Professional Documents
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Revision Notes
Formulae Sheet
Regression analysis
y = a + bx
2C0D
Ch
2C0D
D
Ch (1 )
R
16
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PAper F2
Revision Notes
r = discount rate
n = number of periods until payment
Discount rate (r)
Periods
(n)
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
1
2
3
4
5
0990
0980
0971
0961
0951
0980
0961
0942
0924
0906
0971
0943
0915
0888
0863
0962
0925
0889
0855
0822
0952
0907
0864
0823
0784
0943
0890
0840
0792
0747
0935
0873
0816
0763
0713
0926
0857
0794
0735
0681
0917
0842
0772
0708
0650
0909
0826
0751
0683
0621
1
2
3
4
5
6
7
8
9
10
0942
0933
0923
0941
0905
0888
0871
0853
0837
0820
0837
0813
0789
0766
0744
0790
0760
0731
0703
0676
0746
0711
0677
0645
0614
0705
0665
0627
0592
0558
0666
0623
0582
0544
0508
0630
0583
0540
0500
0463
0596
0547
0502
0460
0422
0564
0513
0467
0424
0386
6
7
8
9
10
11
12
13
14
15
0896
0887
0879
0870
0861
0804
0788
0773
0758
0743
0722
0701
0681
0661
0642
0650
0625
0601
0577
0555
0585
0557
0530
0505
0481
0527
0497
0469
0442
0417
0475
0444
0415
0388
0362
0429
0397
0368
0340
0315
0388
0356
0326
0299
0275
0305
0319
0290
0263
0239
11
12
13
14
15
(n)
11%
12%
13%
14%
15%
16%
17%
18%
19%
20%
1
2
3
4
5
0901
0812
0731
0659
0593
0893
0797
0712
0636
0567
0885
0783
0693
0613
0543
0877
0769
0675
0592
0519
0870
0756
0658
0572
0497
0862
0743
0641
0552
0476
0855
0731
0624
0534
0456
0847
0718
0609
0516
0437
0840
0706
0593
0499
0419
0833
0694
0579
0482
0402
1
2
3
4
5
6
7
8
9
10
0535
0482
0434
0391
0352
0507
0452
0404
0361
0322
0480
0425
0376
0333
0295
0456
0400
0351
0308
0270
0432
0376
0327
0284
0247
0410
0354
0305
0263
0227
0390
0333
0285
0243
0208
0370
0314
0266
0225
0191
0352
0296
0249
0209
0176
0335
0279
0233
0194
0162
6
7
8
9
10
11
12
13
14
15
0317
0286
0258
0232
0209
0287
0257
0229
0205
0183
0261
0231
0204
0181
0160
0237
0208
0182
0160
0140
0215
0187
0163
0141
0123
0195
0168
0145
0125
0108
0178
0152
0130
0111
0095
0162
0137
0116
0099
0084
0148
0124
0104
0088
0074
0135
0112
0093
0078
0065
11
12
13
14
15
17
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PAper F2
Revision Notes
Annuity Table
(1 + r)n
Present value of an annuity of 1 i.e. 1
r
Where
r = discount rate
n = number of periods
Discount rate (r)
Periods
(n)
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
1
2
3
4
5
0990
1970
2941
3902
4853
0980
1942
2884
3808
4713
0971
1913
2829
3717
4580
0962
1886
2775
3630
4452
0952
1859
2723
3546
4329
0943
1833
2673
3465
4212
0935
1808
2624
3387
4100
0926
1783
2577
3312
3993
0917
1759
2531
3240
3890
0909
1736
2487
3170
3791
1
2
3
4
5
6
7
8
9
10
5795
6728
7652
8566
9471
5601
6472
7325
8162
8983
5417
6230
7020
7786
8530
5242
6002
6733
7435
8111
5076
5786
6463
7108
7722
4917
5582
6210
6802
7360
4767
5389
5971
6515
7024
4623
5206
5747
6247
6710
4486
5033
5535
5995
6418
4355
4868
5335
5759
6145
6
7
8
9
10
11
12
13
14
15
1037
1126
1213
1300
1387
9787
1058
1135
1211
1285
9253
9954
1063
1130
1194
8760
9385
9986
1056
1112
8306
8863
9394
9899
1038
7887
8384
8853
9295
9712
7499
7943
8358
8745
9108
7139
7536
7904
8244
8559
6805
7161
7487
7786
8061
6495
6814
7103
7367
7606
11
12
13
14
15
(n)
11%
12%
13%
14%
15%
16%
17%
18%
19%
20%
1
2
3
4
5
0901
1713
2444
3102
3696
0893
1690
2402
3037
3605
0885
1668
2361
2974
3517
0877
1647
2322
2914
3433
0870
1626
2283
2855
3352
0862
1605
