ABC Question

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:09AM in AAT student discussion
I completely messed this up. I reapportioned the overheads on level of output (10,000 + 1,000 = 11,000 so 10/11 or 1/11)<BR><BR>Have now found out this was completely wrong!!!<BR><BR>i ended up with £31.70 per unit Model F and £31.00 Model H - Will getting this question wrong cause me to fail the whole thing as it was quite a big section of the exam????<BR><BR>

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    Boy you dont know how relieved i feel to see most of you answer £25 and £98! <BR><BR>Lucky for most of you on here i've got four more to go!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    so what was the effect of using abc on profit was it higher or lower. I put higher as more overheads were carried forward to the next period based on the overhead rates we calculated.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    I got £25 and £98 but weren't meant to then adjust the stock figures...<BR>£25 campared to £30 and £98 compared to £45???????? per unit and then times this by to stock held 500 and 1000.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    I did that too..........couldn't see the point of doing each one individually. Just add them up and then divide them between 10,000 units or 1,000 units .
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    got £25 for f and £98 for h as well but i don't know whether it's right<BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    my view wasnt meant to hold you wrong its just that if all the possibilities are brought together then a better judgement can be made??
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    <br><br><< <i>Yes, you're right, based on labour hours. But ABC allocates the overheads in proportion to the model's use of the cost pools. As there were only a small amount of Model H made they had to absorb a much larger proportion per unit of the o/h costs they had incurred. This isn't gospel this is just how I handled it and my understanding. I feel I really messed up this morning and quite willing to accept I am wrong - just trying to explain my train of thought.</i> >><br><br><BR>I'm sure you're right, and several others have arrived at the £25/unit for F and £98/unit for H.<BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    Yes, you're right, based on labour hours. But ABC allocates the overheads in proportion to the model's use of the cost pools. As there were only a small amount of Model H made they had to absorb a much larger proportion per unit of the o/h costs they had incurred. This isn't gospel this is just how I handled it and my understanding. I feel I really messed up this morning and quite willing to accept I am wrong - just trying to explain my train of thought.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    but wasnt that already the case?? model H was consuming 48.00 per unit as compared to 30.00 per unit of model F.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    This is what I did too. £31 ish per unit is freaking me out or is that the least of my worries!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    I thought that was the point of ABC to avoid disproportionate allocation. The lower volume product usually ends us absorbing a greater amount of overheads than the larger volume as it is usually a more costly product and utilises a greater proportion of the overheads than the cheaper model. But there again I thought the whole thing was a nightmare and I sat looking at the ABC for ages wondering why they had virtually completed the task for us so perhaps I'm way up a gum tree on this one. I did get £25 and £98 but would have felt much more satisfied if we had allocated all the costs based on cost drivers. <BR><BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    Hi <BR>I thought that was really difficult wasnt expecting that at all - i got the same answer as you though - i didnt know what else to do - they had already allocated the costs?<BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    It can be a possibility that the work was already done and that we were just suppose to allocate them through production units. But then ABC is basically a method where appropriate allocation is granted based on the usage. Unlike absorption costing it does not over allocate overheads to high volume production nor does it under allocates overheads to low volume production. But as said by quite a few ppl that the answer is 95 for model H then this looks like over allocation to low volume product?? <BR>Any suggestions?<BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    Totalled up the costs for each model then divided that figure by the number of units.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    Dont be daft. One question wrong, is a few marks wrong.<BR>Pass rate i reckon at 60 %, cos the exam was pretty difficult.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    I got £25 and £98 too
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    How did you get £25 and £98?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    Hi All.<BR><BR>I assumed they'd already carried out the ABC cost - i got £25 & £98.<BR><BR>Scott.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    £25 and £98 for me too.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    I am soooo pleased that at least a couple of people done the same thing as me - at least i am not alone.<BR><BR>Now i am confused as i don't know whether our way was the right way or it should of been done another way! Roll on results!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    Anything is better than tradewind, had to nip to bog when I got in i blame the tradewind!!!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    Meaasage to MaryJSage - Bass is good, better than tradewind !!!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    Think I got £25 per Model F and £98 per model H. Totalled the split up and divided by the total for that model.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    I did the same way allocating on the basis of production volume..if this is incorrect what was the correct way doing it ??
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    i too did the same as you 1/11 etc!!! oh well i guess we will have to wait and see???
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    what should it have been done on? we didnt have any other relevant info did we? or were we supposed to use info from 1.1?<BR><BR>i did the same as you?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ABC Question

    Dubstar is right, if you get one question wrong you should be fine especially seeing as I don't think that question would hav had much weighting. Have a beer and relax. Bass is good eh DUBSTAR?

Categories

Privacy Policy