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Q & A Management Accounts with Teresa Clark & Carly Barnes

Good evening everyone, and welcome to the latest ASN FREE Q & A sessionn on Management Accounts with Teresa Clarke & Carly Barnes of 3aaa Apprenticeships. This Q & A covers all three levels in respect to Basic Costing/Cost n Revenues/Financial Performance for AQ2013 and Elements of Costing/ Management Accounting: Costing/ Management Accounting: Decision and Control on AQ2016. If you have any questions, please post as a comment below and Teresa and Carly will do their best to answer! Please be aware, if any questions are left unanswered, then they will be answered at a later time. And thank you all for participating…..now over to you, who has the first question?

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Teresa Clarke Welcome everyone!

· Reply · 21 March at 19:30

Natasha Everard

Natasha Everard Variance – i loath them – its what made me put my studies on hold the first time – what is the best practice to tackle them?

· Reply · 21 March at 19:32

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Teresa Clarke

Teresa Clarke Level 4?

· Reply · 21 March at 19:32

Natasha Everard

Natasha Everard Yes

🙂

· Reply · 21 March at 19:32

Carly Barnes

Carly Barnes Ha one for me I think

🙂

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· 21 March at 19:32

Carly Barnes

Carly Barnes I have my way of writing them out and stick with the same principle everytime, do you want material etc or the fixed?

· Reply · 21 March at 19:33

Natasha Everard

Natasha Everard I have a problem with efficiency

· Reply · 21 March at 19:34

Natasha Everard

Natasha Everard I always think i get them then i try a different question and it all goes wrong

· Reply · 21 March at 19:35

Carly Barnes

Carly Barnes I use this for fixed, always good to get in the habit even if you don’t need them all. Efficiency will look at how many you managed to make x OAR then compare that to what you should have done for that level of production (flexed) x OAR

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· 21 March at 19:36

Natasha Everard

Natasha Everard Is it just a case of attempting as many questions as possible till it clicks?

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· 21 March at 19:37

Carly Barnes

Carly Barnes I think the understanding of what you are doing helps, for example the capacity will look at what you budgeted to do against what you actually managed to do. If you do more than budget that is a good thing because you have made more units then more of the budgeted flexed overhead has been absorbed into production.

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· 21 March at 19:39 · Edited

Natasha Everard

Natasha Everard So basically, the variances are just flexing the standard cost card figures? So what should have cost/made to what actually did cost/make?

· Reply · 21 March at 19:41

Carly Barnes

Carly Barnes That’s a big part of it, but you do have to be careful as to whether you are doing fixed overheads or material, labour and variable overheads.

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· 21 March at 19:42

Natasha Everard

Write a reply…

Cags Gray

Cags Gray I’m struggling with working out the break even, marginal and marginal % xxx

· Reply · 21 March at 19:33

Teresa Clarke

Teresa Clarke Breakeven is the point at which you make no profit and no loss. To work this out you need your total fixed costs and divide this by your contribution per unit. Now contribution per unit is the selling price of the unit less the variable production costs. This gives you the break even cost in units. To get this into money, just multiply by the selling price per unit.

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· 21 March at 19:35

Teresa Clarke

Teresa Clarke The margin of safety is the unit you budget (or plan) to make, minus the breakeven point.

· Reply · 21 March at 19:35

Cags Gray

Cags Gray How do I calculate the safety margin% xx

· Reply · 21 March at 19:36

Teresa Clarke

Teresa Clarke Ah yes. You are looking at the amount of units for the margin of safety and divide this by the budgeted (planned units).

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· 21 March at 19:36

Cags Gray

Cags Gray Thankyou that makes sense x

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· 21 March at 19:37

Teresa Clarke

Teresa Clarke Just keep practising!

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· 21 March at 19:37

Cags Gray

Cags Gray I will I’ve tried all 4 practise tasks n keep calculating it wrong xx

· Reply · 21 March at 19:38

Teresa Clarke

Teresa Clarke Just do them over and over again – you will get it!

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· 21 March at 19:38

Natasha Everard

Write a reply…

Natasha Everard

Natasha Everard Advice for the Management Accounts in the synoptics at level 3 & 4?

· Reply · 21 March at 19:38

Teresa Clarke

Teresa Clarke I have taught Costing, but not for the synoptic. May have to update you on this at a later date.

· Reply · 21 March at 19:40

Carly Barnes

Carly Barnes Same, I can advise on the written tasks?