2246
2798
3274
0855
1585
2210
2743
3199
0847
1566
2174
2690
3127
0840
1547
2140
2639
3058
0833
1528
2106
2589
2991
1
2
3
4
5
6
7
8
9
10
4231
4712
5146
5537
5889
4111
4564
4968
5328
5650
3998
4423
4799
5132
5426
3889
4288
4639
4946
5216
3784
4160
4487
4772
5019
3685
4039
4344
4607
4833
3589
3922
4207
4451
4659
3498
3812
4078
4303
4494
3410
3706
3954
4163
4339
3326
3605
3837
4031
4192
6
7
8
9
10
11
12
13
14
15
6207
6492
6750
6982
7191
5938
6194
6424
6628
6811
5687
5918
6122
6302
6462
5453
5660
5842
6002
6142
5234
5421
5583
5724
5847
5029
5197
5342
5468
5575
4836
4988
5118
5229
5324
4656
4793
4910
5008
5092
4486
4611
4715
4802
4876
4327
4439
4533
4611
4675
11
12
13
14
15
18
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PAper F2
Revision Notes
A: 40%;
Repairs: 20%;
Maintenance: 10%.
A & B are production departments. The repairs and maintenance service production department as follows:
A
60%
40%
Repairs
Maintenance
B
40%
40%
Repairs
20%
Maintenance
(b) Smith Ltd has budgeted overheads of $200,000 and budgeted labour hours of 50,000. Actual hours worked
were 48,000 and actual overheads were $205,000.
Answer
(a)
Already allocated
General Overheads
Reallocate maintenance
Reallocate repairs
A
336,000
123,200
B
210,000
92,400
Repairs
42,000
61,600
Maintenance
28,000
30,800
23,520
23,520
(58,800)
69,216
551,936
46,144
372,064
11,760
115,360
115,360
551,936
40,000
372,064
60,000
(b)
200,000
50,000
= $4
205,000
192,000
$13,000
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PAper F2
Revision Notes
10%
Canteen
60%
36%
4%
C = 56,000 + 8658.6
C = 64,659
Department X
= 280,000 + (0.8 x 86,586) + (0.6 x 64,659)
= $388,064
= 196,000 + (0.1 x 86,586) + (0.36 x 64,659(
Department Y
= $227,936
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PAper F2
Revision Notes
Answer
units
Materials
Labour o/h
Overheads
Normal loss (10%)
8,000
8,000
(800)
7,200
20,000
3,840
8,000
(800)
$23,040
$23,040
= $3.20
7,200 kg
units
Materials
Labour & overheads
Abnormal gain
800
Process Account
$
100
20,000
3,840
320
8,100
24,160
Normal loss
Finished
units
800
7,300
800
23,360
8,100
24,160
Loss Account
units
Normal loss
800
Profit
800
units
Normal loss
Cost
100
700
320
700
800
1,020
220
800
1,020
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PAper F2
Revision Notes
Answer
Materials
280
5,400
5,400
600
360
6,000
6,040
$30,000 $18,120
$5
$3
Total cost $8 p.u.
units
WIP b/f
Materials
Labour & overheads
Labour
1,840
840
43,200
$45,880
3,000
1,080
$4,080
Process Account
$
400
6,000
1,840
30,000
18,120
6,400
49,960
Finished
WIP c/f
units
5,800
600
45,880
4,080
6,400
49,960
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PAper F2
Revision Notes
Answer
Joint costs
Less: proceeds of by-product
(i)
on basis of weight:
Cost per kg
(ii)
(10,000 $1.40)
460,000
(14,000)
$446,000
446,000
10,000 + 40,000
$8.92
(for A and B)
70,000
560,000
Total sales value: $630,000
70,000
x 446,000 =
630,000
49,556
= $4.96
10,000
560,000
x 446,000 =
630,000
396,444
= $9.91
40,000
= $49,556
= $396,444
Note: In both cases, these are the values when A & B leave the joint process. The final stock value of A will be $3 higher
in both cases due to the further processing
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PAper F2
Revision Notes
STOCK CONTROL
(a) X plc needs to purchase 1,800 units a year. The purchase price of each unit is $25.
