[jeff]

Welcome to the Q2 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

[Anonymous]

@Pony Boy, you're absolutely correct! Thanks. Please tell me this, why are we including the 3 jobs when the question references August? Maybe if I understand that, it'll help me.

I'm tired of operating in fear and mediocrity. It's time to try. It's time to do. It's time to go.

[MaLoTu]

@KG – those are the product totals for August … they make 3 things, apparently.

[MaLoTu]

This question blew my mind … it was recently released in 2015 … Just want to see if anyone else thinks it is crazy! lol.

At the start of its fiscal year, a company anticipated producing 300,000 units throughout the year. The annual budgeted manufacturing overhead was $150,000 for variable costs and $600,000 for fixed costs. In April, when there was a beginning inventory for finished goods of 5,000 units, the company showed an income of $40,000 using absorption costing. That same month, ending inventory for finished goods was 7,000 units. What amount would the company recognize as income for April using variable costing?
a. $44,000
b. $36,000
c. $45,000
d. $35,000

[monikernc]

Is it B? Change in inventory, 2000 units. Prod>sales, absorp profit > variable profit. Fixed cost per unit $2. $40,000-4,000=36,000

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

[MaLoTu]

lol, yes, monikernc!

It has so many elements to consider and then to top it off you have to remember that caveat about absorption … I wonder if it is no longer being tested because of the complexity. I am going to walk through that one a couple times!

[mtaylo24]

Good lord. It's like I hit a roadblock as soon as I hit the Finance and Capital stuff, with all of the ratios. Will be switching to IT later today, hopefully that will be better. Using Gleim BTW

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[Pony Boy]

Taking BEC Saturday morning (4/02). Ultimate cram session is beginning….

REG (02/2016)- PASS
BEC (04/2016)- PASS
FAR (06/2016)- PASS
AUD (08/2016)-

"Stay Gold, PonyBoy, Stay Gold"

[monikernc]

MaLoTu – it really is as simple as taking the change in inventory and multiplying by the FOH per unit. knowing whether to add or subtract that result is based on knowing whether production is greater than, less than, or equal to sales. the basic premise is if prod=sales, absorp profit = variable profit. from there the signs follow each other. if prod>sales, absorp profit > var profit. if prod<sales, absorp profit<var profit.
in your question inventory increased 2000 units over the period from 5000 to 7000, meaning prod>sales and absorp profit>sales. the difference in profit for the 2 methods is always FOH. the per unit cost of FOH is $600,000/300,000 =$2. $2*2000=$4000. since absorp profit is $40,000 and we know it will be > var profit when prod>sales, then $40,000 absorp profit -4,000 FOH = $36,000 var profit.
much easier than the gymnastics they make us use to learn it.

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]

[RWCPA]

I'm with you Pony Boy. 4/2 at 11:30 am.

[Pony Boy]

Good stuff. How far along in the review are you? Trying to get a sense of reference.

REG (02/2016)- PASS
BEC (04/2016)- PASS
FAR (06/2016)- PASS
AUD (08/2016)-

"Stay Gold, PonyBoy, Stay Gold"

[RWCPA]

I am using CPAexcel, Ive gone through all of the MCQs completed all lectures and taken 1 practice exam (on Saturday). As of now I am just jamming out as many MCQs as I can and reviewing notes. I will take another Practice exam probably tomorrow night or Thursday. How about you?

[MaLoTu]

@moniker, yeah I get the math and the difference between absorption and variable costing … I was just disgruntled to see all those elements thrown together in a recently released question. It is not hard at all, really, but could cause a testing center melt down! haha.

[Pony Boy]

I am reworking the MCs for each chapter and then am going to do a practice test tomorrow and one Friday. I don't think I have time to work an WC examples, but will look over a few of them for general guidelines before Saturday. Hopefully that is enough…

REG (02/2016)- PASS
BEC (04/2016)- PASS
FAR (06/2016)- PASS
AUD (08/2016)-

"Stay Gold, PonyBoy, Stay Gold"

[lonestar]

Help please!!!!!!!

The CFO of a company is concerned about the company’s accounts receivable turnover ratio. The company currently offers customers terms of 3/10, net 30. Which of the following strategies would most likely improve the company’s accounts receivable turnover ratio?

A. Pledging the accounts receivable to a finance company.
B. Changing customer terms to 1/10, net 30.
C. Entering into a factoring agreement with a finance company.
D. Changing customer terms to 3/20, net 30.

[Author]

Replies