Questions and Answers of Cost And Management Accounting An Introduction

Regression analysis is being used to find the line of best fit (vy =a+t bx)from five pairs of data. The calculations have produced the following information:Sx = 129 Sy = 890 Sxy = 23091 dx? = 3433
Brisbane Limited has recorded the following sales information for the past six months:The following has also been calculated:> (Advertising expenditure) = £13500 > (Sales revenue) = £192000
company is seeking to establish whether there is a linear relationship between the level of advertising expenditure and the subsequent sales revenue generated.Figures for the last eight months are as
Cost estimation using the linear regression formula The management accountant at Josephine Ltd is trying to predict the quarterly total maintenance cost for a group of similar machines. She has
Define quality, discuss the different approaches to quality, and describe the four types of quality costs. LO1
Prepare a quality cost report and explain the difference between the con¬ ventional view of acceptable quality level and the view espoused by total quality control. LO2
Explain why quality cost information is needed and how it is used. LO2
Describe and prepare three different types of quality performance reports. LO4
Explain what is meant by the term ‘relevant range’. (o. 234)
Define the term ‘contribution margin’. (0. 235)
Defithne teer m ‘profit-volume ratio’ and explain how it can be used for cost-volume—profit analysis. (0. 238)
Describe and distinguish between the three different approaches to presenting cost-volume-profit relationships in graphical format. (op. 240-243)
How can a company with multiple products use cost-volume-profit analysis?(pp. 243-245)
Explain why the break-even point changes when there is a change in sales mix.(pp. 244-245)
Describe the assumptions underlying cost-volume-profit analysis. (op. 245-247)
How can sensitivity analysis be used in conjunction with cost—volume-profit analysis? (p. 247)
Four lines representing expected costs and revenue have been drawn on thefollowing break-even chart:Which statement is correct?(a) Line F represents total variable cost.(b) The break-even point
The following information is required for sub-questions (a) and (b)The company expects to sell A units in the next accounting period.(a) The margin of safety is shown on the diagram by:(i) k (ii) m
The diagram shows the profit-volume chart of Z Ltd for its last accounting period.The company made a profit of $w during the period.(a) An increase in the fixed costs per period (assuming the selling
The profit-volume chart for a single product company is as follows:What is the product’s contribution to sales ratio (expressed as a %)?(a) 16%(b) 28%(c) 40%(d) 72%(2 marks)ACCA - Financial
A company’s budget for the next period shows that it would break even at sales revenue of $800 000 and fixed costs of $320 000.The sales revenue needed to achieve a profit of $200 000 in the next
A company wishes to make a profit of £150000. It has fixed costs of £75000 with a C/S ratio of 0.75 and a selling price of £10 per unit.How many units would the company need to sell in order to
A company manufactures a single product which it sells for £15 per unit. The product has a contribution to sales ratio of 40 per cent. The company’s weekly break-even point is sales of
An organization manufactures a single product which has a variable cost of£36 per unit. The organization’s total weekly fixed costs are £81000 and it has a contribution to sales ratio of 40 per
An organization manufactures and sells a single product which has a variable cost of £24 per unit and a contribution to sales ratio of 40 per cent. Total monthly fixed costs are £720000.What is the
Z plc currently sells products Aye, Bee and Cee in equal quantities and at the same selling price per unit. The contribution to sales ratio for product Aye is 40 per cent; for product Bee it is 50
Acompany manufactures a single product. Budget and standard cost details for next year include:Required:(a) Calculate the break-even point in units.(b) Calculate the percentage by which the budgeted
Preparation of break-even and profit-volume graphs ZED plc manufactures one standard product, which sells at £10. You are required to:(a) Prepare from the data given below, a break-even and
Preparation of a contribution graph Z plc operates a single retail outlet selling direct to the public. Profit statements for August and September are as follows:Required:(a) Use the high- and
Preparation of a break-even chart with step fixed costs Toowomba manufacturers various products and uses CVP analysis to establish the minimum level of production to ensure profitability.Fixed costs
Changes in sales mix XYZ Ltd produces two products and the following budget applies:You are required to calculate the break-even points for each product and the company as a whole and comment on your
Non-graphical CVP analysis The summarized profit and loss statement for Exewye plc for the last year is as follows:At a recent board meeting the directors discussed the year’s results, following
Multi-product CVP analysis Cardio Co manufactures three types of fitness equipment: treadmills (T), cross trainers (C) and rowing machines (R). The budgeted sales prices and volumes for the next year
Distinguish between variable costing and absorption costing. (op. 207-208)
How are non-manufacturing fixed costs treated under absorption and variable costing systems? (p. 208)
Describe the circumstances when variable and absorption costing systems will report identical profits. (p. 273)
Under what circumstances will absorption costing report higher profits than variable costing? (p. 213)
Under what circumstances will variable costing report higher profits than absorption costing? (p. 273)
What arguments can be advanced in favour of variable costing? (pp. 214-216)
What arguments can be advanced in favour of absorption costing? (pp. 216-27 7)
Explain how absorption costing can encourage managers to engage in behaviour that is harmful to the organization. (p. 275)
The following budgeted information relates to a manufacturing company for next period:The normal level of activity is 14000 units per period.Using absorption costing the profit for next period has
A company has the following budgeted costs and revenues:In the most recent period, 2000 unit were produced and 1000 units were sold.Actual sales price, variable production cost per unit and total
A company manufactures and sells a single product. In two consecutive months the following levels of production and sales (in units) occurred:The opening inventory for Month 1 was 400 units. Profits