Delivery costs per order:
Stock holding costs p.a.
(as %age of purchase cost):
$32
18 % p.a.
Calculate the optimum order quantity, and the total costs p.a. at that order quantity.
Answer
EBQ =
2C oD
=
D
CH (1 )
R
2 1,800 32
0.18 25
= 160units
$
Order costs:
Holding cost
= 1,800/160
= 160/2
=
=
360
360
$720
(b) Y Plc has minimum dexmand of 20 units per day, average demand of 30 units per day, and maximum demand
of 40 units per day. The lead time varies between 10 and 15 days.
(i)
(ii) If the reorder quantity is 1,200 units, what will be the maximum stock level?
Answer
(i) Reorder level = maximum lead time x maximum demand per day = 15 x 40 = 600 units
(ii) Minimum demand over lead time = 10 x 20 = 200 units
Therefore, maximum inventory left when new order arrives is 600 200 = 400 units
New order is 1,200 units, so maximum inventory level is 1,200 + 400 = 1,600 units
(c)
Answer
Physical
Add: outstanding order from suppliers
Less: outstanding orders by customers
Free inventory
20,000
10,000
(14,000)
16,000 units
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PAper F2
Revision Notes
REGRESSION
Units
Costs
($000s)
y
40
45
50
65
70
70
80
x
100
200
300
400
500
600
700
(a)
xy
x2
y2
Answer
Units
Costs
($000s)
y
40
45
50
65
70
70
80
420
x
100
200
300
400
500
600
700
2,800
(a)
(b)
xy
4,000
9,000
15,000
26,000
35,000
42,000
56,000
187,000
x2
10,000
40,000
90,000
160,000
250,000
360,000
490,000
1,400,000
y2
1,600
2,025
2,500
4,225
4,900
4,900
6,400
26,550
b=
a=
= 60 27.16 = 32.84
7
7
y = 32.84 0.0679x
r=
+133,000
+133,000
=
196,000 9, 450 136,096
= 0.977
(c)
r2 =
(0.977)2
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PAper F2
Revision Notes
Labour costs
Ratios:
Production Volume Ratio =
Capacity Ratio =
Efficiency Ratio =
Piecework:
Employees Replaced
Average Number of Employees
Example
Firm had 200 employees at start of the year, and 160 at the end of the year.
During the year 50 employees had left.
Answer
Number of employees fell by 40, so if 50 left 10 must have been replaced.
Average number of employees
200 +160
Average number of employees =
= 180
2
Labour turnover rate =
10
100% = 5.56%
180
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PAper F2
Revision Notes
Answer
Absorption profit
Fixed overheads increase in inventory (5,000 units x $3 per unit)
Marginal profit
(Inventory increases and so absorption profit is higher than marginal profit)
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$
220,000
(15,000)
$205,000
PAper F2
Revision Notes
VARIANCES MATERIALS
Standard cost of materials:
Answer
Actual purchases
Actual purchases
at actual cost
120,000kg
at standard cost
120,000kg x $4
500,000
480,000
$20,000(A)
kg
Actual usage
Standard usage for actual production
(5,000 u 20kg)
105,000
100,000
5,000kg
x $4 = $20,000(A)
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PAper F2
Revision Notes
VARIANCES LABOUR
Standard cost of labour:
at actual cost
52,000 hours x $3.20
at standard cost
52,000 hours x $3
166,400
156,000
$10,400(A)
52,000
49,500
2,500hours x $3
$7,500(A)
49,500
48,000
1,500hours x $3
$4,500(A)
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PAper F2
Revision Notes
Actual hours
Actual hours
at actual cost
7,100 hours
at standard cost
7,100 hours x $2
13,900
14,200
$300(F)
Actual hours
Standard hours for actual production
1,200 units x $6
7,100
7,200
100hours x $2
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$200(F)
PAper F2
Revision Notes
100,000
108,000
$8,000(F)
100,000
96,000
$4,000(A)
Actual production
Budget production
9,000
8,000
1,000units x $12
$12,000(F)
35,000
32,000
3,000 hours x $3
$9,000(F)
Actual hours
Budget hours 8,000 x 4
Fixed overhead efficiency variance:
Actual hours
Standard hours for actual production 9,000 x 4 hours
35,000
36,000
1,000 x $3
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$3,000(F)
PAper F2
Revision Notes
VARIANCES SALES
We budgeted to sell 10,000 units.
