[syedwaris]

I did not get where I was wrong in my first statement. Please state.

[syedwaris]

BUT how should we actually choose scales to draw all the lines?

According to the example of the notes then we should choose the scale in two ways:

1) Use scales after finding the values for S and E such as in materials S value is 40 while E value is 20. So we should choose a scale up to 40 which is the highest value. (correct?)

OR

2) We can use the average of total available resources such as 80 kg of material is available so choosing the scale would be on average of total available resource (80 kg / 2) = 40 which will be the highest scale.

(Both ways are correct?)

I know that we’ll not be asked to draw in the exam but I am learning to draw myself and I am stuck plotting the scales.

Thanks for your previous answer 🙂

[syedwaris]

Thanks for your previous answer 🙂

Please also tell me that the average time per unit is only an estimate that how many hours will be required to produce the product?

(what do you mean by when you say average!)

[syedwaris]

Thanks for your previous answer 🙂 could u please also tell me about imperfect information calculation below. It would be great. I Sorry in advance for such a long question!

[Question]
Demand level———–Strong——–Weak
Option A——————60000——–50000
Option B—————–100000——-20000
Demand Probability—–0.4————0.6
Research Probability—-0.9————0.8

[Answer]
Demand—Research—-Decision——-Profit——-Probability——-EV
–Weak——Weak——–Option A——$50000—–(0.6 x 0.8)——24000
–Weak——Strong——-Option B——$20000—–(0.6 x 0.2)——2400
–Strong—–Strong——-Option B——$100000—(0.4 x 0.9)—–36000
–Strong—–Weak——–Option A——$60000—–(0.4 x 0.1)——2400
EV with imperfect information——————————————-64800

EV calculation:
Option A : ($50,000 x 0.6) + ($60,000 x 0.4) = $54,000
Option B : ($20,000 x 0.6) + ($100,000 x 0.4) = $52,000

[The decision would be to select Option A and the EV of profit would be $54,000]

EV with imperfect information = (70000 x 0.1) + (20000 x 0.4) – (5000 x 0.5) = 64800
EV with no information———- = 54000
Value of Imperfect information = 10800

We will always be given two probabilities in imperfect information questions to calculate the sum of probabilities. (if correct then why is that?)

Is that all correct?

[syedwaris]

you do not need to be registered to access

Here is the link for CBE specimen exam:
https://www.accaglobal.com/scotland/en/student/exam-support-resources/fundamentals-exams-study-resources/f5/specimen-exams.html

Specimen exam 2016 is also given at the back of BPP kit.

[syedwaris]

Material receipt and inspection cost: $15,600
Power cost: $19,500
Material Handling cost: $13,650
Total = $48,750

Material receipt & inspection = Number of Batches per Unit
Process power = Number of Power Drill Operations
Material handling: Number of Units

Overhead Absorption rate (OAR):

i) Material receipt & inspection: ($15,600 / 550 batches) = $28.36 per batch

Number of Batches per Unit:
Product X : (2000 unit / 10 batches) = 200 batches
Product Y : (1500 unit / 5 batches) = 300 batches
Product Z : (800 unit / 16 batches) = 50 batches
Total Batches per Units—————-= 550 batches

ii) Process power: ($19,500 / 11 drills per unit) = $1772.72 per unit

Number of Power Drill Operations per Unit:
Product X : 6
Product Y : 3
Product Z : 2
Total Drills per unit = 11

iii) Material handling: ($13,650 / 4300 units) = $3.17 per unit

Number of Units:
Product X: 2000
Product Y: 1500
Product Z: 800
Total Units: 4300

Absorb Overhead to each Product:

i) Material receipt & inspection to Product X: ($28.36 x 200 batch) = $5,672

ii) Process power to Product X: ($1772.72 x 6 Drills per Unit) = $10,636.32

iii) Material handling to Product X: ($3.17 x 2000 units) = $6,340

Total cost absorbed to Product X = $22,648.32

Budgeted product cost per unit for Product X:
($22,648.32 / 2000 units) = $11.32 cost per unit

I know that this answer is different from the MCQs given maybe I copied the question incorrectly but could you please say a word about whether did I calculate everything correctly or not?

Thanks for your much help 🙂

[syedwaris]

Could somebody help me with this question that I asked above please!

[syedwaris]

Sorry to ask such a long question but I’m having a problem when we are given units & batches in ABC questions. I have seen your video on ABC topic.

A manufacturing business makes two products A1 and A2.

Products————————-A1————–A2
Demand————————8000———-10000
Number of Setups————-60————-250
Production Batch size—–2000 units—–100 units
Setups per Batch————–2—————-3
Special Handling per unit—-2—————-8

ALL Overheads:
Setup cost = $98,600 (number of setups)
Material Handling cost = $60,000 (number of batches)
Special Handling cost = $120,000 (Number of Sales Orders)
Total Overheads = $278,600

OAR is calculated by taking the units per batch (units/batch) and then multiply it with the overhead costs per cost driver (Overhead / Number of Setups)?

[syedwaris]

I want to ask u said that all costs are included but I really wanna know that does that includes initial cost, depreciation, and opportunity cost?

If we have included the initial cost of the machine in lifecycle cost should we also have to include depreciation?

If not then why because depreciation is charged every year until the lifecycle of a project while the initial cost is only included in the first year (when we bought the machine?

So I ask again there are no specific costs that should be not be included?

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