[jeff]

Welcome to the Q2 2015 CPA Exam Study Group for BEC.

Economic Cycles (All Across the Land)https://www.another71.com/economic-cycles-rap/

Posted by Another71 on Thursday, November 6, 2014

Free NINJA: https://www.another71.com/cpa-exam-study-plan/

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

[Meeekks]

@ ARCPA2B

It doesn't include fixed costs in the CM. Calculating for a profit is the same as break even point, but you add the targeted profit.

(BEP + Profit) / CM

[Anonymous]

Please ignore the above post…………..I hit send before I was ready to post it. The answer to this is b. $156,960. I understand how they got the equivalent units but I cannot figure out how they calculated the total costs. Does anyone know how they calculated the total costs?

Kimbeth Manufacturing uses a process cost system to manufacture Dust Density Sensors for the mining industry. The following information pertains to operations for the month of May:

Units

Beginning work-in-process inventory, May 1 16,000

Started in production during May 100,000

Completed production during May 92,000

Ending work-in-process inventory, May 31 24,000

The beginning inventory was 60 percent complete for materials and 20 percent complete for conversion costs. The ending inventory was 90 percent complete for materials and 40 percent complete for conversion costs.

Costs pertaining to the month of May are as follows:

•Beginning inventory costs are: materials, $54,560; direct labor $20,320; and factory overhead, $15,240.

•Costs incurred during May are: materials used, $468,000; direct labor, $182,880; and factory overhead, $391,160.

Using the weighted-average method, the total cost of the units in the ending work-in-process inventory at May 31, 1995, is:

a. $154,800

b. $156,960

c. $153,960

d. $155,328

Explanation

Materials Equivalent Units = 21,600 Total Costs = $99,360

Conversion Costs: Equivalent Units = 9,600; Total Costs = $57,600

[Meeekks]

For materials, it's 92k completed + 21.6k ending WIP (24k x 0.9) = 113.6k

For conversion cost, it's 92k completed + 9.6k ending WIP (24k x 0.6) = 101.6k

Then for the prices just add up the costs.

Materials = 54560 + 468000 = 522560

Conversion Costs (Direct Labor + Overhead) = 20320 + 15240 + 182880 + 391160 = 609600

Then divide the costs by the quantity to get the cost per unit

Materials = 522560/113600 = 4.6

Conversion Costs = 609600/101600 = 6.0

Then just solve for the ending balance

Materials = 21600 x 4.6 = 99360

Conversion Cost = 9600 x 6 = 57600

93360 + 57600 = 156960

Hope I explained it decently!

[Anonymous]

@Meeekks Thank you so much! You explained it perfectly……….this helps me so much!

[pracap]

Hi all,

I know its a silly question, but still wanna keep everything straight.

Is there any problem if we flag more number of questions in the exam?

Will this be counted for scoring criteria? Or its just a tool for us to keep a track of “not confident answers”

[Anonymous]

Thanks Meeks, I've just always assumed the “gross” didn't include fixed costs, bet I don't forget it again.

@pracap – You can flag as many or as few of questions as you want, it is not included in the scoring it is strictly for the test takers convenience. With that said, I always like to at least take an educated guess my first read through even if I want to flag it and come back, just in case you forget or miss that question when you go back.

[Ssbknyc]

@ARCPA2B I don't want to confuse you but Fixed Costs are included in Gross Profit when using ABSORPTION Cost Approach. It is NOT INCLUDED in Contribution Margin (a.k.a. Gross Profit) when using the CONTRIBUTION Approach.

Absorption Cost Approach Net Income is the following

Revenues

-COGS (which include DM + DL + VOH + FOH)

=Gross Profit

– Variable SG&A

– Fixed SG&A

=Net Income

Contribution Approach Net Income is the following

Revenues

-COGS (which include DM + DL + VOH + Variable SG&A)

=Contribution Margin

– FOH

– Fixed SG&A

=Net Income

If I were to have to guess, i think on BEC we would get more computation problems having to use the Contribution Approach as this method is more beneficial for management to use.

Absorption Approach is US GAAP, however, management is reluctant to use this approach because it also allocates Fixed OH to inventory.

