Cost & Revenues with Jeff Grimston

Natasha Everard Lara Richards do you have any questions?

Natasha Everard Kamara Abdul K Hi do you have any questions?

Kamara Abdul K Not yet

Natasha Everard Jeff Grimston What are the common pitfalls found when studying this unit?

Tina Hanlon I haven’t started this section yet but would be grateful for any tips on remembering the data.

Kamara Abdul K Honestly, I have some areas but I had no time to prepare so I will just be watching

Paula Rutter I’m getting confused on labour rates when to include the premium rate and when to show it separately. the way the question is worded. I’ve been told this is a common mistake people make

Tina Hanlon Please could you give us an example

Jeff Grimston A business has lots of costs and somehow they all have to taken into account as part of the cost of supplying a product or a service – even the rent of the building for example

Jeff Grimston Paula – in an exam you will be told. If not the basic part of each hour is direct and any extra (eg plus half) is an overhead

Kamara Abdul K What is the key to understanding good will?

Jeff Grimston If you work 8 hours ‘normal time’ @ 10.00 and 2 hours @ time plus half we would say (8+2) x 10.00 = direct labour and (2 x 0.5) x 10.00 = overhead

Jeff Grimston At the start of the period we estimate our overhead spend and we share this across the number of products we expect to make and sell

Paula Rutter oh ok so think of it as an overhead

Jeff Grimston If we make and sell more than expected we over absorb – the products are cheaper than expected if we make less then we under-absorb

Jeff Grimston However if we make the same but spend more then we also under-absorb or if we spend less, for the same output we over absorb

Sam Cole Hi, I have done first few chapters and seem to have some of it, but results weren’t as good as I hoped. Some tips on remembering formulas would be good.😊

Jeff Grimston Abdul – goodwill is not a costs and revenues topic!!!

Tina Hanlon If I understand that correctly? If we normally make 10 but make 12 then we over absorbe the cost because it would be split by 12 instead of 10? Am I getting confused?

Jeff Grimston Sam – as earlier, the key is to understand the ‘why’ first and the ‘how’ will follow naturally

Jeff Grimston Tina – yes it’s as simple as that as long as we spend the expected amount

Sam Cole Tina, I like that way of putting it😊

Jeff Grimston absorption = overheads are absorbed into product

Jeff Grimston more products = less per product = cheaper

Kamara Abdul K Oh yes, sorry Jeff

Jeff Grimston more spend = more per product = dearer

Jeff Grimston and vice versa

Tina Hanlon Thank you I understand that now.

Jeff Grimston Good 🙂

Sam Cole That has helped me😊

Paula Rutter is there any videos or extra material we should be covering to be prepared?

Jeff Grimston I believe there are videos in MyPTA myself, I’m a fan of past papers in the run up to exams and we have several years worth of paper ones

Tina Hanlon How would you deal with returns, assuming you would have calculated the costs on the products bought?

Paula Rutter are they only for PT students though

Jo Ingram Hi Jeff is there ever a time in budgeting when your fixed costs stay fixed, I understand that they flex in the flexed bugeted costs but have a nagging feeling they stay fixed in other cases?

Sam Cole How can we access those? Also, I am struggling with the high/low method and working out the fixed and variable costs?

Jeff Grimston You would use the net figure after deduction of returns

Jeff Grimston Sam – i can email you some.also we have a method helpsheet for Hi Lo

Sam Cole That would be great, thank you:)

Sam Cole Wow, that was quick, thank you:)

Jeff Grimston You’re welcome 🙂

Jeff Grimston Everybody – when tackling questions in this unit you need to visualise the boxes on the assembly line, or the buses in the depot

Jeff Grimston The more realistic it ‘feels’ the easier it becomes

Jeff Grimston The other maxim is that reading the questions is the hard part

Jeff Grimston Answering is the easy part once you fully grasp what they want you to do

Jeff Grimston Again – if you focus on the objective your common sense will help you out

Jeff Grimston Always subject the numbers you come up with to a ‘reasonableness’ test

Jeff Grimston The standard cost of one bar of soap is less the £327.15 for example

Jeff Grimston Yes – someone did 🙁

Tina Hanlon Are the videos easily accessed because I am not on this unit yet and don’t want to overload but would like to know where to get them at the appropriate time.

Sam Cole I have done first assignment than ground to a halt😒 finding that I need to go back over everything before I’m ready to move on as it’s taking time to sink in.

Jeff Grimston Paula – there isn’t a road in town that isn’t dug up here!!! These just mean the journey takes a bit longer sometimes but you still get there

Jeff Grimston Don’t be put off when you hit a tricky bit. It just means it’s a tricky bit and not that there’s anything wrong with you

Jeff Grimston Tina – we’ll email you some links

Tina Hanlon Thank you

Sam Cole Can you email me those links also please?

Jeff Grimston We’re developing a slick new interface but these will do for now

Jeff Grimston Paula – the split is about 85/15 between ‘don’t like’ and ‘this is OK’ so you’re probably one of the 15% who take to this area naturally

Jeff Grimston If you’ve had experience of solving logic problems (especially business ones) it definitely helps

Sam Cole Thank you for the links and tips this has been helpful. Also good to watch and read others comments as it jogs memory:) I have to go now but thank you everyone😊

Jeff Grimston Bye Sam!

Natasha Everard Does anyone have any further questions?

Tina Hanlon I don’t have any more questions but will there be further question times on this subject, perhaps in a few months time. I’m actually still on Accounts Prep.

Jo Ingram I haven’t got to the stage of looking at past papers yet but are all the formula needed?

Jeff Grimston Hi Jo Personally I focus on the meaning behind the formulae as I found it easier to work them out rather then learning them!!! We’re back to the ‘why’ again – understand ‘why’ and ‘how’ falls naturally into place

Selina Hatice Hi Jeff , I did cost & revenue with you but on L4 now finding the information as a reminder for financial performance for hiLo and observations. Thanks

Jeff Grimston You need to know what marginal cost for example but that doesn’t mean learning a list of all the things that might be included

Jo Ingram Ok thanks think I need a couple poor study sessions for it to truly sink in!

Jeff Grimston Both Budgeting and Financial Performance are built on what we learn at level 3

Susan Challis This is my first experience of a Q&A even though im not yet studying this subject it has been good to see how this works and learn a bit about costs and revenues before I get there.

Jo Ingram More not poor!!

Susan Challis Thank you

Tina Hanlon This is the first Q&A Session, it has been really helpful, reading other students questions has also helped, thank you for your time. I have to go now but appreciate having been invited to the session!

Natasha Everard Okay if no one has anyone has any further questions, i would like to thank Jeff Grimston for being our Host this evening. Thank you!

Lidiia Gould Thank you

Jo Ingram Thank you

Kamara Abdul K Thank you

Jeff Grimston My pleasure 🙂