ACCA F2 Revision Notes

8/9/2019 ACCA F2 Revision Notes

1/25

Formulae Sheet

Regression analysis

y = a + bx

Economic order quantity

Economic batch quantity

=

2C D

C0

h

=

2

1

C D

C DR

0

h ( – )

PAPER F2 REVISION NOTES


2/25

Present Value Table

Present value of 1 i.e. (1 + r )–n

Where 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 0·990 0·980 0·971 0·962 0·952 0·943 0·935 0·926 0·917 0·909 1 2 0·980 0·961 0·943 0·925 0·907 0·890 0·873 0·857 0·842 0·826 2 3 0·971 0·942 0·915 0·889 0·864 0·840 0·816 0·794 0·772 0·751 3 4 0·961 0·924 0·888 0·855 0·823 0·792 0·763 0·735 0·708 0·683 4 5 0·951 0·906 0·863 0·822 0·784 0·747 0·713 0·681 0·650 0·621 5

6 0·942 0·888 0·837 0·790 0·746 0·705 0·666 0·630 0·596 0·564 6 7 0·933 0·871 0·813 0·760 0·711 0·665 0·623 0·583 0·547 0·513 7 8 0·923 0·853 0·789 0·731 0·677 0·627 0·582 0·540 0·502 0·467 8 9 0·941 0·837 0·766 0·703 0·645 0·592 0·544 0·500 0·460 0·424 9 10 0·905 0·820 0·744 0·676 0·614 0·558 0·508 0·463 0·422 0·386 10

11 0·896 0·804 0·722 0·650 0·585 0·527 0·475 0·429 0·388 0·305 11 12 0·887 0·788 0·701 0·625 0·557 0·497 0·444 0·397 0·356 0·319 12 13 0·879 0·773 0·681 0·601 0·530 0·469 0·415 0·368 0·326 0·290 13 14 0·870 0·758 0·661 0·577 0·505 0·442 0·388 0·340 0·299 0·263 14 15 0·861 0·743 0·642 0·555 0·481 0·417 0·362 0·315 0·275 0·239 15

(n) 11% 12% 13% 14% 15% 16% 17% 18% 19% 20%

1 0·901 0·893 0·885 0·877 0·870 0·862 0·855 0·847 0·840 0·833 1 2 0·812 0·797 0·783 0·769 0·756 0·743 0·731 0·718 0·706 0·694 2 3 0·731 0·712 0·693 0·675 0·658 0·641 0·624 0·609 0·593 0·579 3 4 0·659 0·636 0·613 0·592 0·572 0·552 0·534 0·516 0·499 0·482 4 5 0·593 0·567 0·543 0·519 0·497 0·476 0·456 0·437 0·419 0·402 5

6 0·535 0·507 0·480 0·456 0·432 0·410 0·390 0·370 0·352 0·335 6 7 0·482 0·452 0·425 0·400 0·376 0·354 0·333 0·314 0·296 0·279 7 8 0·434 0·404 0·376 0·351 0·327 0·305 0·285 0·266 0·249 0·233 8

9 0·391 0·361 0·333 0·308 0·284 0·263 0·243 0·225 0·209 0·194 9 10 0·352 0·322 0·295 0·270 0·247 0·227 0·208 0·191 0·176 0·162 10

11 0·317 0·287 0·261 0·237 0·215 0·195 0·178 0·162 0·148 0·135 11 12 0·286 0·257 0·231 0·208 0·187 0·168 0·152 0·137 0·124 0·112 12 13 0·258 0·229 0·204 0·182 0·163 0·145 0·130 0·116 0·104 0·093 13 14 0·232 0·205 0·181 0·160 0·141 0·125 0·111 0·099 0·088 0·078 14 15 0·209 0·183 0·160 0·140 0·123 0·108 0·095 0·084 0·074 0·065 15



3/25

Annuity Table

Present value of an annuity of 1 i.e.