WTD Ltd produces a single product. The management currently uses marginal costing but is considering using absorption costing in the future.The budgeted fixed production overheads for the period are
The following information relates to a manufacturing company for next period:Using the absorption costing the profit for next period has been calculated as £36000.What would the profit for next
Last month a manufacturing company’s profit was $2000, calculated using absorption costing principles. If marginal costing principles had been used, a loss of $3000 would have occurred. The
A company which uses marginal costing has a profit of £37500 for a period.Opening inventory was 100 units and closing inventory was 350 units.The fixed production overhead absorption rate is £4 per
A company uses standard absorption costing to value inventory. Its fixed overhead absorption rate is $12 per labour hour and each unit of production should take four labour hours. In a recent period
The following details have been extracted from KL’s budget:The budgeted fixed production cost per unit was based on a normal Capacity of 11000 units per month.Actual details for the months of
Preparation of variable and absorption costing statements and an explanation of the differences in profits Bittern Ltd manufactures and sells a single product at a unit selling price of £25.In
Compare and contrast traditional responsibility accounting with contempo¬ rary responsibility accounting. LO1
Describe process value analysis and explain its role in the contemporary responsibility accounting model. LO2
Describe activity-based flexible budgeting. LO3
Describe life cycle cost budgeting. LO4
Discuss how control at the operational level in a contemporary environ¬ ment differs from that in a conventional environment. LO5
Describe a traditional responsibility accounting system. LO5
Describe a contemporary responsibility accounting system. How does it differ from traditional respon¬ sibility accounting? LO5
Explain how materials price variances can work against the JIT objectives of zero inventories and total quality control. LO5
Explain how materials usage variances can impede JIT manufacturing. LO5
Traditional currently attainable standards are not compatible with the objective of continuous im¬ provement. Do you agree? Explain your reasoning. LO5
What are the two dimensions of the activity-based management model? How do they differ? LO5
What is driver analysis? What role does it play in process value analysis? LO5
What is meant by activity inputs? Activity output? Activity output measurement? LO5
What is activity analysis? Why is this approach com¬ patible with the goal of continuous improvement? LO5
Identify and define four different ways to manage activities so that costs can be reduced. LO5
What are nonvalue-added activities? Nonvalue- added costs? Give an example of each. LO5
What are value-added costs? LO5
Explain how value-added standards are used to identify value-added and nonvalue-added costs. LO5
What is the standard cost allowed for nonvalue- added activities that are unnecessary? Explain why. LO5
Explain how trend reports of nonvalue-added cost can be used. LO5
Explain how benchmarking can be used to improve activity performance. LO5
In controlling nonvalue-added costs, explain how ac¬ tivity output measures (activity drivers) can induce behavior that is either beneficial or harmful. How can value-added standards be used to
Describe the benefits of life cycle cost budgeting. LO5
Explain how the use of multiple activity drivers can improve performance reports that compare actual costs with budgeted costs. LO5
What is the meaning of the fixed activity volume variance? Explain how the unused capacity variance is useful to managers. LO5
Why are nonfinancial measures of performance used more at the operating level? LO5
In a non-JIT company, price reductions for raw ma¬ terials are often obtained through the use of quantity discounts. In a JIT company, how are price reduc¬ tions obtained? LO5
Identify and define two operational measures of de¬ livery performance. LO5
What is cycle time? Velocity? LO5
What is manufacturing cycle efficiency? LO5
Explain why time-based performance measures are becoming more important. LO5
Identify two operational measures of machine performance. LO5
Machine performance is more important in a JIT en¬ vironment than in a non-JIT environment. Do you agree? Explain. LO5
Define joint costs, split-off point and further processing costs. (p. 188)
Distinguish between joint products and by-products. (p. 188)
Provide examples of industries that produce both joint products and by-products.(pp. 187-188)
Explain why it is necessary to allocate joint costs to products. (pp. 188-189)
Describe the four different methods of allocating joint costs to products.(pp. 189-193)
Why is the physical measure method considered to be an unsatisfactory joint-cost allocation method? (p. 790)
Explain the factors that should influence the choice of method when allocating joint costs to products. (p. 193)
Explain the financial information that should be included in a decision as to whether a product should be sold at the split-off point or further processed. (pp. 195-196)
Describe the accounting treatment of by-products. (op. 196-197)
Acompany simultaneously produces three products (X, Y and Z) from a single process. X and Y are processed further before they can be sold; Z is a by-product that is sold immediately for $6 per unit
In a process where there are no work in progress stocks, two joint products(J and K) are created. Information (in units) relating to last month is as follows:Joint production costs last month were
Two products (W and X) are created from a joint process. Both products can be sold immediately after spilt-off. There are no opening inventories or work in progress. The following information is
Two products G and H are created from a joint process. G can be sold immediately after split-off. H requires further processing into product HH before it is in a saleable condition. There are no
Two joint products A and B are produced in a process. Data for the process for the last period are as follows:Common production costs in the period were $12 000. There was no opening inventory. Both
At the end of manufacturing in Process |, product K can be sold for £10 per litre.Alternatively, product K could be further processed into product KK in process II at an additional cost of £1 per
Joint cost apportionment and decisions on further processing A process costing £200000 produces three products - A, B and C. Output details are as follows: 1 Product A 6000 litres Product B 10000

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