Remember this as well, if at the end of the year there is a(n)

INCREASE in Inventory; Absorption Net Income > Contribution Net Income

DECREASE in Inventory; Absorption Net Income < Contribution Net Income

Done 08/2014-08/2015

[Anonymous]

@ssbknyc – Thanks, yeah I follow, I guess we're to just assume the company is following GAAP, pfft.. Just kidding, of course, but I will have to remind myself of that on test day because little facts can definitely make a hell of a difference on this exam. Also, with your CM approach, are you positive VSG&A costs goes to COGS? I was thinking that you didn't apply period costs to COGS in either approach.

[jsch8912]

@Crunchtime: Good luck on your exam tomorrow!!!! I know you'll do amazingly well :D:D:D:D:D:D

[Anonymous]

Ninja Question #739:

Notebook computers provide automation outside of the normal office location. Which of the following would provide the least security for sensitive data stored on a notebook computer?

A. Encryption of data files on the notebook computer

(correct answer) B. Setting up a password for the screensaver program on the notebook computer

C. Using a notebook computer with a removable hard disk drive

D. Using a locking device that can secure the notebook computer to an immovable object

Password protection for a screensaver program can be easily bypassed.

Data encryption provides adequate security for notebook computers. Removable hard drives would provide adequate security. Security is promoted by physically locking the notebook computer to an immovable object.

______________________________________________________________________________________________

Questions like this really bother me, way too subjective. First, I have no clue what a password for a screensaver program is unless it is referring to a password required to use the computer after going into the screensaver mode. Second, physically locking a computer to an object does not protect sensitive data at all, anyone can break a lock and steal the computer or plug a USB into it for that matter. If I get a question similar to this on exam day I might lose it.

[Ssbknyc]

@ARCPA2B In regards to the CM approach, yea i am sure Variable SG&A goes into COGS.. the Contribution Margin includes all variable costs.

Done 08/2014-08/2015

[aj2013]

I just hit the freak-out point for BEC. I feel like I don't understand a few too many topics… My test is Saturday, so I only have 3 nights and all-day Friday to study…AH!

Alright, that's it. I don't have any questions or answers, just need to rant/vent.

Thanks, guys.

B - 80
A - 80
R - 71, 59, 74, 80 FINALLY!
F - 77

Used Kaplan for FAR, BEC, AUD, and the first 2 REG attempts. I started using NINJA about 2 weeks before my 3rd REG attempt. I believe it's why I was so close to passing and why I passed the 4th time. USE IT FROM THE BEGINNING.

[fuyuki]

@aj2013: you and me both. I am freaking out about this exam and it is coming up on Thursday. I feel I understand too little of BEC topic and MCQ are not easy. feels like MCQ on ninja cover some topic that was not in Wiley test bank and it scares me.

[Anonymous]

Been scrolling through this thread periodically as I've been studying for BEC and now I have my test tomorrow!! Agreed … feels like too much material for anyone to possibly keep straight. I've been using Gleim exclusively and am hoping I'll be in good shape at the exam. I took a full practice exam simulation yesterday and did great, but then did some more MCQs today and was only scoring in the 70s. Gahh!!! I guess it's pretty dependent on the topics you get.

Good luck to everyone with the exam coming up the next few days!! This is my first of the four tests so I'm especially nervous.

[Anonymous]

@ssbknyc – So what are the differences between the variable costing method and the contribution margin approach? Because I guess I'm totally screwed, I never caught that they were two separate methods. I'm totally confused… Check out this MCQ and thank you for your help…

Per Ninja MCQ #1016

Using the variable costing method, which of the following costs are assigned to inventory?

A. Variable selling and administrative costs

Correct B. Variable factory overhead costs

C. Both variable selling and administrative costs and variable factory overhead costs

D. Neither variable selling and administrative costs nor variable factory overhead costs

Under variable costing, only variable manufacturing costs are assigned to inventory. This would include direct material and labor costs as well as variable overhead costs. All period costs (i.e., selling and administrative costs) would be treated as expenses of the period.

Thus, variable factory overhead costs are assigned to inventory while variable selling and administrative costs are not.

[Author]

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