Where r = discount rate n = number of periods

Discount rate (r)

Periods(n) 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%

1 0·990 0·980 0·971 0·962 0·952 0·943 0·935 0·926 0·917 0·909 1 2 1·970 1·942 1·913 1·886 1·859 1·833 1·808 1·783 1·759 1·736 2 3 2·941 2·884 2·829 2·775 2·723 2·673 2·624 2·577 2·531 2·487 3 4 3·902 3·808 3·717 3·630 3·546 3·465 3·387 3·312 3·240 3·170 4 5 4·853 4·713 4·580 4·452 4·329 4·212 4·100 3·993 3·890 3·791 5

6 5·795 5·601 5·417 5·242 5·076 4·917 4·767 4·623 4·486 4·355 6 7 6·728 6·472 6·230 6·002 5·786 5·582 5·389 5·206 5·033 4·868 7 8 7·652 7·325 7·020 6·733 6·463 6·210 5·971 5·747 5·535 5·335 8 9 8·566 8·162 7·786 7·435 7·108 6·802 6·515 6·247 5·995 5·759 9 10 9·471 8·983 8·530 8·111 7·722 7·360 7·024 6·710 6·418 6·145 10

11 10·37 9·787 9·253 8·760 8·306 7·887 7·499 7·139 6·805 6·495 11 12 11·26 10·58 9·954 9·385 8·863 8·384 7·943 7·536 7·161 6·814 12 13 12·13 11·35 10·63 9·986 9·394 8·853 8·358 7·904 7·487 7·103 13 14 13·00 12·11 11·30 10·56 9·899 9·295 8·745 8·244 7·786 7·367 14 15 13·87 12·85 11·94 11·12 10·38 9·712 9·108 8·559 8·061 7·606 15

(n) 11% 12% 13% 14% 15% 16% 17% 18% 19% 20%

1 0·901 0·893 0·885 0·877 0·870 0·862 0·855 0·847 0·840 0·833 1 2 1·713 1·690 1·668 1·647 1·626 1·605 1·585 1·566 1·547 1·528 2 3 2·444 2·402 2·361 2·322 2·283 2·246 2·210 2·174 2·140 2·106 3 4 3·102 3·037 2·974 2·914 2·855 2·798 2·743 2·690 2·639 2·589 4 5 3·696 3·605 3·517 3·433 3·352 3·274 3·199 3·127 3·058 2·991 5

6 4·231 4·111 3·998 3·889 3·784 3·685 3·589 3·498 3·410 3·326 6 7 4·712 4·564 4·423 4·288 4·160 4·039 3·922 3·812 3·706 3·605 7

8 5·146 4·968 4·799 4·639 4·487 4·344 4·207 4·078 3·954 3·837 8 9 5·537 5·328 5·132 4·946 4·772 4·607 4·451 4·303 4·163 4·031 9 10 5·889 5·650 5·426 5·216 5·019 4·833 4·659 4·494 4·339 4·192 10

11 6·207 5·938 5·687 5·453 5·234 5·029 4·836 4·656 4·486 4·327 11 12 6·492 6·194 5·918 5·660 5·421 5·197 4·988 4·793 4·611 4·439 12 13 6·750 6·424 6·122 5·842 5·583 5·342 5·118 4·910 4·715 4·533 13 14 6·982 6·628 6·302 6·002 5·724 5·468 5·229 5·008 4·802 4·611 14 15 7·191 6·811 6·462 6·142 5·847 5·575 5·324 5·092 4·876 4·675 15

1 – (1 + r )–n————––r



4/25

OVERHEAD ALLOCATION AND ABSORPTION

Jones Ltd has allocated overheads between departments as follows:Dept $A 336,000B 210,000Repairs 42,000

Maintenance 28,000

In addition there are general overheads of $308,000 which should be apportioned:

A: 40%; B: 30%; Repairs: 20%; Maintenance: 10%.

A & B are production departments. The repairs and maintenance service production department as follows:

A B Repairs MaintenanceRepairs 60% 40% – –Maintenance 40% 40% 20% –

Budgeted labour hours:A: 40,000 hrs; B: 8,000 hrs

Budgeted machine hours:A: 5,000hrs; B: 60,000 hrs

(a) Calculate an overhead absorption rate for each production dept.

(b) Smith Ltd has budgeted overheads of $200,000 and budgeted labour hours of 50,000. Actual hours workedwere 48,000 and actual overheads were $205,000.

