[jeff]

Guess I’ll kick it off!

Scheduled to take BEC on 4/19. It’s my last test so I’m putting as much study time in as I can. If I pass I get promoted, if I don’t pass I don’t get promoted, so the pressure is on!!

Good luck to everyone taking BEC this quarter!

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Jade CPA-to-be]

I don't have becker final review, but i think becker is good at answers and explanations

CPA Licensed in California- Class of 2013

[Jade CPA-to-be]

hi guys,

I ran into a question in becker about economic value added.

EVA = Net Income – Required return ( Net income here is after tax income according to becker explanation)

how about ” Net income” in residual income formula? before tax or after tax ?

how about ” Net income” in ROI ? before tax or after tax?

thanks,

CPA Licensed in California- Class of 2013

[Theo]

@shsh1314 I couldn't find the exact question but here's a similar one from Becker and the explanation. I'm guessing you may just have copied it wrong.

Question CPA-03836

The standard direct material cost to produce a unit of Lem is 4 meters of material at $2.50 per meter. During May of the

current year, 4,200 meters of material costing $10,080 were purchased and used to produce 1,000 units of Lem. What was

the material price variance for May?

a. $400 favorable.

b. $420 favorable.

c. $80 unfavorable.

d. $480 unfavorable.

Explanation

Choice “b” is correct. Material price variance is the difference between actual price and standard price times actual quantity.

(AP ‐ SP) x AQ = Material price variance

[($10,080 ÷ 4,200) ‐ $2.50] x 4,200

($2.40 ‐ $2.50) x 4,200 = 420

The variance is favorable because the actual cost ($2.40) was less than the standard cost ($2.50).

Choice “a” is incorrect. The material price variance equals the difference in prices times the quantity purchased.

Choice “c” is incorrect. The total material variance is $80 unfavorable ($10,000  $10,080). This total variance needs to be

separated into price and quantity variances.

Choice “d” is incorrect. The material price variance equals the difference in prices times the quantity purchased

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[Anonymous]

Jade: I believe net income is always going to be After tax. The only time I don't assume tax implications is if 1 it doesn't give you any information about it or any sort of tax rate or 2 if it explicitly says “not considering income tax.” I know a couple of questions I have come across have said “ignoring income tax implications” and it will change two possible answers to one definite answer.

Thanks for the input guys… It is cray to move the test.

Theo: If its not copied wrong, would it have anything to do with the fact that it states the variance for May 20xx and since they produced 2000 units at 4lbs a unit that would give you an 800F difference? Just a thought.

[shsh1340]

the answer I wrote it down is (2.5-2.4)*4*2000=800F

However, I just could not understand why

[Theo]

@bcjasper09 The $800 favourable variance is the result of the standard quantity allowed x standard price and the standard quantity allowed x standard price (at least I'm assuming that's how you got it). However the material price variance is calculated as difference in the actual quantity purchased x actual price and the actual quantity purchased x standard price.

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[Anonymous]

Right, so in theory it should have been the 2.50-2.40 x Actual Quantity purchased. But if the answer is 800F than I am guessing that the reason being is because they are specifying in the question stem that they need the material price variance for May. If thats the case you would use the actual quantity used. I am just going off of what was copied so that is the only logical explanation, because your right that it should have been what was purchased.

[Anonymous]

Not to change the subject, but what the bloody hell is the difference between a digital signature and an e-signature. To me they accomplish the same objective.

[shsh1340]

oh My God… How can I walk to exam tomorrow with this unclear?? I was thinking that I am fully prepared.

[Anonymous]

Don't let one question trip you up. Given the fact that it was released, and all of us are coming to the same conclusion (which is evidently the wrong answer) I am going to bet it was a pre-test question. If the answer is truly 800F than it was produced as a result of only the materials used during May… which isn't how you calculate a materials price variance. I would chalk it up to it being unclear as to the call of the question and move on. You'll be fine. I think a lot of the questions that are released are pretest because in every hard ass question Becker puts in the explanation (This was likely a pretest question and the odds of seeing it on your exam are remote), but maybe not.. either way.

[Theo]

The question did state that the quantity purchased and “used” in may was 8400.

“During may 20×1, 8400 pounds of material cost $20160 were purchased and used to produce 2000 units of Brook”

So I really think it's an error somewhere because every other question I've seen it's the price difference per unit by units purchased.

On that other note, at least you know there is a difference. I am here trying to go through the appendix. I've been on that IT for 3 days now!

AUD 01/17/2013 (92)
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FAR 04/26/2013 (85)
BEC 05/30/2013 (88)

[Theo]

@shsh1314 I would say don't sweat it just do what makes sense to you.

AUD 01/17/2013 (92)
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FAR 04/26/2013 (85)
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[shsh1340]

Thanks everyone. I should just do my best. Don't need this question to drive me crazy before the exam. this is my final subject then I finish the study. I can do it and I trust myself.

[Anonymous]

Sh: Thats what is important! If you go in with confidence your bound to do better.

In relation to that question, partially because I feel defeated that I can't figure it out… there was clearly a material efficiency variance if they used 8400 to produce 2000 products when the standard was 4 lbs of RM for every product. That has to be where the miscommunication is.

Theo: I am going through IT now again, to be honest that Mike fella didn't do the best job going through it because now that I have done the MCQ's and am rereading the material its making a lot more sense. I have been looking up some things on the internet that aren't explained very well in here such as asymmetrical and symmetrical encryption since I saw quite a few questions in the passmaster about that. The appendix is killer.. I took a MIS class in college and we touched some of that stuff but do you think I remember any of it… NOPE because at the time I thought psssh I'll never need to use this again. Oh how wrong I was.

[Theo]

The funny thing I am actually learning something from the appendix. You know we see all these abbreviations all the time and have no idea what they really mean (well me anyway). So it's nice to have a general idea. eg TCP & SMTP etc. etc.

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[Author]

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