[jeff]

Welcome to the Q1 2016 CPA Exam Study Group for BEC.

Some BLITZ videos to help your exams: https://www.another71.com/ninja-blitz

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

[Jordanlovefood]

Just came back from taking the test.TIP guys: ASK FOR A CALCULATOR. I was the first one at my center to ever do so lol. I got easy, wtf hard, and wtf hard again I believe.

The last second easier than the second for me, but from looking at the released 215 AICPA hard questions, my questions were still harder than what they gave out, so I think I did pretty good. There were some question that I had to think through and it was mainly with Operations management and IT. Ironic because I am also a Management Information Systems major.

There were some IT questions were I thought “wtf this was mentioned once in my SQL class… why would this even be tested” Other than that, I think ninja prepares you extremely well and was harder than the questions you would see on the test.

To answer your about the writing question, no I did not do any writing writing assessments. I made sure I knew the multiple choice because I can pass with those alone, and if not, I have done the multiple choice so quickly that the extra time I have left would allow me to be able to contrive a higher-quality coherent essay.

I made sure to dissect the essays though and see what they were looking for. I would always write “I am writing to discuss the implications… as my intro (or derivatives of this intro) and “If you have further questions I would be happy to meet with you at your earliest convenience to further discuss in-depth…”

[monikernc]

Jordanlovefood I hope you did well.

Did they give you a calculator to use? Wow. I am going to call and ask my testing center if they will do that. Would make such a difference to me.

I am IT person and don't buy the BEC fairy tale version of it but i am learning it because it is their test. I get mad or laugh hysterically as i study those questions.

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[Jordanlovefood]

Thank you, yes they did give me a calculator. They are not allowed to advertise it and I do not know how many they have. Just hope I manage to pass all of the other sections before everyone else realizes and starts to compete for calculators :).

[Anonymous]

First time posting in this group and let me just say that BEC sucks. Hopefully this is my last part but so far this has become the most boring and least likeable section of all. I have no motivation at all… sorry but needed to vent 🙂 ) Midwest Fabricators is building a corporate planning model to predict cash flows. The company maintains end-of-month inventories that cover 20% of the following month's sales. Merchandise costs average 55% of selling prices, and payment is made at the time of purchase. If S(n) = Sales in month(n), an appropriate notation for total monthly cash payments for merchandise purchases in month(n) would be:

A.
0.11S(n+1).

B.
0.11S(n-1).

C.
0.44S(n) + 0.11S(n+1).

D.
0.44S(n) + 0.11S(n-1).

The answer is C. Does anyone knows the logic behind the S(n+1) for the following month sales? (why do we add the 1 to the month sales) This was the explanation:

A model is a representation of the interrelationship between sets of data, converting constants and independent variables (often estimated) into a mathematical formula to determine (estimate) a useful approximation of the dependent variable. Here, cash flows is the variable dependent upon sales (S) and inventory levels (I) and the cost of inventory (COG).

If S(n) = sales in month(n), then the following month's sales = S(n+1). Then, End-Of-Month inventory (EOMI) = 20% of S(n+1) or 0.20S(n+1). Thus, required purchases for month(n) (Sales converted into Cost of Inventory (COG)) = (80%S(n) + 20% × (n+1)) × average COG of 55%.

Since payment is made at the time of purchase, in a given month cash is needed to pay for 80% of that month's sales (since 20% was purchased the preceding month for EOM – I) plus 20% of the next month's sales. Thus, an appropriate notation for total monthly cash payments for merchandise purchases in month(n) would be:

(COG% x Required Purchases) + (COG% x EOM Inventory)
= (0.55 x 0.80S(n)) + (0.55 x 0.20S(n+1)) = 0.44S(n) + 0.11S(n+1)

[monikernc]

cortes, n and n+1 are standard time series notations. n is a notation for the current period, and n+1 is the notation for the next, +1, period. when the period is months, then, this is january, so its notation would be n, and february would be n+1. S means Sales. S(n) = January Sales. S(n+1) = February Sales. If the problem required you could have S(n+2) = March Sales.

