[jeff]

Welcome to the Q3 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

[Sticky Nicky]

@csvirk You mean the COSO and IT were word for word? Or other questions as well?

[Anonymous]

Question on the writing section of the exam: do they just give you a random topic and expect you to write an essay on it? I'm worried that they'll ask a question on a topic that I'm on vaguely familiar with, such as ERM (Enterprise Risk Management), flexible budgets, etc. I'm familiar with these concepts and can answer multiple choice questions but I'm not sure I could write an essay on the topic off the top of my head.

What should we expect for the essay section? Do they give you any research tools?

[Anonymous]

hey @BondVillain, i think it's better to think of it as an email/memo you are writing to a fictitious person rather than an essay. i think it'll always be a situation where you're helping out someone in a company, like the president or something. i don't think you have access to authoritative literature. i'm worried about coming up with something to write from the top of my head too haha… MCQ take a completely different skill imo

you can check out the sample test at the AICPA website. although it doesn't give you the answer, you can still check out how the question/prompt is formed.

https://apps.aicpa.org/CBTeSampleTest/SampleTestStart.html
(pretty sure you have to use internet explorer)

[jad11]

Hopefully someone can help.

1a)Are FIFO and weighted average equivalent unit methods part of process costing?
1b)If they are, how do you know which one of the two to use when a question just says “a company uses process cost accounting?”
1c)If they are not, the same, can someone explain the difference?
2)Can someone please post a sample of a memo/letter that they have written?

[Finally_a_CPA]

jad11: They are both a type of process costing. Depending on the method, you will come up with a different number of equivalent units under each method. WA will always have higher equivalent units than FIFO unless there are no units in beginning inventory.

From what I've seen on my review course, the question will typically specify which method to use if it is relevant to the question. If the process costing question does not relate to equivalent units, it will typically not matter what method is being used because the answer will be the same under both methods.

[Anonymous]

A company's standard costs for direct labor are as follows:

Direct Labor
Standard Quantity Standard Price
1 hour per unit $15 per hour

Last month, the company produced and sold 100 units of its product, using 110 direct labor hours at a rate of $16 per hour. What amount is the company's direct labor efficiency variance for last month?

A.
$260

B.
$160

Correct C.
$150

D.
$110

The company's direct labor efficiency variance for last month is $150, calculated as follows:

Direct labor efficiency variance (DLEV) = Standard price × (Standard hours – Actual hours)

DLEV = $15/hour × [(1 hour/unit – (110 hours ÷ 100 units)]
= $15/hour × 0.10 hours/unit
= $1.50 per unit, or $150 total for 100 units

I calculated the answer as follows:

$15 x (100 – 110) = -150

Is this correct? Why is the answer a positive $150 instead of negative?

[iamonloose]

Direct labor efficiency variance = Standard price × (actual – standard)

[Anonymous]

yup that's correct. I think variances are always going to be a positive value, but will be denoted favorable or unfavorable. it's unfavorable in this case

[jad11]

@GSD512 Thanks

@bondvillain – Don't pay too much attention to the negative or positive that comes out of the formula. You can calculate it as std price (actual qty-std qty) or std price (std qty-actual qty). Look at it this way: I used 110 hours and I was supposed to use 100 hours. I used more than I was scheduled to use so that is an unfavorable variance.

[Anonymous]

Where are all the ninjas today? I'm home studying, cramming for the exam on Thursday. I've passed the reg and audit but this section is really giving me grief.

[Anonymous]

good luck thursday! i'm at the library, cramming for friday. really been diving deep into COSO…the learning never stops haha

[AMGcpa]

@Drcashamilli

How are you studying so much for COSO!? I have NINJA and Becker and there just doesn't seem like much material in them.

[Anonymous]

AMCcpa

https://www.coso.org/ic.htm

[Anonymous]

yeah there really aren't a whole lot of COSO questions to do. i was reading literature about monitoring yesterday but i can't find it now. here's a different version of it i guess: https://www.coso.org/documents/volumeii-guidance.pdf

the figures help. figure 6 in particular helped with a question on the change continuum.

i really need to practice written comms at this point i think. i can answer MCQs about a topic way better than i can write coherent sentences about them haha

[BenB]

The average industry inventory turnover ratio is 1.5, how much does your cash change if you decide to adopt the industry average?

Cost of sales 1,000,000
Inventory 100,000
A. (50,000)
B. 33,333
C. 150,000
D. 166,666

FAR 7/11/16 - 87
BEC 9/9/16
REG TBD
AUD TBD

[Author]

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