This lecture is Awesome.. It makes it look simpler (less complicated than other videos) The material C explanation may need clarification, because although $8,000 is the correct value... The explanation does not really present how this is so, it's still a bit confusing... Please can you help us with a lecture that's fully focuses on opportunity cost and its concept.
Thanks for the good lesson sir Please can you help me to solve the following question You are the management accountant of Tricks, an organization which has been asked to quote for the production of a pamphlet for an event. The work could be carried out in addition to the normal work of the company. Due to existing commitments, some overtime working would be required to complete the printing of the pamphlet. A trainee has produced the following cost estimate based upon the resources required as specified by the operations manager: Direct materials: $ -paper (book value) 4,000 -ink (purchase price) 2,400 Direct labor: -highly skilled 250 hours @ $4.00 1,000 -semi-skilled 100 hours @ $3.50 350 Variable overhead 350 hours @ $4.00 1,400 Printing press depreciation 200 hours @ $2.50 500 Fixed production cost 350 hours @ $6.00 2,100 Estimating department costs 400 12,150 You are aware that considerable publicity could be obtained for the company if you are able to win this order and the price quoted must be very competitive. The following notes are relevant to the cost estimate above: 1. The paper to be used in the pamphlet is currently in stock at a value of $ 4,000. It is of an unusual specification (texture and weight) and has not been used for some time. The replacement price of the paper is $9,000, while the sales value of that in stock is $2,500. The store’s manager does not foresee any alternative use for the paper if it is not used on the pamphlet. 2. The inks required are presently not held in stock. They would have to be purchased in bulk at cost of $3,000. 80% of the ink purchased would be used in producing the pamphlet. There is no foreseeable alternative use for the remaining unused ink. 3. Highly skilled direct labour is in short supply, and the factory labour is already being utilized at full capacity, therefore, to accommodate the production of the pamphlet, 50% of the time required would be worked at weekends for which a premium of 25% above the normal hourly rate is paid. The normal hourly rate is $4.00 per hour. 4. Semi-skilled labour is presently under-utilized, and 200 hours per week are currently recorded as idle time. If the printing work is carried out, 25 unskilled hours would have to occur during the weekend, but the employees concerned would be given two hours time off during the week in lieu of each hour worked at the weekend. 5. Variable overhead represents the cost of operating the printing press and binding machines. 6. When not being used by the company, the printing press is hired to outside companies which earn a contribution of $3.00 per hour. There is unlimited demand for this facility. 7. Fixed production costs are those incurred by and absorbed into production, using an hourly rate based on budgeted activity. 8. The cost of the estimating department represents time spent in discussions with the organization concerning the printing of its pamphlet. 9. Tricks’ profit policy is to price its regular products after adding 10% profit mark-up. Required: Prepare a revised cost estimate using the relevant cost approach, showing clearly the minimum price that the company should accept for the order. Give reasons for each resource valuation in your cost estimate.
You are the management accountant of Tricks, an organization which has been asked to quote for the production of a pamphlet for an event. The work could be carried out in addition to the normal work of the company. Due to existing commitments, some overtime working would be required to complete the printing of the pamphlet. A trainee has produced the following cost estimate based upon the resources required as specified by the operations manager: Direct materials paper (book value). $4,000 -ink (purchase price). $2,400 Direct labor: -highly skilled 250 hours @ $4.00 -semi-skilled 100 hours @ $3.50 Variable overhead 350 hours @ $4.00 Printing press depreciation 200 hours@$2.50 Fixed production cost 350 hours @ $6.00 Estimating department cost. $400 You are aware that considerable publicity could be obtained for the company if you are able to win this order and the price quoted must be very competitive. The following notes are relevant to the cost estimate above: 1. The paper to be used in the pamphlet is currently in stock at a value of $ 4,000. It is of an unusual specification (texture and weight) and has not been used for some time. The replacement price of the paper is $9,000, while the sales value of that in stock is $2,500. The store’s manager does not foresee any alternative use for the paper if it is not used on the pamphlet. 2. The inks required are presently not held in stock. They would have to be purchased in bulk at cost of $3,000. 80% of the ink purchased would be used in producing the pamphlet. There is no foreseeable alternative use for the remaining unused ink. 3. Highly skilled direct labour is in short supply, and the factory labour is already being utilized at full capacity, therefore, to accommodate the production of the pamphlet, 50% of the time required would be worked at weekends for which a premium of 25% above the normal hourly rate is paid. The normal hourly rate is $4.00 per hour. 4. Semi-skilled labour is presently under-utilized, and 200 hours per week are currently recorded as idle time. If the printing work is carried out, 25 unskilled hours would have to occur during the weekend, but the employees concerned would be given two hours time off during the week in lieu of each hour worked at the weekend. 5. Variable overhead represents the cost of operating the printing press and binding machines. 6. When not being used by the company, the printing press is hired to outside companies which earn a contribution of $3.00 per hour. There is unlimited demand for this facility. 7. Fixed production costs are those incurred by and absorbed into production, using an hourly rate based on budgeted activity. 8. The cost of the estimating department represents time spent in discussions with the organization concerning the printing of its pamphlet. 9. Tricks’ profit policy is to price its regular products after adding 10% profit mark-up. Required: Prepare a revised cost estimate using the relevant cost approach, showing clearly the minimum price that the company should accept for the order. Give reasons for each resource valuation in your cost estimate.