Calculate the amount of over or under absorption of overheads

Answer

(a) A B Repairs MaintenanceAlready allocated 336,000 210,000 42,000 28,000General Overheads 123,200 92,400 61,600 30,800

Reallocate maintenance 23,520 23,520 11,760 (58,800)

115,360Reallocate repairs 69,216 46,144 115,360

551,936 372,064

Absorb A on labour hours:551,936

= $13.80 per labour hour40,000

Absorb B on machine hours:372,064

= $6.20 per labour hour60,000

(b) Absorb B on machine hours:200,000

= $4 per labour hour50,000

Actual total overheads 205,000Amount absorbed (48,000 x $4) 192,000Under Absorption $13,000



5/25

OVERHEAD ABSORPTION SERVICE DEPARTMENTS

After allocating and apportioning overheads, the total overheads for each department are: X Y Stores Canteen

280,000 196,000 84,000 56,000

Stores and Canteen are service departments, and are used by other departments as follows:

X Y Stores CanteenStores 80% 10% – 10%Canteen 60% 36% 4% –

Reallocate the service department costs

AnswerIf S is stores and C is canteen, then:S = 84,000 + 0.04 C (1)C = 56,000 + 0.10S (2)

Substituting for C in (1): S = 84,000 + 2,240 + 0.004 S 0.996 S = 86,240 S = 86,586

Substituting for S in (2): C = 56,000 + 8658.6 C = 64,659

Department X = 280,000 + (0.8 x 86,586) + (0.6 x 64,659) = $388,064

Department Y = 196,000 + (0.1 x 86,586) + (0.36 x 64,659( = $227,936



6/25

PROCESS COSTING EXAMPLE 1

In process X, 8,000 units were started during the month. There is a normal loss of 10% of input. All losses are soldfor $1 p.u. Actual units completed during the month were 7300u.

Costs incurred during the month: Materials: $20,000

Labour and overheads: $3,840(There was no W.I.P at start or end of month)

Write up the Process account and Loss account for the month

Answerunits $

Materials 8,000 20,000Labour o/h 3,840Overheads 8,000 8,000Normal loss (10%) (800) (800)

7,200 $23,040

Cost per unit$23,040

= $3.207,200 kg

Process Account

units $ units $Materials 800 20,000 Normal loss 800 800Labour & overheads 3,840 Finished 7,300 23,360Abnormal gain 100 320

8,100 24,160 8,100 24,160

Loss Accountunits $ units $

Normal loss 800 800 Normal loss 100 320Cost 700 700

Profit 220

800 1,020 800 1,020



7/25

PROCESS COSTING EXAMPLE 2

In process Y, 6,000u were started during the month.W.I.P. at the start of month: 400u [Materials 100% complete: $1,600 Labour 30% complete: $240]

W.I.P. at the end of month:600u [ Materials 100% completeLabour 60% complete]

Expenditure during the month:Materials: $30,000Labour: $18,120

(There were no losses during the month)

Write up the process account, using FIFO

AnswerMaterials Labour

Finish W.I.P b/f (400 units) 280Start to finish (6,000 – 600 = 5,400u) 5,400 5,400Start WIP c/f (600u) 600 360

6,000 6,040Spent this month $30,000 $18,120Cost per unit $5 $3

Total cost $8 p.u.

Valuation of finished units:WIP b/f (400u) 1,840 To finish labour 400 x 70% x$3 840Completed this month: 5,400 x $8 = 43,200

$45,880

Valuation of Closing WIPMaterials 600 x $5 3,000Labour & overheads 600 x 60% x $3 1,080

$4,080

Process Accountunits $ units $

WIP b/f 400 1,840 Finished 5,800 45,880Materials 6,000 30,000 WIP c/f 600 4,080Labour & overheads 18,120

6,400 49,960 6,400 49,960



8/25

JOINT COSTS AND BY PRODUCTS

Jackson Ltd produces 2 products (& a by-product) in a joint process.During 2010, production was as follows:

S.P. (per kg)A 10,000 kg $10B 40,000 kg $14

By-product 10,000 kg $1.40

The costs incurred in the process are $460,000Product A needs a further $3 per kg to be spent before it is ready for sale.

