[jeff]

BEC Resources:

Free BEC Notes & Audio – https://www.another71.com/cpa-exam-study-plan

BEC 10 Point Combo: https://www.another71.com/products-page/ten-point-combo

BEC Score Release: https://www.another71.com/cpa-exam-scores-results-release

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

[UCMCPA]

When they are asking for total overhead, I always make sure I know the amounts of each the variable and fixed.

For applied, it will always be actual units. It gives you a FOH per unit of 1 dollar, and you can calculate a VOH per unit of .2 (2 hours x .1). Total of 1.2 total FOH rate x 19,000.

For the budgeted amount, it's BS (budget and std amounts). The only thing that will change here is the budgeted FOH because that's the amount they can budget as a total from the start. So ask yourself, what amount did they budget for FOH, the 20,000. The remaining amount (variable) is still the std amounts allowed that you calculated in applied, the 19,000 x .2.

Kind of a confusing explanation, but that's the only way I can make it through that problem lol

FAR - 84
AUD - 94
REG - 86
BEC - 86

[Nimboo]

Hi there,

I'm new here preparing for BEC using Becker 2013, I'm stuck on a question from B6:

A company currently has 1,000 shares of common stock outstanding with zero debt. It has the choice of raising an additional $100,000 by issuing 9% long-term debt, or issuing 500 shares of common stock. The company has a 40% tax rate. What level of earnings before interest and taxes (EBIT) would result in the same earnings per share (EPS) for the two financing options?

a.An EBIT of $27,000 would result in EPS of $10.80 for both.

b.An EBIT of $10,800 would result in EPS of $7.92 for both.

c.An EBIT of $27,000 would result in EPS of $7.20 for both.

d.An EBIT of $18,000 would result in EPS of $7.20 for both.

Choice “a” is correct. Earnings before interest and taxes (EBIT) of $27,000 would produce identical EPS amounts of $10.80 under both the equity and debt financing assumptions provided in the fact pattern.

the question is pointing to page B6-51 which doesn't help.. am I missing something obvious?

Please help?

[Nimboo]

Hi there,

I'm new here preparing for BEC using Becker 2013, I'm stuck on a question from B6:

A company currently has 1,000 shares of common stock outstanding with zero debt. It has the choice of raising an additional $100,000 by issuing 9% long-term debt, or issuing 500 shares of common stock. The company has a 40% tax rate. What level of earnings before interest and taxes (EBIT) would result in the same earnings per share (EPS) for the two financing options?

a.An EBIT of $27,000 would result in EPS of $10.80 for both.

b.An EBIT of $10,800 would result in EPS of $7.92 for both.

c.An EBIT of $27,000 would result in EPS of $7.20 for both.

d.An EBIT of $18,000 would result in EPS of $7.20 for both.

Choice “a” is correct. Earnings before interest and taxes (EBIT) of $27,000 would produce identical EPS amounts of $10.80 under both the equity and debt financing assumptions provided in the fact pattern.

the question is pointing to page B6-51 which doesn't help.. am I missing something obvious?

Please help?

[Anonymous]

@ Nimbo. Not sure if this is what your asking but…..Equity financing – $27,000 in EBIT with a 40% tax rate (giving you $10,800 tax expense) so NI would be $16,200. The $16,200 divided by 1500 shares of CS (original 1,000 shares plus the 500 more you sold) would give you EPS of 10.8. Debt financing – EBIT of $27,000 less $9,000 of interest expense ($100,000 loan times 9%) giving you operating income of $18,000 less taxes of $7,200 ($18,000 times 40%) gives you NI of $10,800. The $10,800 divided by 1,000 shares of CS (you didn't sell shares this time) gives you EPS again of 10.8. In both scenarios you end up with the same EPS.

[Anonymous]

@ Nimbo. Not sure if this is what your asking but…..Equity financing – $27,000 in EBIT with a 40% tax rate (giving you $10,800 tax expense) so NI would be $16,200. The $16,200 divided by 1500 shares of CS (original 1,000 shares plus the 500 more you sold) would give you EPS of 10.8. Debt financing – EBIT of $27,000 less $9,000 of interest expense ($100,000 loan times 9%) giving you operating income of $18,000 less taxes of $7,200 ($18,000 times 40%) gives you NI of $10,800. The $10,800 divided by 1,000 shares of CS (you didn't sell shares this time) gives you EPS again of 10.8. In both scenarios you end up with the same EPS.

