[jeff]

@h0wdyus

Incorrect

The answer is B. Comparable sales.

“The use of comparable sales is not an income approach to valuation of a business, it is a market approach. Under the comparable sales approach, the value of a business is determined by comparing it to other entities with comparable characteristics for which the value is more readily determinable.”

This was a tricky one

AUD - 79
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Jeff Elliott, CPA (KS)
NINJA CPA | NINJA CMA | NINJA CPE | Another71

[Anonymous]

I am. Trying to get through B3 (The NPV, WACC, EVA, etc) section in Becker by Saturday night and I'm halfway through. Lots of formulas and it's horrible!

[Anonymous]

Still trying to get through Econ!

[NJPRU]

Econ sucks. lol. I just started studying Micro and I keep saying to myself that I wish I paid more attention in my Econ class.

AUD: DONE
FAR: DONE
BEC: DONE
REG: DONE

IM GOING TO BE A CPA!!!!!

[jeff]

Welcoming NINJA Terrell (taking BEC in August): https://www.another71.com/ninja-cpa-blogger-terrell-1/

AUD - 79
BEC - 80
FAR - 76
REG - 92

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

[JamesBJames]

I can't wait to get to more econ / finance stuff. I just got done with B1, and those 110 questions about cost drivers and cost allocation and split off points weren't fun. Barely broke 70% on my first run through.

FAR: May 1st, 2014 - 91
AUD: May 29th, 2014 - 97!
BEC: July 16th, 2014 - 91
REG: August 29th, 2014 - 88

Licensed December 2015

Feel free to add me on LinkedIn by clicking my username!

[Anonymous]

Does anyone else have a hard time with ROI? It just doesn't make sense to me. Its like the only concept in B3 that I'm having a hard time with. Can anyone dumb it down for me?

[GoVPI]

I remember this saying ” If your ROI doesn't exceed your required rate of return, you must be WACC.” Saw it on twitter

BEC - Passed

AUD - 74 🙁

REG - TBD

FAR - TBD

BEC 8/14/14 - Passed
Graduated from college 12/13/14
AUD 8/31/15 - 74. Retake - Passed
REG
FAR

[WANNABE_CPA]

I have a question about NINJA MCQs, i am planning to take for BEC. I want to know if the questions are topic by topic or just random, as i dont see that mentioned in the video and i need topic by topic for now since i want to get those done alongwith the Becker MCQs.

FAR : 68, 74, 83 Thank you God 🙂
BEC : 78 (8/27) 🙂
REG : 72 ,80 (2/25) 🙂
AUD : 69,67, 07/23

[JamesBJames]

Came across an odd question in B2:

—

Spring Co. had two divisions, A and B. Division A created Product X, which could be sold on the outside market for $25 and used variable costs of $15.

Division B could take Product X and apply additional variable costs of $40 to create Product Y, which could be sold for $100. Division B received a special order for a large amount of Product Y.

If Division A were operating at full capacity, which of the following prices should Division A charge Division B for the Product X needed to fill the special order?

A. $15

B. $20

C. $25

D. $40

—

I originally got this wrong, but then I thought about it some more. When dealing with full capacity, the minimum acceptable price is VC(product X) + OC(product X). The variable cost is $15, and the opportunity cost is the $10 profit that division A foregoes by not selling it on the outside market. That sums to $25. Right logic?

I just wonder, why in the world does Becker talk about transfer pricing in the answer? It says that the best transfer pricing model is based on market price. Is that a shortcut you could use instead of calculating VC + OC separately?

FAR: May 1st, 2014 - 91
AUD: May 29th, 2014 - 97!
BEC: July 16th, 2014 - 91
REG: August 29th, 2014 - 88

Licensed December 2015

Feel free to add me on LinkedIn by clicking my username!

[Anonymous]

@James is the right answer $25?

[JamesBJames]

Yeah, the right answer is $25.

FAR: May 1st, 2014 - 91
AUD: May 29th, 2014 - 97!
BEC: July 16th, 2014 - 91
REG: August 29th, 2014 - 88

Licensed December 2015

Feel free to add me on LinkedIn by clicking my username!

[Anonymous]

Ok wasn't sure- I was confused by your question. Are you asking why the answer is based on the possible selling price of 25 rather than the VC+OC? My assumption would be (and I could be wrong) that if they give you what the potential selling price could be then you would use that as the selling price they should charge. If not, use VC+OC. Hopefully someone else can verify that that's right.

[Anonymous]

James,

This is my thinking. Since you are at full capacity, your cost to produce more is not just VC, so you arent going to set the transfer price to anything below market price

if you were not at full capacity you would be willing to sell for anything over variable cost

[Anonymous]

Is anyone else out there spending their entire Saturday holed up and studying for BEC?

[Anonymous]

A company is considering outsourcing one of the component parts for its product. The company currently makes 10,000 parts per month. Current costs are as follows:

Direct materials $40,000

Direct labor 30,000

Fixed plant facility cost 20,000

The company decides to purchase the part for $8 per unit from another supplier and rents its idle capacity for $5,000/month. How will the company's monthly income before taxes change?

A. Decrease $15,000

B. Decrease $10,000

C. Increase $5,000

D. Increase $10,000

The correct answer is C. My calculation: Make the parts internally: $40,000+$30,000+$20,000=$90,000. Purchase part outside: $80,000+$20,000FC-$5,000 rental income= $95,000. The net difference is cost increase $5,000, or income decrease $5,000. Should the Fixed plant facility cost still be counted as part of cost even they decided purchase the parts?

Please help me. I really don’t know why C is the correct answer.

[Author]

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