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Economics, Accounting & Business: Post your doubts here!

parthrocks

parthrocks

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okay everyone...gtgt.....dnt know when we will meet again////...chalo bye...gn.sdd......thanks everyone:)
 
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wajiman

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Mohammad Taymur said:
plz help in question no 30
Click to expand...

its a repeat mcq from the year may 04 q30. the solution is simple, OAR is always set before a financial year and hence is a forecast. therefore we would first divide budgeted fixed overheads by budgeted no.of units i.e $354,000/118,000 units = $3 OAR. as the overheads under absorbed, which means that the budgeted overhead is $3000 less than actual overheads. hence the overheads =$357,000 which we will divide by the OAR. this will give 119,000 units the actual level of activity
 
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wajiman

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for image no. 11

first we need to calculate the difference between the increase in cost and output of units. this is done so that we can find out the variable cost per unit. Fixed cost remain constant and hence they dont change with output. therefore, the difference between costs is $13,000 - $6,000 = $7,000 and for output 24,000 - 10,000 units = 14,000 units. now we know that how much increase in output leads to how much increase in cost. we simply now find out the per unit cost i.e by $7,000/14,000 units = $0.5/unit variable cost. now for finding out the fixed cost, we multiply $0.5 with either 10,000 units or 24,000 units ( the result will be the same ). if u use 10,000 units you will get $5,000 as variable cost which we subtract from $6,000 which then gives as fixed cost of $1,000. now as we know the fixed cost, we multiply $0.5 with 20,000 units and we get $10,000 variable cost. now add fixed cost and you will get total cost which is $11,000.

for image no.22:

answer is D.

semi variable expenses are those expenses that have the element of both fixed and variable expense. eg. electricity. if we dont use, we still have to pay the line rent and the more we use the more is the bill. so when we decrease 20% activity, the cost per unit increases by less than 20% due to the variable expense that has to be paid also on low output and as the cost now has to spread on less no.of goods
 
M

Mohammed Hassan

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wajiman said:
for image no. 11

first we need to calculate the difference between the increase in cost and output of units. this is done so that we can find out the variable cost per unit. Fixed cost remain constant and hence they dont change with output. therefore, the difference between costs is $13,000 - $6,000 = $7,000 and for output 24,000 - 10,000 units = 14,000 units. now we know that how much increase in output leads to how much increase in cost. we simply now find out the per unit cost i.e by $7,000/14,000 units = $0.5/unit variable cost. now for finding out the fixed cost, we multiply $0.5 with either 10,000 units or 24,000 units ( the result will be the same ). if u use 10,000 units you will get $5,000 as variable cost which we subtract from $6,000 which then gives as fixed cost of $1,000. now as we know the fixed cost, we multiply $0.5 with 20,000 units and we get $10,000 variable cost. now add fixed cost and you will get total cost which is $11,000.

for image no.22:

answer is D.

semi variable expenses are those expenses that have the element of both fixed and variable expense. eg. electricity. if we dont use, we still have to pay the line rent and the more we use the more is the bill. so when we decrease 20% activity, the cost per unit increases by less than 20% due to the variable expense that has to be paid also on low output and as the cost now has to spread on less no.of goods
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i didnt quite understand the second question, why the cost per unit increases by less than 20%? sry :S may u explain :S
thnx in advance :)
 
Esme

Esme

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Mohammed Hassan said:
i didnt quite understand the second question, why the cost per unit increases by less than 20%? sry :S may u explain :S
thnx in advance :)
Click to expand...


for the second question why dont you take an example on your own.work it out and then see.

My Example :-

take the semi-variable cost to be a fixed amount of 50 plus variable cost of 2 per unit.
now suppose 100units are produced so your semi-variable cost will be 50+2(100) = 250. unit cost will be 250/100=2.5
decrease he output by 20%. it now becomes 80units.
so yyour new cost is 50+2(80)= 210. unit cost will be 210/80=2.625,
the % increase in the semi-variable cost is (2.625-2.5)/2.5 x 100 = 5%.
therefore the increase is less than 20%.
 
cross

cross

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Anyone got any advice on 9708? What's the best book that'll cover everything by the 22nd?
 
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wajiman

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Esme said:
for the second question why dont you take an example on your own.work it out and then see.

My Example :-

take the semi-variable cost to be a fixed amount of 50 plus variable cost of 2 per unit.
now suppose 100units are produced so your semi-variable cost will be 50+2(100) = 250. unit cost will be 250/100=2.5
decrease he output by 20%. it now becomes 80units.
so yyour new cost is 50+2(80)= 210. unit cost will be 210/80=2.625,
the % increase in the semi-variable cost is (2.625-2.5)/2.5 x 100 = 5%.
therefore the increase is less than 20%.
Click to expand...

i too was gonna give this kind of example now
 
M

Mohammed Hassan

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Esme said:
for the second question why dont you take an example on your own.work it out and then see.

My Example :-

take the semi-variable cost to be a fixed amount of 50 plus variable cost of 2 per unit.
now suppose 100units are produced so your semi-variable cost will be 50+2(100) = 250. unit cost will be 250/100=2.5
decrease he output by 20%. it now becomes 80units.
so yyour new cost is 50+2(80)= 210. unit cost will be 210/80=2.625,
the % increase in the semi-variable cost is (2.625-2.5)/2.5 x 100 = 5%.
therefore the increase is less than 20%.
Click to expand...

wajiman said:
i too was gonna give this kind of example now
Click to expand...

thank u very much!!!!! appreciate that :) :) understood (Y) thaaaaaaaaaaaaaanks :)
 
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