Questions and Answers of Cost And Management Accounting An Introduction

construct an overhead analysis sheet and calculate cost centre allocation rates;Appendix
justify why budgeted overhead rates should be used in preference to actual overhead rates;Appendix
calculate and explain the accounting treatment of the under/over recovery of overheads;Appendix
record inter-service department transfers using one of the methods described in Appendix 4.1.Appendix
distinguish between an integrated and interlocking accounting system;Appendix
explain the distinguishing features of contract costing;Appendix
prepare contract accounts and calculate attributable profit.Appendix
distinguish between process and job costing;Appendix
explain the accounting treatment for normal and abnormal losses;Appendix
prepare process, normal loss, abnormal loss and abnormal gain accounts when there is no ending work in progress;Appendix
compute the value of work in progress and completed production using the weighted average and first in, first out methods of valuing work in progress;Appendix
differentiate between the different cost per unit calculations which are necessary for inventory valuation, decision-making and performance reporting for cost control;Appendix
compute the value of normal and abnormal losses when there is ending work in progress.Appendix
explain the differences between an absorption costing and a variable costing system;Appendix
prepare profit statements based on a variable costing and absorption costing system;Appendix
explain the difference in profits between variable and absorption costing profit calculations;Appendix
explain the arguments for and against variable and absorption costing.Appendix
describe the differences between the accountant’s and the economist’s model of cost-volume-profit analysis;Appendix
justify the use of linear cost and revenue functions in the accountant’s model;Appendix
apply the mathematical approach to answer questions similar to those listed in Example 9.1;Appendix
construct break-even, contribution and profit—volume graphs;Appendix
identify and explain the assumptions on which cost—volume-profit analysis is based;Appendix
calculate break-even points for multi-product situations.Appendix
A company manufactures and sells two products, X and Y. Forecast data for a year are:Annual fixed costs are estimated at £273 000.What is the break-even point in sales revenue with the current sales
H Limited manufactures and sells two products, J and K. Annual sales are expected to be in the ratio of J: 1, K:3. Total annual sales are planned to be £420000. Product J has a contribution to sales
The following details relate to product R:LO1 Level of activity (units) 1000 2000 (/unit) (/unit) Direct materials 4.00 4.00 Direct labour 3.00 3.00 Production overhead 3.50 2.50 Selling overhead
Z ple makes a single product which it sells for£16 per unit. Fixed costs are £76 800 per month and the product has a contribution to sales ratio of 40%.In a period when actual sales were £224 000,
A break-even chart is shown below for Windhurst Ltd.You are required:(i) to identify the components of the breakeven chart labelled p, q, r, 5, t, u, v, w, x and y3 (5 marks)(ii) to suggest what
ZED ple manufactures one standard product, which sells at £10. You are required to:(a) prepare from the data given below, a graph showing the results for the six months ending 30 April and to
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 low-points technique to identify the
XYZ Ltd produces two products and the following budget applies for 20 × 2:You are required to calculate the break-even points for each product and the company as a whole and comment on your
define relevant and irrelevant costs and revenues;Appendix
explain the importance of qualitative factors;Appendix
distinguish between the relevant and irrelevant costs and revenues for the five decision-making problems described;Appendix
explain why the book value of equipment is irrelevant when making equipment replacement decisions;Appendix
describe the opportunity cost concept.Appendix
Z Limited manufactures three products, the selling price and cost details of which are given below:In a period when direct materials are restricted in supply, the most and the least profitable uses
Your company regularly uses material X and currently has in stock 600kg, for which it paid£1500 two weeks ago. If this were to be sold as raw material it could be sold today for £2.00 per kg. You
BB Limited makes three components: S, T and U. The following costs have been recorded:Which component(s), if any, should BB Limited consider buying in?(a) Buy in all three components.(b) Do not buy
Two decision-making problems are faced by a company which produces a range of products and absorbs production overhead using a rate of 200% on direct wages. This rate was calculated from the
Due to a national wage agreement, you find that wage rates for skilled workers are to increase by 50% over the budget figures. There is a shortage of such skilled workers and it takes over a year to
The production manager of your organization has approached you for some costing advice on project X, a one-off order from overseas that he intends to tender for. The costs associated with the project
Blackarm Ltd makes three products and is reviewing the profitability of its product line. You are given the following budgeted data about the firm for the coming year.The company is concerned about