· Reply · 21 March at 19:41

Natasha Everard

Natasha Everard Carly Yes please

🙂

· Reply · 21 March at 19:42

Carly Barnes

Carly Barnes I have found you really need to back up your assumptions. So if you have said that labour price variance is adverse because you have spent more then explain why:

· Reply · 21 March at 19:45

Carly Barnes

Carly Barnes Show numbers for it ie what you did pay compared to what you should have paid (standard cost card) and if you apply that to actual hours worked to get the variance.

· Reply · 21 March at 19:47

Carly Barnes

Carly Barnes Tie them all together – once you have explained the price and efficiency/usage then show how the two together make up the total variance.

· Reply · 21 March at 19:48

Natasha Everard

Write a reply…

Teresa Clarke

Teresa Clarke Level 3. Prime cost is all direct costs, marginal cost is all direct and variable production overheads, absorption cost is all direct and all production costs.

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· 21 March at 19:44

Cags Gray

Cags Gray You guys are so helpful. And this session is perfect for me as I’m doin L3 costing assessment on Monday So thankyou xxx

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· 21 March at 19:46

Teresa Clarke

Teresa Clarke Let us know if there is anything else you need guidance on.

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· 21 March at 19:47

Cags Gray

Cags Gray I will do thankyou xx

· Reply · 21 March at 19:47

Natasha Everard

Write a reply…

Teresa Clarke

Teresa Clarke A variable cost varies per unit, so no units made cost nothing. One unit costs £2, two units cost £4 each.

· Reply · 21 March at 19:46

Teresa Clarke

Teresa Clarke A fixed cost is the same in total, so you may need to do the maths to check if the total cost is the same regardless of the units being made.

· Reply · 21 March at 19:46

Viki Smith-McShee

Viki Smith-McShee I heard that the decision & control was put on hold due to idle time. I haven’t seen much on it? I have this exam on 5th April and struggle with fixed variances

😩

· Reply · 21 March at 19:46

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Teresa Clarke

Teresa Clarke Carly Barnes

· Reply · 21 March at 19:49

Carly Barnes

Carly Barnes Idle time will always be an adverse variance (nothing good coming out of your staff not working!)
I use the attached for variances and if you have idle time will just add in an extra line…

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· 21 March at 19:51

Carly Barnes

Carly Barnes The extra bit will come in between AQ – swap AQ for AH (hours) if you dealing with labour.
So you would compare AHp (Actual Hours Paid) to AHw (Actual Hours Worked) x Standard Hourly Rate

· Reply · 21 March at 19:53

Viki Smith-McShee

Viki Smith-McShee It’s the efficiency and capacity for fixed variances that I get stuck with but thank you for the diagram. They all seems to work the same until you get to fixed overheads and then the formulas seem to get confusing.

· Reply · 21 March at 19:54

Carly Barnes

Carly Barnes I’ve popped a bit on the fixed overheads further up that may help

· Reply · 21 March at 19:55

Viki Smith-McShee

Viki Smith-McShee Thank you!

😊

👍

· Reply · 21 March at 19:55

Carly Barnes

Carly Barnes I struggled with fixed overheads for years and I found the only way that helped was writing out the picture further up each time even if I didn’t need them all.

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· 21 March at 19:57

Carly Barnes

Carly Barnes Capacity will literally look at what you budgeted to do and what you managed to produce, this is all about what you managed to absorb into production from the original OAR you calculated.

· Reply · 21 March at 19:58

Carly Barnes

Carly Barnes Efficiency will then see what you should have absorbed for that level of production (the flexing element)

· Reply · 21 March at 19:59

Viki Smith-McShee

Viki Smith-McShee I think I slightly understand abit more. Every time I think I’ve got it I do questions on it and then get in a muddle. I think I just need to try and memorise my flash cards! Thanks for you help

😊

· Reply · 21 March at 20:00

Carly Barnes

Carly Barnes Worse case scenario make sure you get your expenditure down at least

🙂

· Reply · 21 March at 20:02

Carly Barnes

Carly Barnes It does really help to write out the proforma each time and then when it comes to the exam you have it sorted without even worrying about the question!

· Reply · 21 March at 20:02

Natasha Everard

Write a reply…

Natasha Everard

Natasha Everard Does anyone else have any questions?

· Reply · 21 March at 19:54

Teresa Clarke

Teresa Clarke Here to help – please ask, even if you think it is a silly question.