The standard selling price is $20 per unit.
The standard costs are:
Variable costs
$12 per unit
Fixed costs $ 5 per unit
The actual sales were 12,000 units at a selling price of $19 per unit
What are the sales variances?
Answer
Absorption costing:
Sales price variance:
228,000
240,000
$12,000(A)
Actual sales
Budget sales
12,000
10,000
2,000units x standard profit x $3p.u.
$6,000(F)
Marginal costing:
As absorption costing
12,000
10,000
2,000units x standard contribution $8p.u.
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$16,000(F)
PAper F2
Revision Notes
Variable costs
Fixed costs
Semi-variable costs
Stepped fixed costs
Controllable costs
Non-controllable costs
High-Low
In a month when the production was 10,000 units, the total costs were $60,000.
In another month, the production was 18,000 units and the total costs were $100,000.
What is the variable cost per unit, and the fixed cost per month?
Answer
units
High
Low
18,000 100,000
10,000 60,000
8,000 40,000
Variable cost =
40,000
= $5 per unit
8,000
High:
Total cost
Total variable cost 18,000 x $5
Fixed cost
100,000
(90,000)
$10,000 per month
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PAper F2
Revision Notes
Index Numbers
1
Answer
109
x $25 = $25.95
105
The following data relates to a typical shopping basket in each of 2010 and 2011:
2010
2011
Product
Units
Units
A
B
100
200
$5
$12
150
180
$8
$13
Answer
Laspeyre (Use base year quantities)
2010
A
B
100 x $5 =
200 x $12 =
Index number =
500
2,400
$2,900
2011
100 x 8 =
200 x 13=
800
2,600
$3,400
3,400
100 = 117.2
2,900
A
B
150 x $5 =
180 x $12 =
Index number =
750
2,160
$2,910
2011
150 x $8 =
180 x $13=
1,200
2,340
$3,540
3,540
100 = 121.6
2,910
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PAper F2
Revision Notes
Interest
1
If $1,000 is invested for 2 years at compound interest of 10% per year, what will the deposit have
grown to by the end of the period?
Answer
A bank gives simple interest of 12% per year, with interest credited to the account quarterly.
What is the actual rate of interest per year?
Answer
1 + r = (1.03)4 = 1.1255
actual interest rate = r = 0.1255
= 12.55% p.a.
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PAper F2
Revision Notes
Answer
d.f. @ 10%
0
1
2
3
2
(75,000)
20,000
30,000
20,000
0.909
0.826
0.751
P.V.
(75,000)
18,180
24,780
37,550
N.P.V. 5,510
1
2
3
20,000
50,000
100,000
Payback period = 2 +
(75,000 50,000)
= 2.5 years
50,000
1
2
3
18,180
42,960
80,510
(75,000 42,960)
= 2.85 years
37,550
If the net present value at 15% is $(2,060), what is the Internal Rate of Return?
Answer
NPV
10%
15%
5%
5,510
(2,060)
(7,570)
5,510 x 5%)
IRR = 10% + ( 7,570
= 13.64%
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PAper F2
Revision Notes
Answer
2
1 8
4,000 x 5.535
= $22,140
Answer
8,000 x (1/0.06)
= $133,333
Sunk costs
Opportunity costs
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PAper F2
Revision Notes
Performance Measurement
Financial measures
Non-financial measures
Economy
Efficiency
Effectiveness
Answer
(b) what is the Residual Income (if the cost of capital is 10%)?
Answer
Profit
Less: Notional interest $350,000 x 10%
Residual income
40,000
(35,000)
$5,000
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PAper F2
Revision Notes
SOURCES OF DATA
Primary data
Secondary dates
Sampling frame
Random sampling
Systematic sampling
Stratified sampling
- divide population into categories, take random samples from each category
Multistage sampling
Quota sampling
Cluster sampling
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PAper F2
Revision Notes
The trend forecast for sales in quarter 2 of next year is 18,000 units.
What is the actual forecast is the seasonal variation for quarter 2 is
(a) +1,200 using the additive model
(b) 85% (or 0.85) using the multiplicative model.
Answers
1) (a) 18,000 + 1,200 = 19,200 units
= 15,300 units
(b) 18,000 x 0.85
2)
3)
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