For products A & B, calculate the stock value per kg splitting the joint costs

(i) on the basis of weight

(ii) on the basis of sales value

Answer

Joint costs 460,000Less: proceeds of by-product (10,000 × $1.40) (14,000)

$446,000

(i) on basis of weight:

Cost per kg446,000

$8.92 (for A and B)10,000 + 40,000

(ii) on basis of sales value:

A: 10,000 x ($10 – $3) 70,000B: 40,000 x $14 560,000

Total sales value: $630,000

Total cost applied to A =70,000

x 446,000 = = $49,556630,000

Cost per kg for A49,556

= $4.9610,000

Total cost applied to B =560,000

x 446,000 = = $396,444630,000

Cost per kg for B396,444

= $9.9140,000

Note: In both cases, these are the values when A & B leave the joint process. The nal stock value of A will be $3 higherin both cases due to the further processing



9/25

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: $32Stock holding costs p.a.(as %age of purchase cost): 18 % p.a.

Calculate the optimum order quantity, and the total costs p.a. at that order quantity.

Answer

=

−

=× ×

×=EBQ

2C D

C (1DR

)

2 1,800 32

0.18 25160unitso

H

$Order costs: = 1,800/160 = 11.25 orders x $32 = 360Holding cost = 160/2 = 80 units x (18% x $25) = 360

Total inventory costs $720

(b) Y Plc has minimum dexmand of 20 units per day, average demand of 30 units per day, and maximum demandof 40 units per day. The lead time varies between 10 and 15 days.

(i) What should the reorder level be?

(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) A company has physical inventory of 20,000 units.An order has been placed with suppliers for another 10,000 units, and orders from customers for 14,000 unitsare outstanding.What is the free inventory?

AnswerPhysical 20,000Add: outstanding order from suppliers 10,000

Less: outstanding orders by customers (14,000)Free inventory 16,000 units

(d) buffer (or safety) stock Buffer stock is extra stock held throughout the year in case of unexpected level of demand



10/25

REGRESSION

Units Costs($’000’s)

x y xy x2 y2

100 40200 45300 50400 65500 70600 70700 80

(a) Calculate the regression line

(b) Calculate the coefficient of correlation

(c) Calculate the coefficient of determination

AnswerUnits Costs

($’000’s)x y xy x2 y2

100 40 4,000 10,000 1,600200 45 9,000 40,000 2,025300 50 15,000 90,000 2,500400 65 26,000 160,000 4,225500 70 35,000 250,000 4,900600 70 42,000 360,000 4,900700 80 56,000 490,000 6,400

2,800 420 187,000 1,400,000 26,550

(a) b =(7 x 187,000) – (2,800 x 420)

=133,000

= 0.0679(7 x 1,400,000) – (2,800)2 1,960,000

a =420

–0.0679 x 2,800

= 60 – 27.16 = 32.847 7

y = 32.84 – 0.0679x

(b) r = ×× − × −

= + × = +(7 x 187,000) – (2,800 420)

(7 1,400,000) – (2,800) (7 26,550) (420)133,000

196,000 9,450133,000

136,0962 2

= 0.977

(c) r2 = (0.977)2 = 0.95 (or 95%)



11/25

LABOUR COSTS

Ratios:

Production Volume Ratio =Expected hours to make output

Hours budgeted

Capacity Ratio =Actual hours worked

Hours budgeted

Efficiency Ratio =Expected hours to make output

Actual hours worked

Piecework: Pay workers per unit produced

Labour Turnover Rate =Employees Replaced

Average Number of Employees

ExampleFirm 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

Average number of employees =200 +160

= 1802

Labour turnover rate =10

× 100% = 5.56%180



12/25

MARGINAL AND ABSORPTION COSTING

Z Ltd produces desks for which the standard cost card is as follows:$ pu

Materials 10Labour 6Variable overheads 4

Fixed overheads 3$23

During January, Z Ltd produced 50,000 desks and sold 45,000. The profit was calculated at $220,000, using absorption costing

What would the profit be using marginal costing?

Answer

$Absorption profit 220,000Fixed overheads increase in inventory (5,000 units x $3 per unit) (15,000)Marginal profit $205,000

(Inventory increases and so absorption profit is higher than marginal profit)



13/25

VARIANCES MATERIALS

Standard cost of materials:

20 kg at $4 per kg = $80 per unit

During the month we produced 5000 units.