· Reply · 21 March at 19:54

Teresa Clarke

Teresa Clarke What are you struggling to understand in Levels 2, 3 or 4 Costing units?

· Reply · 21 March at 20:00

Toni Louise Thorpe

Toni Louise Thorpe I’m doing Level 3 cost and revenues and struggling to get my head round re-apportionment

😔

· Reply · 21 March at 20:01

Teresa Clarke

Teresa Clarke Hi. When you have apportioned the costs to all the different areas of the business, you then need to re-apportion. This is because the costs need to go from the service departments to the production departments so the costs can be absorbed. In theq…See more

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· 21 March at 20:02

Toni Louise Thorpe

Toni Louise Thorpe Thankyou Teresa

😃

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· 21 March at 20:03

Teresa Clarke

Teresa Clarke Allocate, apportion and re-apportion. Then the all the overheads will be assigned to the production centres so that we can absorb into the cost of making the units.

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· 21 March at 20:04

Carly Barnes

Carly Barnes I also find it helps to get the allocated ones done first as they relate directly to a specific cost centre.

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· 21 March at 20:05

Natasha Everard

Write a reply…

Teresa Clarke

Teresa Clarke Any Level 2 questions?

· Reply · 21 March at 20:04

Natasha Everard

Natasha Everard Does Anyone have any further questions?

· Reply · 21 March at 20:07

Teresa Clarke

Teresa Clarke Or any areas you need tips on?

· Reply · 21 March at 20:07

Natasha Everard

Natasha Everard If no one has any further questions, i would like to say thank you to Carly & Teresa for their time answering your questions tonight. They are more than happy to answer your questions later if you would like to continue to post them. Thank you

🙂

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· 21 March at 20:11

Cheryl Jackson

Cheryl Jackson Level 4 – budgeting…. I’m struggling with season variances/trends. Any tips ?.

· Reply · 21 March at 20:12

Carly Barnes

Carly Barnes The trend always has to increase by the same percentage or amount so if you get the actual, SV and trend and not sure which way round to do it you will know if it’s wrong because you won’t have that figure.

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· 21 March at 20:14

Cheryl Jackson

Cheryl Jackson I can never see what the trend is? Is there a way to know?.

· Reply · 21 March at 20:15

Carly Barnes

Carly Barnes If you take the actual and minus the SV (not forgetting if your SV is a negative you would add this as two minuses equal a positive) you will get the trend. The trend should show a repeating pattern as you do it.

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· 21 March at 20:18

Carly Barnes

Carly Barnes So if you had done the above the wrong way round you wouldn’t have got that repeating pattern.

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· 21 March at 20:18

Cheryl Jackson

Cheryl Jackson Great thank you Carly. I will see if I can find another example to have a go at.

· Reply · 21 March at 20:19

Carly Barnes

Carly Barnes Then what you will probably need to do is forecast using that pattern. So if you know your trend is increasing by £20 each time keep adding that onto the trend figure. If you then add or minus the SV (depending on what it is asking) you will work back to the forecasted figure.

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· 21 March at 20:22

Natasha Everard

Write a reply…

Michelle Campion

Michelle Campion Hi just managed to join in – L2 costing is a module I will be starting soon and I know nothing about it so any tips on what to focus on or how easy/hard it is as am from a non finance background ! Thanks

· Reply · 21 March at 20:13

Teresa Clarke

Teresa Clarke Non-financial background is not important. L2 Costing is very much about numbers and using your calculator.

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· 21 March at 20:14

Teresa Clarke

Teresa Clarke Make sure you fully understand this as well as you can because you will need all this knowledge for Levels 3 and 4 too.

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· 21 March at 20:15

Michelle Campion

Michelle Campion Thanks – good to know

· Reply · 21 March at 20:16

Teresa Clarke

Teresa Clarke You will be fine! Plenty of help and advice within this group too!

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· 21 March at 20:17

Natasha Everard

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Carly Barnes

Carly Barnes Thanks all and if you have any other questions will keep an eye out. Good luck with any exams!

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· 21 March at 20:29

Cheryl Jackson

Cheryl Jackson Thank you Carly

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· 21 March at 20:31

Natasha Everard

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Rose Crockett

Rose Crockett Thank you

😊

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· 21 March at 20:35

Etha Sriani Buzzard

Etha Sriani Buzzard Hi just found time to join in.
Statement says “variance in excess of 5% is significant ”
So if variance is 4.99%, is it “significant ” or “not significant”?