Good morning sir. May the Lord be Glorified in your life. You're indeed a helper sent from ABOVE for people like me. May GOD'S tremendous BLESSINGS NEVER depart from your life AMEN. Please Sir, where can I watch your new videos?. If it's in this same Channel, please, direct on how to locate them. I'm asking because I was expecting to watch double constraints after watching single constraint in the LIMITING FACTOR ANALYSIS, l didn't see it. Likewise MKT Share VARIANCES in the VARIANCE ANALYSIS. Please Sir, I'm preparing for November Diet. Your quick response will help me tremendously in my preparations. Thanks & REMAIN BLESSED.
Multiple constraints is linear programming. Use playlist, it will help you in your search to see all the available videos on a particular subject at a glance
Thanks for the lectures... On Material C- As you mentioned in your presentation you said opportunity cost is the forgone alternative. Base on this definition how would the $8,000 be referred as the opportunity cost of material c when it’s the selling of it for $6,000 that has been forgone? Just want to get clarity on the term opportunity cost in the circumstances surrounding material c. Thanks for the clarification.
I believe two things were foregone in this event. Mr. Smith has to use the item for the contract.. By virtue of using it in the contract, He will give up two things.. 1) the profits ($6000) he could have obtained if he just sells it 2) a savings of $8000, which he could have earned if he had used it as a substitute for the other product. $8,000, being the greater loss (or greater profit foregone) was chosen as the opportunity cost. This means that rather than using it as a replacement for a material (that he could have bought for $8000, hence saving $8000) he used it for the project and lost/forgo this opportunity/alternative.
Disposed off is different disposed. Disposed of is like you engaging refuse disposal to help you pack them and throw them away which you will need to pay them to do that
Okay Sir, since we are now going to utilize it in the production of the special order, why are we not adding it? Also, please i posted an answer to a question someone posted sometime ago, pls can you help me confirm if the answer is correct@@Ezikan
For you to get your Net Realizable Value, you must deduct any expenses incurred in selling the Asset. There is a delivery cost that will be incurred in selling the asset which must be deducted to get the NRV. This NRV is the relevant cost we will use when the material is no longer needed and is to be sold.
Net realizable value based mean proceed less selling expenses. You can sell it for 2000 and also incur 300 on delivery given 1700 as the net realizable value
Thank you so much for simplifying PM to us. God bless the work of your hands
You have an amazing way to teaching. Thanks.
God bless you sir Relevant cost is simplified.
You explain so well. Thanks
What an awesome lecture
Thank you for this lesson video. keep pushing brother. you are good at this.
This really helps, thank you sir
Glory be to God
Great explanations! Thanks.
thanks for this lecture.....
This lecture is Awesome..
It makes it look simpler (less complicated than other videos)
The material C explanation may need clarification, because although $8,000 is the correct value... The explanation does not really present how this is so, it's still a bit confusing...
Please can you help us with a lecture that's fully focuses on opportunity cost and its concept.
Thanks for this lecture
Nice lecture
Thank you Sir for this
Thank you sir you help me alot
It's my pleasure
Thanks for the good lesson sir
Please can you help me to solve the following question
You are the management accountant of Tricks, an organization which has been asked to quote for the production of a pamphlet for an event. The work could be carried out in addition to the normal work of the company. Due to existing commitments, some overtime working would be required to complete the printing of the pamphlet. A trainee has produced the following cost estimate based upon the resources required as specified by the operations manager:
Direct materials:
$
-paper (book value)
4,000
-ink (purchase price)
2,400
Direct labor:
-highly skilled 250 hours @ $4.00
1,000
-semi-skilled 100 hours @ $3.50
350
Variable overhead 350 hours @ $4.00
1,400
Printing press depreciation 200 hours @ $2.50
500
Fixed production cost 350 hours @ $6.00
2,100
Estimating department costs
400
12,150
You are aware that considerable publicity could be obtained for the company if you are able to win this order and the price quoted must be very competitive.