We purchased 120,000 kg of material and paid $500,000We used 105,000 kg in production (the other 15,000 kg are in inventory)

What are the materials variances?

Answer

Materials expenditure (price) variance:

$Actual purchases at actual cost

120,000kg 500,000

Actual purchases at standard cost120,000kg x $4 480,000

$20,000 (A)

Materials usage variance:

kgActual usage 105,000Standard usage for actual production(5,000 u × 20kg) 100,000

5,000kg x $4 = $20,000 (A)



14/25

VARIANCES LABOUR

Standard cost of labour:

8 hours at $3 per hr = $24 per unit

During the month we produced 6000 units.

We paid for 52,000 hours of labour at the rate of $3.20 per hour.We worked 49,500 hours.

What are the Labour variances?

AnswerLabour rate of pay variance:

$Actual hours paid at actual cost

52,000 hours x $3.20 166,400Actual hours paid at standard cost

52,000 hours x $3 156,000$10,400 (A)

Labour idle time variance:

Actual hours paid 52,000Actual hours worked 49,500

2,500hours x $3 $7,500 (A)

Labour efficiency variance:

Actual hours worked 49,500

Standard hours worked for actual production6,000 x 8 hours = 48,0001,500hours x $3 $4,500 (A)



15/25

VARIANCES VARIABLE OVERHEADS

Standard cost of variable overheads:

6 hours at $2 per hr = $12 per unit

During the month we produced 1,200 units.

We worked for 7100 hours, and paid $13,900 for variable overheads.

What are the variable overhead variances?

Answer

Variable overhead expenditure variance:

$Actual hours at actual cost

7,100 hours 13,900Actual hours at standard cost

7,100 hours x $2 14,200$300 (F)

Variable overhead efficiency variance:

Actual hours 7,100Standard hours for actual production

1,200 units x $6 7,200100hours x $2 $200 (F)



16/25

VARIANCES FIXED OVERHEADS

Our company uses absorption costing, and budgeted to produce and sell 8,000 units.Standard cost of fixed overheads:

4 hours at $3 per hr = $12 per unitDuring the month we produced 9,000 units.

We worked for 35,000 hours, and paid $100,000 for fixed overheads.

What are the fixed overhead variances?

AnswerTotal fixed overhead variance:

Actual total cost 100,000Standard cost for actual production 9,000 units x $12 108,000

$8,000 (F)

Fixed overhead expenditure variance:

Actual total cost 100,000Budget total cost 8,000 units x $12 96,000

$4,000 (A)

Fixed overhead volume variance:

Actual production 9,000Budget production 8,000

1,000units x $12 $12,000 (F)

Fixed overhead capacity variance:

Actual hours 35,000Budget hours 8,000 x 4 32,000

3,000 hours x $3 $9,000 (F)

Fixed overhead efficiency variance:

Actual hours 35,000Standard hours for actual production 9,000 x 4 hours 36,000

1,000 x $3 $3,000 (F)



17/25

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 unitWhat are the sales variances?

Answer

Absorption costing:

Sales price variance:

Actual sales at actual selling price 12,000 x $19 228,000Actual sales at standard selling price 12,000 units x $20 240,000

$12,000 (A)

Sales volume variance:

Actual sales 12,000Budget sales 10,000

2,000units x standard profit x $3p.u. $6,000 (F)

Marginal costing:

Sales price variance:

As absorption costing $12,000 (A)

Sales volume variance:Actual sales 12,000Budget sales 10,000

2,000units x standard contribution $8p.u. $16,000 (F)



18/25

COST CLASSIFICATION AND BEHAVIOUR

Direct costs

Indirect costs

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?

Answerunits $

High 18,000 100,000Low 10,000 60,000

8,000 40,000

Variable cost =40,000

= $5 per unit8,000

High: Total cost 100,000 Total variable cost 18,000 x $5 (90,000)Fixed cost $10,000 per month



19/25

INDEX NUMBERS

1 Price index numbers for a particular product are as follows:2001 1002002 1052003 1082004 115

2005 109

If the product cost $25 in 2002, what will it cost in 2005 (to the nearest cent)?

