 Hello, and welcome to the session. This is Professor Farhad, and the session would look at additional CPA questions that are covered also in a managerial accounting or cost accounting course. So let's go ahead and look at those questions. The first question reads, what is the estimated total variable cost per unit? Once again, once you have a lot of data and a question, focus on the question first. So I'm looking for variable cost. Well, the estimated cost for call using absorption for costing is to produce and sell it at a level of 12,000 unit per month. So basically they're asking us for the total variable cost. So what's the variable cost? Well, let's look at direct material. Is direct material variable cost? Sure it is, it's a variable cost. Directly, we're sure. Variable cost means we incur that cost as long as we are producing. Sure we do. Variable manufacturing, well, it says variable, yes. Fixed manufacturing, no. Variable selling, it's variable, yes. Fixed selling, no. So if we take 32 plus 20 plus 15, you just fix this, 32 plus 20 plus 15 plus three, that's 52, 62, 60, and that's gonna be 70. Therefore my variable cost is $70. Okay, let's take a look at this question. Estimate the total cost that call would incur during a month with a production level of 12,000 and a sales level of 8,000 unit. So it's basically the same data that we have. So basically, if we produce 12,000 unit, do we incur $32? Sure we do. If we produce the 12,000 unit, do we include the direct labor? Of course we do. Do we incur the variable overhead? Sure. What about fixed manufacturing overhead? Yes. What about variable selling? Well, variable selling, yes, but remember we are only selling 8,000 units. So I'm gonna keep the $3 on the side here. And fixed selling, $4. Yes, sure the fixed selling will be included here. So let's add up. So this is keep the variable selling separately and I'll tell you why in a moment. So let's add this up. That's 52. That's 52, 62, 67, 73. So $77. So let's take $77 multiplied by 12. Take $77 multiplied by 12,000. That's 924,000. Then we have a variable selling price of $3. And remember we only sold 8,000 unit. So that's gonna be an additional $24,000. We're gonna add $24,000. That's gonna be $948,000 as the total cost. So the trick here to be careful that we did not, we produced 8,000 unit and all of those, so let me highlight the production cost for you. All of those were in the production cost except the variable selling. You have to multiply the variable selling by eight because you only incurred $8. You only sold 8,000 unit. Therefore, the variable selling time is straight. What is the total variable cost at 100,000 copies? What are we given here? We are giving January and February data. So data from the duplicating department of a company for the last two months. So on January 100,000, February 150,000 copies, the total cost is 8,500 and 9,500. So now they want the variable cost. Well, you need to know the high-low method. What's the high-low method? If you have a bunch of data, you might have the whole 12 months. You select the highest and the lowest month. And here we are giving the highest and the lowest month because we're given only two months. So you take the difference in the dollar amount between the highest and the lowest and here the difference is 1,000. This is called the high-low method. Divide them by the activity, the difference in activity. The difference in activity is 50,000 unit. So 1,000 divided by 50,000 unit, I believe that's 1.2, 50,000 copies. That's 0.02, 0.02. That's your variable cost per unit, times 110,000 copies, times 100 and 10,000 copies. And that's gonna give you a variable cost of 2,200, which is 2,200. This is the high-low method. Once again, you select the highest and the lowest month and you take the dollar amount, divide them by the difference in the unit. For those two months to find, this is your variable cost per unit. And this is an estimated number. This is, you can use linear, you can estimate there are other factors, but this is using two points, two points to figure out your variable cost. In manufacturing, its product for the month just ended. Elk incurred normal spoilage of 10,000 and abnormal spoilage of 12. How much spoilage cost should Elk charge as a period cost? Well, here what they're asking you is, do you know the difference? How do we treat normal spoilage versus abnormal spoilage? Here we go. Normal spoilage is part of the product, part of product. So we assume we're gonna have some spoilage, which is we add to the product. Anything that's considered abnormal, abnormal means more than we expected, more than normal, what do we do with that? We expense it. Therefore, expense in it means what? Expense in it means it's a period cost. Expense mean period cost. Therefore, the 12,000 is considered a period cost because we would incur normal spoilage even under efficient operation. We account for that, but for abnormal, we don't. Dale company uses a standard costing system in connection with manufacture of a one-size-fits-all article of clothing. Each unit of finished product contained two yards of direct material. However, a 20% direct material spoilage calculated on input quantities occur during the manufacturing process. Well, what does that mean? It means they use two yards, but they don't start with two yards. They start with more than two yards and 20% is lost during the process and we are left with two yards. The cost of direct material per yard, so the cost per yard equal to $3. That's the cost per yard. So what's the standard direct material cost per unit? Well, you might be saying, well, we're using two yards times $3. That's equal to six. But remember, we are ending up using two yards, okay? Each unit of finished product contained two yards of direct material, but before we end up with that two yard, we're using more. So we don't know what we're starting with. We're starting with X and from X, whatever we are starting with, we are only keeping 80%, okay? And that's gonna, they're giving us two yards. So basically, how much are we starting with? That's X. Well, if we wanna find out X, X equal two divided by 0.8. Two divided by 0.8. So we are starting with, we are starting with 2.5 yards, okay? We are simply put, we're starting with 2.5 and we're keeping 80% of it. Simply put, 2.5 times 0.8, we are ending up with two yards, but we're really using 2.5. Therefore, we need 2.5 yards times $3 and I believe that's 750, okay? And that's 750, okay? Worst case situation, if you get to this question, it cannot be A and you know you're using more than two, it cannot be B. So you're between C and D. If you have to guess, you're between C and D, but it's, you know, quick math and you should be able to do so, okay? Basically, those are a series of questions and in the next session, I might look at the questions that deal with special order. If you have any questions, email me about these questions. If you're studying for your CPA or your CMA exam, make sure to study hard. It's worth it.