[jeff]

Welcome to the Q4 2017 CPA Exam Study Group for BEC. 🙂

Introduce yourselves and let your fellow NINJAs know when you plan to take your BEC exam.

The Five Steps (NINJA Framework): https://www.another71.com/pass-the-cpa-exam/

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

[Teal]

Central Winery manufactured two products, A and B. Estimated demand for product A was 10,000 bottles and for product B was 30,000 bottles. The estimated sales price per bottle for A was $6.00 and for B was $8.00. Actual demand for product A was 8,000 bottles and for product B was 33,000 bottles. The actual price per bottle for A was $6.20 and for B was $7.70. What amount would be the total selling price variance for Central Winery?
$3,700 unfavorable.
$8,300 unfavorable.
$3,700 favorable.
$14,100 favorable.
Answer is: B – $8,300 unfavorable
The selling price variance is equal to actual sales multiplied by the difference between actual sales price and standard sales price. Therefore the variance is equal to $8,300 unfavorable [(8,000 × ($6.20 − $6.00)] + [33,000 × ($7.70 − $8.00)].

Can anyone help me with this one? I would have thought because the price is better on product B (which is a higher variance), that the variance would be favorable? Not unfavorable?

FAR (66,68) Aug 26
REG (66) July 25
AUD (66) December 1st
BEC - October 3rd

[RB]

MERiden, any make or buy decision is always about comparing what you would pay or end up making in each scenario.

For the first piece yes, that’s money they could earn if they buy it instead so that is factored in to the differential cost between the alternatives. (The $200 rent would be the opportunity cost if they did make it, because they gave that up.

But anytime you see a decision, make 2 columns and write out piece by piece: for option A we pay x, y, z, option B we pay X but maybe receive rent of W instead

Which one of those is the lowest cost / highest profit overall.

It’s always comparing 2 scenarios. Shipping and variable costs generally are included in the decision, anything that would change between Option A or option B is relevant.

[RB]

Crap and yes too late but GOOD LUCK JEN!! We are all rooting for you

[jiji]

@rencpa the first one I made up and they are less likely to test. BUT the second one is

Accounts Receivable Turnover = $400,000/$85,000 = 4.705

[rencpa]

Teal,

SP Var = ($ ACTUAL SP/unit – $ BUDGETED SP/unit) x Actual sold units

For A: ($6.20 – $6) x 8K = $1.6K F (sold for more than planned ==> Favorable)
For B: ($7.7 – $8) x 33K = <$9.9K> UF (sold for less than planned ==> Unfavorable)

Total SP Var for A & B = <8.3K> UF

Hope you can see that now. Good luck!

[rencpa]

Thanks jiji. Glad I am not the only one making up questions while I study 🙂

[Teal]

@rencpa oh my gosh, duh, thank you!! I was thinking they got the price more/less than what they paid, not what they sold it for.

Thanks!!!

FAR (66,68) Aug 26
REG (66) July 25
AUD (66) December 1st
BEC - October 3rd

[jenpen]

Hey! I’m done and just now getting a chance to check in. All I can say is it’s done. So much stuff was out of left field. Heavy IT, COSO, and economics. I don’t feel great about the questions. Fair amount of computations, and a couple for formulas I didn’t have down cold. The SIMs were not bad. Nothing to be scared of in my opinion. Practice the AICPA ones and you should be good. I really won’t be surprised if I have to retake this one, but I’ll find out in a couple of weeks. I’m now anxious for score release since that’s over!

AUD - 56 - 68 - 61 - 9/8/16
REG - 75
FAR - 7/15/16
BEC - TBD

Wiley CPAexcel and NINJA 10 Point Combo

[Ana]

Jen I'm hoping you did it. You've worked so hard!!!!!!! Enjoy a break.

[meriden203]

RB, Can you please take a look at this for me? it's based on what you explained to me earlier.

Company A’s cost per unit when making a product:
DM $ 20
DL $10
FOH $6
Total $36
If company A buys a product that cost $40 and rent out the factory space for $20.
1. What is company A’s making relevant cost VS buying relevant cost if company A has excess capacity?
Answer: making cost is $30 (DM $20+ DL$10)
buying cost is $40 (cost $40)

2. What is company A’s making relevant cost VS buying relevant cost if company A has no excess capacity?
Answer: making cost is $50 (DM $20+DL$10+opportunity cost $20)
Buying cost is $40 (cost $40)
Are my answers correct?

[rencpa]

@Jen, be positive. Without asking, I know you did great with WC. You said you did fine with simulations. MCQ? Almost everyone has been getting IT and COSO. With that said, you should cheer up! Let's hope for 75. Okay. Thank you for sharing your experience. Lucky you, no more studying tonight!

@Teal, are you taking BEC in Q4?

[jenpen]

Thank you for the kind words Ana and Ren! And yes, no more studying for a bit at least. I’ll be anxiously waiting for the 19th to roll around now. But for the time being it is out of my hands. Ana, I know you test tomorrow so good luck!!! When is your exam, Ren? I’m sure you’ve said but I can’t recall currently.

AUD - 56 - 68 - 61 - 9/8/16
REG - 75
FAR - 7/15/16
BEC - TBD

Wiley CPAexcel and NINJA 10 Point Combo

[Sweetie1]

I don't post much. I have sort of been a Ninja review voyeur over the last week and half. =)
I take my exam tomorrow (the latest I could possibly get in). I am not sure that I am really prepared for this exam.
Of all 4, this one seems to have hit me out of nowhere. I thought I would be the easiest section, so I saved it for last. However, I am blown away and overwhelmed by the material in this section.
After reading some of your posts, it seems that I am not alone. I almost postponed my exam until next year, but I figure I have nothing lose by taking it.
So, tomorrow it is.

I just want to say THANK YOU to all of you. Without you even knowing, you have helped me immensely over the last week with all of the recommendations, suggestions, notes, and exam experiences.
If I would have only checked in here earlier!!!
Best of luck to all of you, and THANK YOU!

[RB]

Jen – Everyone’s had that feeling walking out. Hold your head up high for now, at least it’s done. Take a break and Optimistically wait for the results!! Enjoy your time for now

Meriden, is this a specific question you found (not a hypothetical one people are apparently using 😉 ?)

You are right on relevant costs here, relevant costs are anything that changes between the two, its just a little unclear with the excess capacity and rent piece. The assumption being that in scenario A they would get that rent either way and in scenario B they would get that rent only if they did NOT produce it then yes you are correct, you add it in scenario B, it is an opportunity cost because that is what they would have to give up. It’s just not 100% clear in scenario A if they could rent per unit, so hypothetically if they could rent out MORE space for that money it could still be relevant, but as worded I would assume not for scenario A and you would be correct.
Buying costs should basically be correct. I just don’t see a question coming up this way on the test, it’s more likely to ask what the net gain or loss is if they chose to buy it instead of make it, in which case the rent is incorporated in scenario B but not scenario A.

Does that make sense? Or was this a bit of a ramble?

[meriden203]

RB, thank you for clarifying my made up scenario!!

[Author]

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