Answer109

x $25 = $25.95105

2 The following data relates to a typical shopping basket in each of 2010 and 2011: 2010 2011

Product Units Cost per unit Units Cost per unit

A 100 $5 150 $8B 200 $12 180 $13

With 2010 as base year, calculate:(a) the Laspeyre price index(b) the Paasche price index

What are the Labour variances?

AnswerLaspeyre (Use base year quantities)

2010 2011A 100 x $5 = 500 100 x 8 = 800B 200 x $12 = 2,400 200 x 13= 2,600

$2,900 $3,400

Index number =3,400

× 100 = 117.22,900

Paasche (Use current year quantities) 2010 2011

A 150 x $5 = 750 150 x $8 = 1,200B 180 x $12 = 2,160 180 x $13= 2,340

$2,910 $3,540

Index number =3,540

× 100 = 121.62,910



20/25

INTEREST

1 If $1,000 is invested for 2 years at compound interest of 10% per year, what will the deposit havegrown to by the end of the period?

Answer

1,000 x (1.10)2 = $1,210

2 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 = 1.1255actual interest rate = r = 0.1255 = 12.55% p.a.



21/25

INVESTMENT APPRAISAL 1

A project has the following cash flows:0 (75,000)1 20,0002 30,0003 50,000

1 If the cost of capital is 10%, what is the net present value?

Answerd.f. @ 10% P.V.

0 (75,000) (75,000)1 20,000 0.909 18,1802 30,000 0.826 24,7803 20,000 0.751 37,550

N.P.V. 5,510

2 What is the payback period?

AnswerTotal cash

1 20,0002 50,0003 100,000

Payback period = 2 +(75,000 – 50,000)

= 2.5 years50,000

3 What is the discounted payback period?

AnswerTotal Present value

1 18,1802 42,9603 80,510

Discounted payback period = 2 +(75,000 – 42,960)

= 2.85 years37,550

4 If the net present value at 15% is $(2,060), what is the Internal Rate of Return?

AnswerNPV

10% 5,51015% (2,060)

5% (7,570)

IRR = 10% + (5,510 x 5%) =13.64%7,570



22/25

INVESTMENT APPRAISAL 2

1 The cost of capital is 9%What is the present value of $4,000 first receivable in 1 years time and thereafter every year with thelast receipt being in 8 years time.

Answer 1 – 8 4,000 x 5.535 = $22,140

2 The cost of capital is 6%.What is the present value of $8,000 first receivable in 1 years time and thereafter every year inperpetuity.

Answer 1 – ∞ 8,000 x ( ⁄ ) = $133,333

Sunk costs = money already spent. NOT relevant

Opportunity costs = lost income. IS relevant



23/25

PERFORMANCE MEASUREMENT

Financial measures

Non-financial measures

Economy

Efficiency

Effectiveness

Residual Income / Return on Investment

A new project is being considered that will generate a profit of $40,000 per year will require an investment of$350,000.(a) what is the Return on Investment?

Answer

⁄ x 100% = 11.43%

(b) what is the Residual Income (if the cost of capital is 10%)?

AnswerProfit 40,000Less: Notional interest $350,000 x 10% (35,000)Residual income $5,000



24/25

SOURCES OF DATA

Primary data - collected specially for a specific purpose

Secondary dates - collected for another purpose

Sampling frame - numbered list of all items in a population

Random sampling - every item in population has an equal chance of being selected

Systematic sampling - selecting every n’th item

Stratified sampling - divide population into categories, take random samples from each category

Multistage sampling - divide into sub-populations. Take random sample from each

Quota sampling - pick every item as it arises until a fixed number is reached

Cluster sampling - use one subsection of the population as representative of the population



25/25

TIME SERIES ANALYSIS

1 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.

2 The sales trend (in units) is given by the following equation:Sales = 12,000 + 30t(where t is the month number, with January this year being month 1, February being month 2 etc.)What is the sales forecast for July of this year?

3 The actual number of unemployed in October is 240,000.If the seasonal variation for October is 105% (using the multiplicative model) what is the seasonallyadjusted unemployment number for October?

Answers1) (a) 18,000 + 1,200 =19,200 units

(b) 18,000 x 0.85 =15,300 units

2) 12,000 + (30x7) =12,210 units

3) 24,000 (or 24,000 x ⁄ ) =22,857105%


ACCA F2 Revision Notes

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