PEV - A Tutor's View

Bet that title got you all looking...<BR><BR>OK, don't know if I'm the first tutor to comment, don't know if I'll be the last, but after all the uproar about PEV, I hope I can make some useful comments about the paper.<BR><BR>Please remember that these are MY thoughts - not those of the AAT, not those of any college - I'm the one to blame! Please also note that I'm not here to defend the AAT or any of you - you're all big enough to look after yourselves!!<BR><BR>To the exam...<BR><BR>Task 1.1<BR><BR>Just the variances. I know lots of you don't like them, but if well prepared you shouldn't have had any problems. Slight difference in that there was more than one product, but all the information needed was readily available.<BR><BR>Task 1.2<BR><BR>The infamous "backwards variances." OK, hands up, I'm quite surprised that the AAT went for this type of task in their style of examination, but I make no apologies to students who I said this to beforehand. I did also point out that if you understood the variance calculations and their meanings, this sort of task shouldn't present any problems. It is no more than a slight variant on the normal variance calculations - certainly not an entirely separate topic to learn. Note also that with a little thought, you could write the memo for part (b) even if you couldn't do the calculations in part (a).<BR><BR>Task 1.3<BR><BR>This was ABC (Activity Based Costing). However, I think a little thought would allow you to answer part (a) even if you didn't realise it was ABC! The question had done the ABC "donkey work" for you, and analysed the overheads between the 2 products - you were just asked for a unit overhead cost for each (divide by output). For part (b) you had to look at the difference in stock valuation between the old and new methods.<BR><BR>Task 2.1<BR><BR>Fairly reasonable peformance indicator question. In response to one comment I've seen, gross profit is NOT (in my opinion) a typo - remember that cost of sales should include costs of production, be they fixed or variable.<BR><BR>Task 2.2<BR><BR>A decision making question, testing your knowledge and understanding of marginal/absorption costing and relevant/irrelevant costs. The key is to identify how much cost will be saved, and compare this with the proposal to sub-contract the work.<BR><BR><BR>Overall (and I know I'm in the minority on this forum!), I don't think the paper was unfair. I thought it was a reasonable test of your understanding, and it would certainly be wrong to describe it as "completely different" to past papers. I think past papers tell you three things:<BR><BR>1) Variances always come up in section 1<BR><BR>2) Performance indicators always come up in section 2<BR><BR>3) Other stuff comes up too, and varies from paper to paper!<BR><BR>This fits in with the examiner's guidance, available to all on the website. It is unrealistic to expect that every paper will be exactly the same with just a few number changes - the AAT have a valued and respected qualification, which they cannot just give away. To do so would be to devalue the effort you have all put in.<BR><BR>Remember too that exams are stressful events! Few if any people will get 100%, or even 90%, whether through silly errors, or bits arising that they didn't know. Examiners know this - remember that many people pass these exams each year, and that is not about to change!<BR><BR>Enough said - now stop reading this, forget about it, and concentrate on the others!!!<BR><BR>Best of luck,<BR><BR>Andrew Harrington