Accounting question
Discussion
Today was the Intermediate AAT costing paper.
On it was a question that asked "what are relevant and irrelevant costs?"
Now, in no text book I have does it talk about these, and thats the general consensus on the AAT website forum too.
Did anyone else take this exam today (long shot!) or are there any accounts type people who can shed some light on it?
Hopefully they might remove that question now...
On it was a question that asked "what are relevant and irrelevant costs?"
Now, in no text book I have does it talk about these, and thats the general consensus on the AAT website forum too.
Did anyone else take this exam today (long shot!) or are there any accounts type people who can shed some light on it?
Hopefully they might remove that question now...
New one on me, and I've been qualified ACA for nearly 9 years.
Not aware of any 'formal' definition (not outside a rather irrelevant textbook, anyway), but would guess they were looking for some sort of discussion on cost-apportionment to a project. Just a guess though...it's a silly question, as you often get from academics...
Not aware of any 'formal' definition (not outside a rather irrelevant textbook, anyway), but would guess they were looking for some sort of discussion on cost-apportionment to a project. Just a guess though...it's a silly question, as you often get from academics...
I did the very same paper this afternoon. Was terribly written imo, full of ambiguous bits and loads of chopping and changing between units etc.
We were given past papers from as far back as 2003 and in all honesty this was the worst out of the lot, not to mention quite different from all the other ones as well. I was really annoyed that they have decided to use terminology we've never been taught before in the exam.
Anyway rant about the halfbaked exam aside, I said that relevant costs were those which were variable, as they would change as quantity changed. Fixed costs I said were irrelevant as they'd be there regardless of change in quantity. Somebody mentioned that this may be covered in yr2 of ACCA, but don't quote me on that, and I think somebody mentioned seeing a definition a bit like mine in a book somewhere. In any case, they certainly aren't commonly used terms.
There were a lot of traps which people seem to have fallen into, eg. not splitting out the fixed element of the semi-variable cost, or messing up the 10% discount on miles in EXCESS of 5000 etc, thankfully I seem to have avoided most of these pitfalls.
OP are you doing FRA on Wed as well?
We were given past papers from as far back as 2003 and in all honesty this was the worst out of the lot, not to mention quite different from all the other ones as well. I was really annoyed that they have decided to use terminology we've never been taught before in the exam.
Anyway rant about the halfbaked exam aside, I said that relevant costs were those which were variable, as they would change as quantity changed. Fixed costs I said were irrelevant as they'd be there regardless of change in quantity. Somebody mentioned that this may be covered in yr2 of ACCA, but don't quote me on that, and I think somebody mentioned seeing a definition a bit like mine in a book somewhere. In any case, they certainly aren't commonly used terms.
There were a lot of traps which people seem to have fallen into, eg. not splitting out the fixed element of the semi-variable cost, or messing up the 10% discount on miles in EXCESS of 5000 etc, thankfully I seem to have avoided most of these pitfalls.
OP are you doing FRA on Wed as well?
H_Kan said:
I did the very same paper this afternoon. Was terribly written imo, full of ambiguous bits and loads of chopping and changing between units etc.
We were given past papers from as far back as 2003 and in all honesty this was the worst out of the lot, not to mention quite different from all the other ones as well. I was really annoyed that they have decided to use terminology we've never been taught before in the exam.
Anyway rant about the halfbaked exam aside, I said that relevant costs were those which were variable, as they would change as quantity changed. Fixed costs I said were irrelevant as they'd be there regardless of change in quantity. Somebody mentioned that this may be covered in yr2 of ACCA, but don't quote me on that, and I think somebody mentioned seeing a definition a bit like mine in a book somewhere. In any case, they certainly aren't commonly used terms.
There were a lot of traps which people seem to have fallen into, eg. not splitting out the fixed element of the semi-variable cost, or messing up the 10% discount on miles in EXCESS of 5000 etc, thankfully I seem to have avoided most of these pitfalls.
OP are you doing FRA on Wed as well?
Yup We were given past papers from as far back as 2003 and in all honesty this was the worst out of the lot, not to mention quite different from all the other ones as well. I was really annoyed that they have decided to use terminology we've never been taught before in the exam.
