a)Based on the above survey, evaluate the reasons why might a business choose not to have a formal product costing system?(10 marks)

b) Explain the meaning of payback period and how the payback period is determined

and its usefulness.(5 marks)

c) Briefly discuss the major criticism of the payback period and accounting rate of return

methods of making capital budgeting decisions (10m)

Question 3 Most businesses need some information about product costs, although many businesses do mot have formal product costing systems. For example, a survey done by the members of the Chartered Institute of Management Accountants (CIMA) found that less than 50 percent of the respondents had systems for costing products in their organization (CIMA, 2009). a) Based on the above survey, evaluate the reasons why might a business choose not to have a formal product costing system (10 marks) b) Explain the meaning of payback period and how the payback period is determined and its usefulness. (5 marks) c) Briefly discuss the major criticism of the payback period and accounting rate of return methods of making capital budgeting decisions. (10 marks)