[jeff]

Free Study Planner, Notes, Audio, Flashcards: https://www.another71.com/cpa-exam-study-plan/

Free CPA Exam Survival Guide: https://www.another71.com/cpa-exam-survival-guide/

[jstay]

yeah, search BEC tips in the search bar, there are some good ones.

[Tarheelgirl]

ABC Co. had debt with a market value of $1 million and an after-tax cost of financing of 8%. ABC also had equity with a market value of $2 million and a cost of equity capital of 9%. ABC’s weighted-average cost of capital would be

A. 9.0%

B. 8.7%

C. 8.0%

D. 8.5%

I understand how to get the answer however I cannot seem to get my calculator to come up with the right answer. Has anyone seen this question and actually calculate the right answer? I feel dumb not being able to calculate this on my calculator and get the right answer.

FAR - 46, 79 (7/8/14)
AUD - 56, 59, 2/23/15 3rd times a charm!
BEC - 69, 74 Really??
REG - April, I hope. Fingers crossed!

[Anonymous]

Is the answer B?

Try this, 1/3×.08 + 2/3×.09

[lauren725]

^^ Agree. The debt is weighted 1/3 and the equity is weighted 2/3. I am getting 8.666666 – so just rounding to 8.7

AUD - 73,91
FAR - 79 - Thank you God!
BEC - 73,79!!!!
REG - 92 whatttt??!

I used Becker review + flashcards, Ninja Audio, Ninja MCQ supplement on BEC and REG.

Done! Praise God!

[lauren725]

jstay – I am using ninja mcq in supplement to becker, I still haven't answered 50% of them (been focusing more on reviewing my trouble areas with becker) but plan to do a lot more ninja this weekend. I am personally finding the questions definitely more broad than what I have seen in becker. I suppose that is good I guess, but it is frustrating when I have never heard of the concept or anything in the question before. I suppose that is why I got it though… 🙂

AUD - 73,91
FAR - 79 - Thank you God!
BEC - 73,79!!!!
REG - 92 whatttt??!

I used Becker review + flashcards, Ninja Audio, Ninja MCQ supplement on BEC and REG.

Done! Praise God!

[Anonymous]

Anyone know how to do this problem?

Aba Caterers quotes a price of $30 per person for a dinner party. This price includes the 6% sales tax and the 15% service charge. Sales tax is computed on the food plus the service charge. The service charge is computed on the food only. At what amount does Aba price the food?

$23.70

$24.61

$25.50

$28.20

[In God I trust]

Am not good at explaining equation but i'll try

Price of food+service+tax=30

if you let P stand for price of food

Price of food = P

Service charge = 15% * P =.15 P

Price of food+service = P +.15 P

Sales tax = 06%(P+15% P) = .06 P+.009 P

Now insert the numbers into the formula….

Price of food+service+tax=30

P+(.15*P)+(.06(P+.15 P)=30

P+.15 P+.06 P+.009 P =30

1.219 P =30

P=24.61

Hope it helps

[Anonymous]

How do you get `1.219 though? I'm confused, what do you multiply?

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.

This answer is correct. The requirement is to calculate the selling price variance. This answer is correct because 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 x ($6.20 − $6.00)] + [33,000 x ($7.70 − $8.00)].

Also, shouldn't this be favorable 8,300 and not unfavorable?

[Anonymous]

Cpahopeful….without going through all the algebra you can answer the question like this. 30/1.06 = 28.30 (this is your food plus service). 28.30/1.15 = 24.61.

[Anonymous]

8,300 unfavorable is correct. The key here is we are selling not purchasing. A – actual selling price is 6.20 instead of the estimated 6 so we made .20 more per bottle than we had planned. This resulted in a favorable variance of 1,600. B – actual selling price is only 7.70 instead of the estimated 8 so we made .30 less per bottle than we had planned. This resulted in an unfavorable variance of 9,900. So 1,600 F + 9,900 U is 8,300 unfavorable.

[Anonymous]

Ah thanks, yeah much easier now.

Good catch, it is selling not purchasing. I just took a 60 question practice session with cost account and planning sections, and got a 60%. Terrible, I forgot just how much I hated cost accounting in college Ha. Looks like I am VERY weak on IT, planning, and cost sections.

[jstay]

SAME cpahopeful…anyone else thinking FAR is easier then BEC??

casagarber, will that work everytime–referring to the food service problem, cause that was so much easier. i had no idea to figure that out when i read it

[Anonymous]

Even though I passed FAR first try and am struggling on this one I still think FAR was harder.

Not sure if that will work every time for the food service problem. Right when I looked at it I knew there had to be an easier way. There are a number of problems that you can do this or something similar though. With this problem I knew it would work because I knew the interest was included in that amount and they gave you the percentage.

[Tarheelgirl]

@cpahopefull @ lauren – Answer is B. Thanks for your help. Maybe I was getting too tired last night.

FAR - 46, 79 (7/8/14)
AUD - 56, 59, 2/23/15 3rd times a charm!
BEC - 69, 74 Really??
REG - April, I hope. Fingers crossed!

[jeff]

(updated – new question posted)

[Author]

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