Anyway rant about the halfbaked exam aside, I said that relevant costs were those which were variable, as they would change as quantity changed. Fixed costs I said were irrelevant as they'd be there regardless of change in quantity. Somebody mentioned that this may be covered in yr2 of ACCA, but don't quote me on that, and I think somebody mentioned seeing a definition a bit like mine in a book somewhere. In any case, they certainly aren't commonly used terms.
There were a lot of traps which people seem to have fallen into, eg. not splitting out the fixed element of the semi-variable cost, or messing up the 10% discount on miles in EXCESS of 5000 etc, thankfully I seem to have avoided most of these pitfalls.
OP are you doing FRA on Wed as well?
Are you doing it too?I think I might have scrapped a pass on ECR - I also put that the fixed costs were irrelevant as they were there no matter what decision was made (if that made sense). However my appraisal of the scheme at the end was rather short as I'd just had enough.
I'm sitting Wednesday's all on my lonesome-doesn't seem so popular here!
Looking at Jeff's post, we do seem to have answered in the right direction.
As for the last question, I wouldn't worry, it was rather short. In a nutshell, plane A as it has higher NPV, capital projects are less viable if cost of capital increased and payback period is another technique,
Btw, yeah I'm also doing FRA tomorrow. Although we are the complete opposite and have about 25 odd in our class doing it.
In any case, good luck for tomorrow. Also thanks to other contributors for their helpful posts.
As for the last question, I wouldn't worry, it was rather short. In a nutshell, plane A as it has higher NPV, capital projects are less viable if cost of capital increased and payback period is another technique,
Btw, yeah I'm also doing FRA tomorrow. Although we are the complete opposite and have about 25 odd in our class doing it.
In any case, good luck for tomorrow. Also thanks to other contributors for their helpful posts.
I did the paper yesterday and i have never heard relevant or irrelevant costs.
I had a guess that the relevant costs were the variables and irrelevant were the fixed.
Overall I thought the paper was horrendous. It was nothing like the practice papers we got from previous exams. The skills test we had for costing was equally as bad.
I'm not very confident that i did that well.
I had a guess that the relevant costs were the variables and irrelevant were the fixed.
Overall I thought the paper was horrendous. It was nothing like the practice papers we got from previous exams. The skills test we had for costing was equally as bad.
I'm not very confident that i did that well.
Legend83 said:
Irrelevant/fixed/sunk - all sounds reasonable.
(ACA - 1 year)
Accountants dick-waving contest
In reality it is not complicated, however if you have NEVER heard of the term before then you cannot possibly know what is being asked of you.(ACA - 1 year)
Accountants dick-waving contest
Having checked, those terms haven't been checked in class, have not appeared in any past papers, are not in our textbooks and aren't in the revision guides.
I think the annoyance is justified given that many people who have been qualified for many years haven't heard of the terminology before.
My answer to it was based purely on an educated guess given the context of the question, thankfully it appears my logic was correct.
having to think back a bit but relevant costs come up quite often in the CIMA syllabus. they are those costs(future, cash etc) fixed and variable that are pertinent to a decision. basically avoidable costs if the decision is not undertaken. Irrelevant would be sunk, non-cash etc costs.
H_Kan said:
Legend83 said:
Irrelevant/fixed/sunk - all sounds reasonable.
(ACA - 1 year)
Accountants dick-waving contest
Having checked, those terms haven't been checked in class, have not appeared in any past papers, are not in our textbooks and aren't in the revision guides.(ACA - 1 year)
Accountants dick-waving contest
Fine, you should have an awareness of business terms, recent stories/developments etc. that would not be taught in class, but something technical like that you would expect some sort of reference.
Best of luck anyway!
Legend83 said:
Dirty Boy said:
Clint (Texas Instrument's chief button depressor for 10 years)
Off topic.DB - Texas Instruments is a client of ours so I will watch what I post from now on!
Nice motor by the way.
(same one since I started incidentally)Cheers
DB.
Dirty Boy said:
Legend83 said:
Dirty Boy said:
Clint (Texas Instrument's chief button depressor for 10 years)
Off topic.DB - Texas Instruments is a client of ours so I will watch what I post from now on!
Nice motor by the way.
(same one since I started incidentally)Cheers
DB.
Thank christ for that!!
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