The problem is asking for a generic formula for cash payments where any month could be the current month, and it would be denoted as n. cash purchases are a function of Sales in the current month S(n) and Sales in the next month S(n+1). the amount of purchases in a month are the total purchases of inventory in the current month = 80% of the current month's Sales, .80*S(n) + 20% of next month's sales, .20*S(n+1) and Inventory costs 55% of Sales. so you end up with cash purchases equal to:

.55*.8*S(n) + .55*.20*S(n+1) or .44*S(n)+.11*S(n+1) since it is January that equates to .44*January sales + .11* February sales.

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[Anonymous]

Thanks monikernc. I saw the question on Ninja but could not see anything to refer to for the answer on the chapter that I am reading (maybe its covered later)

[monikernc]

I am using ninja book and mcq. That formula is on page 3 of financial mgmt.

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[SaveBandit]

The NPV of a proposed investment is negative; therefore, the discount rate used must be:

a. Less than the project's IRR
b. Greater than the firm's cost of equity
c. Less than the incremental borrowing rate.
d. Greater than the project's IRR.

Answer: D.

Can someone dumb down this question for me? I'm having trouble understanding the relationship between IRR/NPV/Discount rates, etc.

4 for 4

FAR 85
AUD 94
BEC 86
REG 90

[FAR_WARS]

Am just starting BEC, so use my explanation w caution:

@IRR, NPV= 0
disc rate > IRR, NPV LOWER
disc rate < IRR, NPV HIGHER

The internal rate of return is the rate that makes the present value of our investment exactly $0. Therefore, if the rate we must pay (discount rate) is higher, NPV of our investment will be lower.

Vice Versa, if the rate we must pay (discount rate) is lower, NPV of our investment will be higher.

FAR- 80
BEC- 75
AUD- 78
REG- ?

[FAR_WARS]

FAR- 80
BEC- 75
AUD- 78
REG- ?

[ELMON]

SaveBandit@

Its A Good Q

First you must Know that When the rate used In DCF Increased The Result of DCF Decreased , i mean if you have rate 12% the amount will be higher than the rate 14 % . that means for every increase in discounted rate the PV Will Decreased

Second the IRR Is the Breakeven Discount rate , means the IRR Is the Rate makes the NPV=0

In your Q NPV Is Negative so , the discount rate used must be Higher than the IRR , In other Word the IRR Is Lower than the Discount rate used

I hope that Helps

FAR- 88 MAY 2015
REG- 83 OCT 2015
BEC- 80 Jan 2016
AUD- 79 May 2016
NH
I am Done

Ninga MQ & SIMS Is the Best Way to Pass

[Zyx]

Can someone please help me explain why relevance costs decrease?;

In Belk Co.’s “just in time” production system, costs per setup were reduced from $28 to $2. In the process of reducing inventory levels, Belk found that there were fixed facility and administrative costs that previously had not been included in the carrying cost calculation. The result was an increase from $8 to $32 per unit per year. What were the effects of these changes on Belk’s economic lot size and relevant costs?

A. Lot size, decrease; Relevant Costs, increase

B. Lot size, increase; Relevant Costs, decrease

C. Lot size, increase; Relevant Costs, increase

D. Lot size, decrease; Relevant Costs, decrease correct answer
Thanks

REG: 77 x2
BEC: 81 x3
FAR: 68 retake 10/1
AUD: 8/27

[FAR_WARS]

“Belk found that there were fixed facility and administrative costs that previously had not been included”

Is the key phrase. We thought that these costs were relevant (subject to change). We now realize that they are sunk.

FAR- 80
BEC- 75
AUD- 78
REG- ?

[monikernc]

Both changes in costs, the decrease in setup costs and the increase in carrying costs, lead to reduced lot sizes. Reduced lot sizes reduce carrying costs, which are relevant costs. So even though the carrying costs increased you will incur them for less inventory and probably shorter periods of time because of the smaller lot sizes.

That is ninja question 1329 and the answer provides the following explanation:

Lower setup costs result in decreased lot sizes because it becomes less expensive to produce a smaller lot.
Increased carrying costs also result in decreased lot sizes because the greater the cost of carrying inventory, the fewer the units you will want to produce in a lot.

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[Zyx]

thanks guys!

REG: 77 x2
BEC: 81 x3
FAR: 68 retake 10/1
AUD: 8/27

[Author]

Replies