[samdiegoCPA]

13 days til my BEC exam. Finished typing the entire Roger book in my own words. Now doing MCQ for Chapter 1 and will be done soon. MCQ for Chapter 2 after! Will finish all MCQ by the weekend, then I found Wiley Focus Notes online so I'll put all that into my notes. Also found Becker notes online. And then finally the NINJA free BEC notes. So much free content online if you search for it 🙂

AUD: 84
REG: 84
BEC: 79
FAR: 83

[samdiegoCPA]

13 days til my BEC exam. Finished typing the entire Roger book in my own words. Now doing MCQ for Chapter 1 and will be done soon. MCQ for Chapter 2 after! Will finish all MCQ by the weekend, then I found Wiley Focus Notes online so I'll put all that into my notes. Also found Becker notes online. And then finally the NINJA free BEC notes. So much free content online if you search for it 🙂

AUD: 84
REG: 84
BEC: 79
FAR: 83

[jennknee]

@Nimboo: here's the equation

.6(EBIT)/1500 = .6(EBIT – 9,000)/1,000

.6(EBIT) = 1.5(.6(EBIT – 9,000))

.6(EBIT) = .9(EBIT) – 8,100

.3(EBIT) = 8,100

EBIT = 27,000

.6(27,000)/1500 = 10.8 EPS

AUD - 7/5/13 - 93
FAR - 8/24/13 - 91
BEC - 11/30/13 - 92
REG - 2/24/14 - 91! DONE!

CPAreviewforFREE, Wiley Test Bank, Becker, and NINJA FLASHCARDS. <3
Candidate from California

[jennknee]

@Nimboo: here's the equation

.6(EBIT)/1500 = .6(EBIT – 9,000)/1,000

.6(EBIT) = 1.5(.6(EBIT – 9,000))

.6(EBIT) = .9(EBIT) – 8,100

.3(EBIT) = 8,100

EBIT = 27,000

.6(27,000)/1500 = 10.8 EPS

AUD - 7/5/13 - 93
FAR - 8/24/13 - 91
BEC - 11/30/13 - 92
REG - 2/24/14 - 91! DONE!

CPAreviewforFREE, Wiley Test Bank, Becker, and NINJA FLASHCARDS. <3
Candidate from California

[Nimboo]

Thank you so much CPA_Driven & jennknee for replying!!

What I was stuck on was what you've explained really well jennknee – how to determine the EBIT and EPS formula to go backwards…it makes complete sense now setting up the formula like that 🙂 🙂 Appreciate it !

[Nimboo]

Thank you so much CPA_Driven & jennknee for replying!!

What I was stuck on was what you've explained really well jennknee – how to determine the EBIT and EPS formula to go backwards…it makes complete sense now setting up the formula like that 🙂 🙂 Appreciate it !

[Qlad]

Hey guys….

missed a lot of days not being online but the first Review is much better than what i was anticipating….IT is the only tough section for now….but all others are getting together,….although I am still referring a lot of notes while doing mcq….but happy with even an inch of progress…

FAR 72,71,81 🙂
AUD 64,71, 72, 75 🙂 I'm done !!!
REG 73, 74, 74, 84 🙂
BEC 76 🙂

[Qlad]

Hey guys….

missed a lot of days not being online but the first Review is much better than what i was anticipating….IT is the only tough section for now….but all others are getting together,….although I am still referring a lot of notes while doing mcq….but happy with even an inch of progress…

FAR 72,71,81 🙂
AUD 64,71, 72, 75 🙂 I'm done !!!
REG 73, 74, 74, 84 🙂
BEC 76 🙂

[Anonymous]

Probably a dumb question but on the actual exam how many computations are involved? I just started studying and I am through chapter 2 but haven't done any significant part of the homework and plan to test on 12/5. Not sure that is attainable now because of how much math is involved and in college cost accounting was not my friend. Any suggestions on how to tackle this section. I can't reschedule because I already requested off on the 4th and 5th and had to go through a lot of trouble to get some work reassigned to don't want to change plans again. Would you suggest ninja notes?

[Anonymous]

Probably a dumb question but on the actual exam how many computations are involved? I just started studying and I am through chapter 2 but haven't done any significant part of the homework and plan to test on 12/5. Not sure that is attainable now because of how much math is involved and in college cost accounting was not my friend. Any suggestions on how to tackle this section. I can't reschedule because I already requested off on the 4th and 5th and had to go through a lot of trouble to get some work reassigned to don't want to change plans again. Would you suggest ninja notes?

[Author]

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