Questions and Answers of Cost And Management Accounting An Introduction

What are ordering costs? Provide some examples. (p. 65)
What are the assumptions underlying the economic order quantity? (p. 68)
Define lead time. (p. 69)
Explain what is meant by the re-order point. (p. 69)
Describe the ABC classification method. What purposes does it serve? (pp. 70-72)
What are the main features of the just-in-time approach? (op. 72-73)
Amachine operator is paid $10.20 per hour and has a normal working week of 35 hours. Overtime is paid at the basic rate plus 50 per cent. If in week 7, the machine operator worked 42 hours, the
An advertising agency uses a job costing system to calculate the cost of client contracts. Contract A42 is one of several contracts undertaken in the last accounting period. Costs associated with the
The effect of using the last in, first out (LIFO) method of stock valuation rather than first, in, first out (FIFO) method in a period of rising prices is: (a) to report lower profits and a lower
An organization's records for last month show the following in respect of one stores item:Last month’s opening stock was valued at a total of £2900 and the receipts during the month were purchased
The following data relate to material J for last month:Using the LIFO valuation method, what was the value of the closing stock for last month?(a) £3300 (c) £3700 (b) £3500 (d) £3900 (2
ELtd’s stock purchases during a recent week were as follows:There was no stock at the beginning of the week. 420 units were issued to production during the week. The company updates its stock
A domestic appliance retailer with multiple outlets stocks a popular toaster known as the Autocrisp 2000, for which the following information is available:(i) Based on the data above, at what level
A manufacturing company uses 25000 components at an even rate during a year. Each order placed with the supplier of the components is for 2000 components, which is the economic order quantity. The
Data relating to one particular stores item are as follows: Average daily issues 70 units Maximum daily issues 90 units Minimum daily issues 50 units Lead time for the replenishment of stock 11 to 17
FP is a retailer of office products. For one particular model of calculator there is an annual demand of 26000 units. Demand is predictable and spread evenly throughout the year. Supplies are
PR is a retailer of bicycles. The most popular children's bicycle has an annual demand of 30000 units. Demand is predictable and spread evenly throughout the year. The bicycles are purchased by PR
Calculate annual stockholding costs and impact of quantity discounts. BB manufactures a range of electronic products. The supplier of component Y has informed BB that it will offer a quantity
EOQ and the impact of quantity discounts Point Ltd uses the economic order quantity (EOQ) model to establish the re- order quantity for raw material Y. The company holds no buffer stock. Information
Impact of JIT on inventory costs (10 marks) ACCA Financial Information for Management CDE has recently won a contract to supply a component to a major car manufacturer that is about to launch a new
Explain why firms measure profit. LO1
Calculate measures of profit using absorption and variable costing. LO2
Calculate the contribution margin, sales volume, sales mix, market share, and market size variances. LO3
Determine the profitability of segments. LO4
Describe the impact of the short run and the long run on measuring profit. LO5
Discuss the product life cycle in relation to profitability analysis. LO6
Describe the impact of profits on behavior. LO7
Discuss some of the limitations of profit measurement. LO8
Why do firms measure profit? LO8
Why do regulated firms care about the level of profit? LO8
Why would a company avoid earning the highest possible profit in the short run? LO8
What is a segment, and why would a company want to measure profits of segments? LO8
How does absorption costing differ from variable costing? When will absorption costing operating in¬ come exceed variable costing operating income? LO8
Is ABC appropriate for external financial reporting? Explain your reasoning. LO8
What are some advantages and disadvantages of using net income as a measure of profitability? LO8
Describe the product life cycle. LO8
How do unit-level costs behave in relation to the product life cycle? Batch-level costs? Product-level costs? Facility-level costs? LO8
Why do some firms measure customer profitabihty? In what situation(s) would a firm not want to mea¬ sure customer profitability? LO8
What are the three major implications of prospect theory for profitability analysis? LO8
What is the "big bath," and why would firms want to take one? LO8
Carol Jackson is the public relations coordinator for Selmore, Inc., a nationwide chain of retail drug stores. During the past month, Selmore has experi¬ enced the following: the construction of two
There is no point in measuring profit, since numbers cannot tell the whole story. Discuss this statement. Do you agree or disagree with it and why? LO8

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