,800<BR><BR>This is probably completely wrong seenas i am the person who completely misread the ABC question - i reapportioned all the overheads, why i don't know.<BR><BR>But it is the only logical answer to their question, i think! So subcontracting was a good idea as it increased profits by 79,800.<BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    Yes very ambigious. because in the previous question about ABC the costs to Model H totalled 98000. Did they want us to assume that ABC was going to be taken in account from the previous question in the months following April. Don't blooming know.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    <br><br><< <i>The fixed costs were only £42,000 though so how can we have saved £79,000??</i> >><br><br><BR><BR>What I did was to draw a little P&L for _both_ products combined both with and without outsourcing. With outsourcing I lost the variable costs and variances for the H, replaced them with the £180/unit, and reduced the overall fixed overheads by £79000. Ended up with about a £8000 or so improvement in GP, so cautiously recommended outsourcing. Hey ho - too late now!<BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    I did think about the comapny as a whole but the question was specifically targetted towards Model H. Like you say very very amibiguous and difficult. I think someone said on another thread that it seems as if the AAT want you to fail or be caught out. I'm not saying things should be easy but still a bit of clarity would really help. Pass mark 40% I'm confident, anything else I'm struggling!!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    I know but again I didn't understand the question. The saving would be 79000 to the company as a whole. When you take into consideration the profit made on the other model there was a saving each month of about 50000. Again the question was so ambigious it could be read too many ways
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    The fixed costs were only £42,000 though so how can we have saved £79,000??
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    I actually wrote that it wasnt good idea to subcontract in short term but maybe in longer time it could be something to think about.. i m pretty much sure that this aint right??!!!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    I didn't understand the question. But I thought the saving were fixed costs which we would have incurred regardless of whether we contracted out or not. So we would have made some savings.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Task 2.2

    So you agree with me desperate?? Thats good news!! Theres two of us out there then!

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