explain the role of a cost accumulation system for generating relevant cost information for decisionmaking;Appendix
describe the differences between activity-based and traditional costing systems, Appendix
illustrate how traditional costing systems can provide misleading information for decision-making;Appendix
compute product costs for an activity-based costing system;Appendix
explain each of the four stages involved in designing ABC systems;Appendix
describe the ABC cost hierarchy.Appendix
explain the opportunity cost of an investment;Appendix
distinguish between compounding and discounting;Appendix
explain the concept of net present value (NPV) and internal rate of return (IRR);Appendix
calculate NPV, IRR, payback period and accounting rate of return;Appendix
explain the limitations of payback and the accounting rate of return methods;Appendix
calculate the incremental taxation payments arising from a proposed investment.Appendix
distinguish between long-term planning and budgeting Appendix
describe the six different purposes of budgets;Appendix
describe the various stages in the budget process;Appendix
prepare functional and master budgets.Appendix
describe the three different types of controls used in organizations;Appendix
describe a cybernetic control system;Appendix
distinguish between feedback and feed-forward controls;Appendix
define the four different types of responsibility centres;Appendix
explain the different elements of management accounting control systems;Appendix
describe the controllability principle and the methods of implementing it;Appendix
describe the different types of financial performance targets and the effects of their level of difficulty on motivation and performance;Appendix
describe the influence of participation in the budgeting process;Appendix
explain why a performance measurement system should also emphasize non-financial measures;Appendix
Define the term ‘budget’. How are budgets used in planning? (op. 351-354)
Distinguish between budgeting and long-range planning. How are they related?(ep. 354-355)
Describe the different purposes of budgeting. (op. 355-356)
Explain what is meant by the term ‘management by exception’. (p. 357)
Describe how the different roles of budgets can conflict with each other.(p. 358)
Distinguish between continuous and rolling budgets. (0. 359)
Describe the different stages in the budgeting process. (pp. 360-363)
All budgets depend on the sales budget. Do you agree? Explain. (p. 366)
What is a master budget? (p. 377)
The following estimates have been prepared for a retailer’s next budget period:The gross profit margin on sales is budgeted at 55 per cent.(a) The cash which the retailer expects to receive from
A company manufactures two products P1 and P2 in a factory divided into two cost centres, X and Y. The following budgeted data are available:Budgeting output is 8000 units of each product. Fixed
A company manufactures and sells one product which requires 8kg of raw material in its manufacture. The budgeted data relating to the next period are as follows:What is the budgeted raw material
A company produces two products, A1 and A2 that are sold to retailers. The budgeted sales volumes for the next quarter are as follows:The inventory of finished goods is budgeted to increase by 1000
CHisa building supplies company that sells products to trade and private customers.Budget data for each of the six months to March are given below:80 per cent of the value of credit sales is received
You have recently been appointed as an assistant management accountant in a large company, PC Co. When you meet the production manager, you overhear him speaking to one of his staff,
The budgeted balance sheet data of Kwan Tong Umbago Ltd is as follows:The estimates for the next four-month period are as follows:The company intends to sell each unit for £219 and has estimated
Budget preparation and comments on sales forecasting methods You have recently been appointed as the management accountant to Alderley Ltd, a small company manufacturing two products, the Elgar and
X plc manufactures specialist insulating products that are used in both residential and commercial buildings. One of the products, Product W, is made using two different raw materials and two types
Explain what productive efficiency means and describe the difference between technical and input tradeoff efficiency. LO1
Explain what partial productivity measurement is and describe its advan¬ tages and disadvantages. LO2
Explain what total productivity measurement is and describe its advantages. LO3
Describe the role of productivity measurement in assessing activity improvement. LO4
Define total productive efficiency. LO4
Explain the difference between technical and input tradeoff efficiency. LO4
What is productivity measurement? LO4
Explain the difference between partial and total mea¬ sures of productivity. LO4
What is an operational productivity measure? A fi¬ nancial measure? LO4
Discuss the advantages and disadvantages of partial measures of productivity. LO4
What is the purpose of a base period? LO4
What is profile measurement and analysis? What are the limitations of this approach? LO4
What is profit-linked productivity measurement and analysis? LO4
Explain why profit-linked productivity measurement is important. LO4

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