[jeff]

I’ve had a few requests for April/May Study Groups…March will be here before you know it.

In order to take an early April exam, you should begin studying…now. 🙂

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

[titoav15]

Just wondering about what is a relevant OH cost for absorption method… I keep getting tricked by the extra stuff the MCQ throws in… I know the formulas and I get the theory (for the most part at least!)

EX info: The company will also be absorbing $120,000 of additional fixed costs associated with the new project. A corporate fixed charge of $20,000 currently absorbed by other products will be allocated to this new product.

OK so… for the BE analysis FC should be 120,000 but I mistakenly added the extra $20,000…. Beckers answer key says its irrelevant… ok I get that its irrelevant BUT WHY??? Is it because it is not directly related?

Can anyone explain why this cost should not be included? Whats a good trick to remember?

Thanks! 🙂

BEC: 5/21/14 82! PASSED HALF WAY THERE!
FAR: 4/2/15 80! Almost there!
AUD: 69, 74, 4/3/14 81! PASSED
REG: TBD

[mjp44]

@tito…I kinda remember that question and I think the key is that the $20,000 is already being absorbed by another project. So, whether they take on the new project or not the company will still be paying that $20,000. The trick to remember if relevant or not is does this cost differ whether the project is agreed to or not. If yes, then it is a relevant cost to the decision.

FAR- PASSED (11/13)
REG- PASSED (2/14)
BEC- PASSED (5/14)
AUD- PASSED (8/14)

If it's important to you, you will find a way. If it isn't, you will find an excuse.

[Kyndra]

Quick Question: When people say that they have done 3,000 multiple choice questions for BEC, does that mean 3,000 different questions, or they went over one or two sets of multiple choice questions to equal 3,000 times? I am using Becker BEC 2014 which has I think about 1,300 questions and I have Wiley BEC 2013 on my iPhone with 660 questions, so I can't answer more than 2,000 questions, is this bad? I have read that doing lots of multiple choice is the key to success in BEC. So as long as I go over each question twice, I am assuming I will be fine. Thanks!! 🙂

FAR - 69
BEC - 80
AUD - 58, 72, 72, 79 Finally! 🙂
REG - 10/10 - waiting on score

[How many letters do you need]

Tito-Yes with any type of project evaluation problem (BE or NPV for example) the trick is to consider only incremental costs and incremental revenue that will surface as a result of the project. In this case, since the costs are being absorbed by another department, they aren't incremental since they will just be shifting from one department to the next. They can try to trick you with added garbage info that includes non incremental costs or even sunk costs, but just remember incremental only….

MBA,CMA,CPA, CFF?, ABV?

[titoav15]

@mjp44 & @How many letters do you need, thanks guys!! I think I get it now. I wish Becker can explain it better… I think becker is lazy with the explanations sometimes…. some of them sound like answer “a” is correct and all the others choices are incorrect because “a” is correct. Great now can you elaborate why?! lol It will be interesting to see with what Jeff came up with in his book, maybe it will be the new benchmark for CPA review huh? I mean his other products are excellent!!

BEC: 5/21/14 82! PASSED HALF WAY THERE!
FAR: 4/2/15 80! Almost there!
AUD: 69, 74, 4/3/14 81! PASSED
REG: TBD

[jeff]

Absorption Costing is covered in pages 38-41 of the Operations Management section, including a full example.

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

[MassCPA2014]

Can anyone help me understand when variable SG&A costs are included in determining contribution margin, and when they are ignored?

I've seen different things telling me to ignore all SG&A, and others telling me to include variable SG&A…what's the deal?

FAR: 86
AUD: 88
REG: 85
BEC: 84
DONE!

[MrsBing]

Is anyone studying the IT apendix in Becker Chapter 4? I'm thinking of skipping it.

Becker, Wiley Test Bank, and Ninja 10 Point Combo!

FAR: 89
REG: 87
AUD: 92
BEC: 75
Ethics: 90

Licensed Arizona CPA

[Anonymous]

@MassCPA You only consider the variable SG&A when calculating contribution margin under the variable costing method.

CM = Sales – DM,DL,VOH – Variable SG&A (if applicable)

For absorption costing there is no contribution margin and SG&A is considered an operating expense.

[mjp44]

Need a little help here…

Union Company uses a standard cost accounting system. The following factory overhead and production data are available for August:

Standard fixed overhead rate per DLH $1

Standard variable overhead rate per DLH $4

Budgeted monthly DLH 40,000

Actual DLH worked 39,500

Standard DLH allowed for actual production 39,000

Overall overhead variance – favorable $2,000

The applied factory overhead for August should be

A. $197,000

B. $197,500

C. $199,500

D. $195,000

Correct ans is D.

The applied factory overhead equals the standard direct hours allowed for actual production multiplied by the total standard overhead rate per hour.

39,000 × ($4 VOH + $1 FOH) =$195,000

Why do they multiply the overhead rate by the standard DLH? I thought and according to Becker applied overhead = Actual cost drive ( actual DLH) x the overhead rate..correct??

FAR- PASSED (11/13)
REG- PASSED (2/14)
BEC- PASSED (5/14)
AUD- PASSED (8/14)

If it's important to you, you will find a way. If it isn't, you will find an excuse.

[MassCPA2014]

Testing today! Anyone have any advice about the written element of it? To be honest, I haven't really prepared for it as much as I probably should've. I feel like it's pretty straightforward, but I'll take any last minute advice on it!

FAR: 86
AUD: 88
REG: 85
BEC: 84
DONE!

[How many letters do you need]

Mjp: I'm a little tripped up on this one too but just to throw out a possibility….

It looks like the additional 500 hours worked are a labor efficiency variance, could it be that in this problem you are supposed to trim that out and look at just the OH variance? If you use the 39.5 what you really have is some variance due to production and some due to labor effeciency….perhaps they are suggesting you need to isolate the OH variance due to production?

MBA,CMA,CPA, CFF?, ABV?

[mjp44]

@How many letters do you need… after looking into this, the only reason i could find is that there is a difference between a standard cost system and a traditional system. Since the question deals with a standard cost system we use the standard DLH for actual production as opposed to the actual DLH. If this were a traditional cost system, we would use the actual DLH x overhead rate to get the overhead applied. If i am wrong with this logic…someone please correct me.

FAR- PASSED (11/13)
REG- PASSED (2/14)
BEC- PASSED (5/14)
AUD- PASSED (8/14)

If it's important to you, you will find a way. If it isn't, you will find an excuse.

[How many letters do you need]

I'm curious about this one too. Ill read up on this…

MBA,CMA,CPA, CFF?, ABV?

[titoav15]

Just wondering… this is for the ninjas that took BEC before… what would you say the ratio for the theory based questions to computation based questions is?

BEC: 5/21/14 82! PASSED HALF WAY THERE!
FAR: 4/2/15 80! Almost there!
AUD: 69, 74, 4/3/14 81! PASSED
REG: TBD

[Author]

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