· Reply · 21 March at 20:38

Carly Barnes

Carly Barnes I would say not significant

· Reply · 21 March at 20:41

Etha Sriani Buzzard

Etha Sriani Buzzard Thank you.

· Reply · 21 March at 20:54

Cags Gray

Cags Gray Non xx

· Reply · 21 March at 21:21

Natasha Everard

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Tom Trevail-Perch

Tom Trevail-Perch I have my level 3 management costing exam tomorrow and I know how to work out the EOQ but my calculator doesn’t have the square root button is there a way I can do this without or will it be easier to go out tomorrow morning? Thanks

· Reply · 21 March at 20:47

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Carly Barnes

Carly Barnes To be honest I could never work out how to calculate it without square root button and normally advise my learners to make sure their calculator has one on it!

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· 21 March at 20:58

Jamil Ahmed

Jamil Ahmed Tom Would you do me a favor ?

· Reply · 21 March at 21:27

Jamil Ahmed

Jamil Ahmed I have this exam next week.

· Reply · 21 March at 21:28

Tom Trevail-Perch

Tom Trevail-Perch Yeah?

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· 21 March at 21:36

Jamil Ahmed

Jamil Ahmed Can you let me know if you found any process costing (input.output) questins in the Exam AQ2016 . I was told by tutor dont weast time in this bcz it no gone come in the Exam. So I’m cofused . I dont want to feile my exam.

· Reply · 21 March at 21:45 · Edited

Jamil Ahmed

Jamil Ahmed Please .and goodluck

☺

☺

· Reply · 21 March at 21:46

Tom Trevail-Perch

Tom Trevail-Perch Will do.. thanks mate

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· 21 March at 21:54

Jamil Ahmed

Jamil Ahmed Please Tome just tag here .or in the group I will remainder you 2morrow .

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· 21 March at 21:56

Tom Trevail-Perch

Tom Trevail-Perch Nothing on input and output mate

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· 22 March at 18:11

Jamil Ahmed

Jamil Ahmed Thanks bro .have done AQ2016.?

· Reply · 22 March at 18:36

Tom Trevail-Perch

Tom Trevail-Perch Yeah it was AQ2016

· Reply · 22 March at 18:38

Jamil Ahmed

Jamil Ahmed Thanks lot . And Comgraz ..

☺

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· 22 March at 18:45

Tom Trevail-Perch

Tom Trevail-Perch Thanks

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· 22 March at 18:45

Natasha Everard

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Jamil Ahmed

Jamil Ahmed Hi. I have question. They give me cost of sale £120960. During the year inventory decreased by 550 . but no closing inventory or purchases .how I gone calculate purchases and closing inventory .?

· Reply · 21 March at 21:22 · Edited

Carly Barnes

Carly Barnes Well you know that COS is made up of Opening Stock + Purchases – Closing Stock so should be able to work from that but I’m not sure enough info is there?

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· 21 March at 21:38

Jamil Ahmed

Jamil Ahmed They try to confused you. Thats all questions . Formula it is open inventory +purchases -closing inventory = cost of sale..

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· Reply · 21 March at 21:53

Carly Barnes

Carly Barnes That’s going to need some working out on some paper! I’ll do later…

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· 22 March at 07:12

Jamil Ahmed

Jamil Ahmed Thanks

· Reply · 22 March at 07:53

Jamil Ahmed

Jamil Ahmed Carly Barnes..??

· Reply · 22 March at 19:20

Carly Barnes

Carly Barnes Just been looking at it and trying to work out, just quickly have to get little one to bed then will reply properly…

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· 22 March at 19:32

Jamil Ahmed

· Reply · 22 March at 19:43

Jamil Ahmed

Jamil Ahmed By today please bcz I have this Exam 2morrow

· Reply · 22 March at 19:43

Carly Barnes

Carly Barnes Right was simpler than I thought when looking at it:
Opening Stock and Closing Stock will pretty much cancel each other out if it doesn’t move figure wise as you would just have Opening Stock – Closing Stock if you rearrange it.
That will just leave you with Purchases figure so if Closing Stock decreases by £550 take that off and that will leave you with a figure of £120,410.…See more

· Reply · 22 March at 19:49

Jamil Ahmed

Jamil Ahmed Thanks lot.

😀

· Reply · 22 March at 20:40 · Edited