The following notes are relevant to the cost estimate above:
1. The paper to be used in the pamphlet is currently in stock at a value of $ 4,000. It is of an unusual specification (texture and weight) and has not been used for some time. The replacement price of the paper is $9,000, while the sales value of that in stock is $2,500. The store’s manager does not foresee any alternative use for the paper if it is not used on the pamphlet.
2. The inks required are presently not held in stock. They would have to be purchased in bulk at cost of $3,000. 80% of the ink purchased would be used in producing the pamphlet. There is no foreseeable alternative use for the remaining unused ink.
3. Highly skilled direct labour is in short supply, and the factory labour is already being utilized at full capacity, therefore, to accommodate the production of the pamphlet, 50% of the time required would be worked at weekends for which a premium of 25% above the normal hourly rate is paid. The normal hourly rate is $4.00 per hour.
4. Semi-skilled labour is presently under-utilized, and 200 hours per week are currently recorded as idle time. If the printing work is carried out, 25 unskilled hours would have to occur during the weekend, but the employees concerned would be given two hours time off during the week in lieu of each hour worked at the weekend.
5. Variable overhead represents the cost of operating the printing press and binding machines.
6. When not being used by the company, the printing press is hired to outside companies which earn a contribution of $3.00 per hour. There is unlimited demand for this facility.
7. Fixed production costs are those incurred by and absorbed into production, using an hourly rate based on budgeted activity.
8. The cost of the estimating department represents time spent in discussions with the organization concerning the printing of its pamphlet.
9. Tricks’ profit policy is to price its regular products after adding 10% profit mark-up.
Required:
Prepare a revised cost estimate using the relevant cost approach, showing clearly the minimum price that the company should accept for the order. Give reasons for each resource valuation in your cost estimate.
You are the management accountant of Tricks, an organization which has been asked to quote for the production of a pamphlet for an event. The work could be carried out in addition to the normal work of the company. Due to existing commitments, some overtime working would be required to complete the printing of the pamphlet. A trainee has produced the following cost estimate based upon the resources required as specified by the operations manager:
Direct materials
paper (book value). $4,000
-ink (purchase price). $2,400
Direct labor:
-highly skilled 250 hours @ $4.00
-semi-skilled 100 hours @ $3.50
Variable overhead 350 hours @ $4.00
Printing press depreciation 200 hours@$2.50
Fixed production cost 350 hours @ $6.00
Estimating department cost. $400
You are aware that considerable publicity could be obtained for the company if you are able to win this order and the price quoted must be very competitive.
The following notes are relevant to the cost estimate above:
1. The paper to be used in the pamphlet is currently in stock at a value of $ 4,000. It is of an unusual specification (texture and weight) and has not been used for some time. The replacement price of the paper is $9,000, while the sales value of that in stock is $2,500. The store’s manager does not foresee any alternative use for the paper if it is not used on the pamphlet.
2. The inks required are presently not held in stock. They would have to be purchased in bulk at cost of $3,000. 80% of the ink purchased would be used in producing the pamphlet. There is no foreseeable alternative use for the remaining unused ink.
3. Highly skilled direct labour is in short supply, and the factory labour is already being utilized at full capacity, therefore, to accommodate the production of the pamphlet, 50% of the time required would be worked at weekends for which a premium of 25% above the normal hourly rate is paid. The normal hourly rate is $4.00 per hour.
4. Semi-skilled labour is presently under-utilized, and 200 hours per week are currently recorded as idle time. If the printing work is carried out, 25 unskilled hours would have to occur during the weekend, but the employees concerned would be given two hours time off during the week in lieu of each hour worked at the weekend.
5. Variable overhead represents the cost of operating the printing press and binding machines.
6. When not being used by the company, the printing press is hired to outside companies which earn a contribution of $3.00 per hour. There is unlimited demand for this facility.
7. Fixed production costs are those incurred by and absorbed into production, using an hourly rate based on budgeted activity.
8. The cost of the estimating department represents time spent in discussions with the organization concerning the printing of its pamphlet.
