Questions and Answers of Management Cost Accounting

1. Is break-even a good performance monitor over the longer term?2. How do decreasing margins affect the break-even point and margin of safety?
1. Why will a decline in production have a positive impact on oil prices?2. Why does the break-even price in the above chart differ according to the location of the oil wells?3. Is the break-even
1. Is it true to say that any A380 aircraft sold before break even has been achieved is making a loss?2. Can you think of some major fixed costs likely to be incurred on the A380 by Airbus?
1. If your business wanted to improve profits by focusing on first fixed costs and then variable costs, what form of profit report might you use internally: one based on absorption costing or one
1. Do you think variable costing is more likely to be used by manufacturing or service sector firms?2. Do you think integrated accounting information system would be able to produce internal profit
1. When does the ‘product’ materialize in the brewing process described above?2. Would you imagine there is any waste in the brewing process?
1. Why is job costing not appropriate to a process such as whiskey production?2. Do you think losses of spirit might occur during the maturation process?
1. Do you think waste which is regarded as ‘normal’ in a process should remain unchallenged?2. How would you value waste in the UHT milk production described above?
1. Why did the company apply the change in valuation method retrospectively for some of its segments but did not make retrospective changes to its International Marketing and Distribution segment?2.
1. Can you think of some examples of overhead costs that might be incurred by cafés such as those described above?2. How would these overheads affect profit if sales declined?
1. Why might increasing the number of cost centres (pools) result in the reporting of more accurate product costs?2. What other factors, besides product diversity, might enable a simplistic product
1. Explain how applying each of the above three myths can lead to bad decisions.2. What changes should be made to cost allocations to avoid the bad decisions?
1. Why do you think absorption costing is more likely to be used by larger businesses?2. What difficulties might be faced by smaller firms who may want to utilize absorption costing?
The production overhead absorption rates of factories X and Y are calculated using similar methods. However, the rate used by factory X is lower than that used by factory Y. Both factories produce
1. Can you think of any reason why management accounting data and financial accounting data might be separated in a business?2. Would you expect accounting software to store more detailed information
1. If your business were using the Job Clock, would you pay all employees by the minute worked?2. Do you think smartphones could be used to track time worked by mobile employees?
From the information given below you are required to:(a) Prepare a standard cost sheet for one unit and enter on the standard cost sheet the costs to show sub-totals for:(i) Prime cost;(ii) Variable
For the relevant cost data in items (1)–(7), indicate which of the following is the best classification.(a) Sunk cost;(b) Incremental cost;(c) Variable cost;(d) Fixed cost;(e) Semi-variable
The Northshire Hospital Trust operates two types of specialist X-ray scanning machine, XR1 and XR50. Details for the next period are estimated as follows:A brain scan is normally carried out on
A company manufactures and retails clothing. You are required to group the costs that are listed below and numbered (1)–(20) into the following classifications (each cost is intended to belong to
1. Why might opportunity costs not be considered when making decisions?2. Provide example of opportunity costs that you might incur.
1. Do you agree the marginal cost of downloaded software or music is nil?2. What marginal costs, if any, might be incurred by the provider of the servers where software/music is downloaded from?
1. What are the relevant costs and benefits relating to the Garden Bridge?2. Why might managers be reluctant to abandon loss-making projects?
1. Do you agree that the variable cost associated with a passenger can be zero? Can this be said for both low-cost and traditional carriers.2. What options do more traditional carriers have to
1. How might performance measurement and management vary between different industries?2. Provide examples of direct labour, direct materials and indirect costs for the different industries mentioned
How can the management accounting function provide information to support a low cost strategy?
1. Do you think the costs of the electronic components in an iPod/iPad are more or less than those in a medical device like a blood pressure monitor?2. Would decreasing the product life cycle of
Can you think of any barriers to entry for a business entering the market for IoT sensors or similar?
Provide more detailed illustrations for each of the first four items in the first category of the above list of how the management accountant can be of assistance in an organization with which you

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