9. Tricks’ profit policy is to price its regular products after adding 10% profit mark-up.
Required:
Prepare a revised cost estimate using the relevant cost approach, showing clearly the minimum price that the company should accept for the order. Give reasons for each resource valuation in your cost estimate.
Apply what you have learnt in the lectures and let me see how far you understood the lecture. Send your solution for my perusal
@@Ezikan okay sir
@@Ezikan Good day Sir. I equally solved the question sent, but want to know if I'm correct.
Direct materials
-paper (book value). $2,500
-ink (purchase price). $3,000
Direct labor:
-highly skilled (125 hours @ $5.00 + 125 @ $4.00 ) $1,125
-semi-skilled 100 hours @ $3.50 -
Variable overhead 350 hours @ $4.00 $1,400
Printing press depreciation 200 hours@$2.50 -
Fixed prod cost (Specific Cost) 350 hours @ $6.00 $2,100
Opportunity Cost $3 @ 350 hours $1,050
Estimating department cost. $400 -
Total Cost $11,175
Profit ( 10% of $11,175) $1,117.5
Minimum Price to Quote += $12,292.5
Good morning sir. May the Lord be Glorified in your life. You're indeed a helper sent from ABOVE for people like me. May GOD'S tremendous BLESSINGS NEVER depart from your life AMEN. Please Sir, where can I watch your new videos?. If it's in this same Channel, please, direct on how to locate them. I'm asking because I was expecting to watch double constraints after watching single constraint in the LIMITING FACTOR ANALYSIS, l didn't see it. Likewise MKT Share VARIANCES in the VARIANCE ANALYSIS. Please Sir, I'm preparing for November Diet. Your quick response will help me tremendously in my preparations. Thanks & REMAIN BLESSED.
Multiple constraints is linear programming. Use playlist, it will help you in your search to see all the available videos on a particular subject at a glance
You’re awesome. 👏
Bless you sir
Thanks for the lectures... On Material C- As you mentioned in your presentation you said opportunity cost is the forgone alternative. Base on this definition how would the $8,000 be referred as the opportunity cost of material c when it’s the selling of it for $6,000 that has been forgone? Just want to get clarity on the term opportunity cost in the circumstances surrounding material c. Thanks for the clarification.
I believe two things were foregone in this event.
Mr. Smith has to use the item for the contract..
By virtue of using it in the contract,
He will give up two things..
1) the profits ($6000) he could have obtained if he just sells it
2) a savings of $8000, which he could have earned if he had used it as a substitute for the other product.
$8,000, being the greater loss (or greater profit foregone) was chosen as the opportunity cost.
This means that rather than using it as a replacement for a material (that he could have bought for $8000, hence saving $8000) he used it for the project and lost/forgo this opportunity/alternative.
@@sirshanme506 better explanation to the us e of the $8000. Because both are opportunity cost of buying the required quantity at $40/kg
@ezikenacademy please sir, I still don't understand this opportunity cost of $8000
Thank you sir😊
Thank you for this sir
Please sir why is the delivery cost subtracted from the existing material A?
Thank you Sir for this wonderful knowledge you shared, but I'm confused about material D. How is it now an outflow which is now being in bracket?
Disposed off is different disposed.
Disposed of is like you engaging refuse disposal to help you pack them and throw them away which you will need to pay them to do that
Okay Sir, since we are now going to utilize it in the production of the special order, why are we not adding it?
Also, please i posted an answer to a question someone posted sometime ago, pls can you help me confirm if the answer is correct@@Ezikan
Ok
And the continuation of this relevant costing lecture. Make or buy decision etc.
Pls how can i get all the questions solved. I want to join .
The question I solved in my Videos are not from only one source.
The better way of getting the question is to copy them down from the video.
Please I need clarity on why the 300 is deducted from the 2000 under material A. I thought it was also a cost. Please help out.
For you to get your Net Realizable Value, you must deduct any expenses incurred in selling the Asset. There is a delivery cost that will be incurred in selling the asset which must be deducted to get the NRV. This NRV is the relevant cost we will use when the material is no longer needed and is to be sold.
Net realizable value based mean proceed less selling expenses.
You can sell it for 2000 and also incur 300 on delivery given 1700 as the net realizable value
Yes
That is why I subtracted #300 (selling expenses)
👏👏👏
How can i get the link for Full MA Lectures please.
Check shut down decision
Give me your email so that I can share with u CPA examination past paper held in East African countries
ezekielanjorin64@gmail.com
Thanks