s 26 to 38 with calculation/explanation 26. Continental Can Company Ltd (CCCL) manufactures recyclable soft drink cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production engineering staff and the management accountant: Direct material $3.12 Quantity 4 kg Price $0.78 per kg Direct labour $4.025 Quantity 0.25 hour Rate $16.10 per hour Actual costs incurred in the production of 50,000 units were as follows: Direct material $170,100 for 210,000 kg Direct labour $210,600 for 13,000 hours All materials were purchased during this time period. Calculate the Direct Labour efficiency variance A. 8,500 favorable B. 1,300 unfavorable C. 8,050 unfavorable D. 2,750 favorable 27. Which of the following do NOT correctly describe beneficial characteristics expected by an organisation using benchmarking? I Benchmarking can identify why differences in performance exist between the organisation and "best practice". II Benchmarking can enable an organisation to see where its management might be improved relative to competitors' management. III Benchmarking can measure the performance gap between the organisation and its competitors. IV Benchmarking can assess difference in performance with an industry competitor in respect of sales and profits. A. I B. I, II C. II, III D. III, IV 28. Consider the following statements and then select the response(s) that are correct and/or reflect the CPA Study Materials' view correctly. I Some stakeholders are interested in sustainability reporting, but others have little or no interest. Recognising this, boards of directors in Australia often ignore their many direct legal duties to stakeholders over shareholders and instead focus on long term responsibility to the shareholders and the company. II Most companies listed on the ASX now produce a corporate social responsibility (CSR) or sustainability report in which they address issues including sustainability and pollution reduction, and often include performance measures of their effectiveness. III The key issue for effective performance measurement is to understand the organisation's strategy for value creation and to measure the success of its value creation activities. IV Performance measures for financial issues and sustainability issues do not always gain the same exposure and are not always accorded similar importance in annual reports, despite the importance of sustainability. A. I, II, III, IV B. I, II, IV C. II, III D. II, III, IV 29. Leebing Limited is an Australian retailer of a wide variety of electrical and electronic goods. Leebing senior management requires a scorecard to measure the performance of its four Australian distribution managers. Distribution managers are expected to arrange the efficient transportation of products for sale by its own retail stores and also transport to customers' homes where customers have purchased large items from Leebing stores or have purchased items on Leebing's website. Leebing's main aim is to create value for its shareholders through its three strategies which are to increase market share, to increase sales in stores and on the web and to provide excellent service to customers. The company has 440 'retail shops' located in major shopping centres across Australia. It has an extensive website. It has four distribution centres located carefully across Australia - with one of the four distribution managers being located at each of these centres. The company manufactures a small number of the products that it sells in Australia, but most products are imported and delivered by shipping container direct to one of the distribution centres. To ensure quality after-sales service that activity is under the control of one manager nationally. As Strategic Management Accountant at Leebing you have been asked to identify which of the following is/are most likely to be success-oriented comments regarding possible approaches proposed for adoption within Leebing? I Distribution managers will be better motivated by their scorecard if the scorecard measures overall communication relating to customer issues including satisfaction with products purchased and service of defective products. II Store managers will be motivated to make better decisions if they participate in a profit share scheme that identifies the profit of all stores and which then shares that profit among all 440 retail store managers on the basis of sales growth achieved in each store. III To translate strategy into action, measures to include on an individual distribution manager's scorecard would include number of deliveries required each day, number of deliveries achieved per day, average delivery time, number of complaints about late deliveries, average cost per delivery. IV Gaming and/or biasing can be avoided if delivery managers and store managers are given freedom to communicate fully and then to adjust scorecard results relevant to poor performance outcomes. A. I, IV B. II, III C. III, IV D. All of the above 30. The focus of the value chain is on: A. Customer requirements B. Profits C. Revenues less expenses D. Products 31. Mix and Match Pty Ltd is an ASX listed business. It is considering closing its Australian manufacturing plant and relocating to a country with cheaper labour costs and less government regulation. Stakeholders have been identified by the Management Accountant. These stakeholders have then been assigned into a stakeholder grid. One of the identified stakeholders is "employees who will become redundant and their trade unions". Within the stakeholder grid, this group would have: A. High Power and high Interest B. High Power low interest C. High Interest and low power D. Low power and low interest 32. Reciprocal promoting of the brand and uncertainty surrounding the performance of the organisation are benefits and risks of what mode of entry? A. Joint venture B. Strategic alliance C. Licensing D. Franchising 33. Which of the following statements is most likely to be generally correct? A. Kaizen is an approach to Strategy that involves minor changes and as such is an appropriate method that can be communicated to all staff in order to seek the ongoing participation of staff at all levels of the organisation B. One aspect of Activity Based Management is referred to as Business Process Management (BPM). BPM is concerned with making incremental improvements to the way business processes are undertaken C. Target costing is a strategic management accounting technique that will help improve product design and/or features, creating the opportunity to increase selling prices so that any 'gap' is minimized D. If pre-production committed costs are very low when compared with overall costs after production commences then the importance of overall Life-Cycle costs as part of Strategic Management becomes relatively more important 34. Which of the following statements correctly identify issues that arise from or relate to outsourcing and/or offshoring? I Outsourcing commonly results in an increased dependence on third parties for the most strategically important functions of an organisation. II Life cycle costs for an outsourced function can be greater than if the function had been retained in-house. III Outsourcing is unlikely to provide a firm with increased flexibility to accommodate changing market conditions. IV Outsourcing can result in service and quality levels being less than would be achieved by internal providers. V Outsourcing can provide greater access to expertise and resources. However long- term dependency on outsourcing can arise. A. I, II and IV B. II, IV, V C. III, V D. IV, V 35. Customer-profitability analysis moves the focus of strategic management accounting to the customer. Understanding who an organisation's customers are and what contribution they make to profits is important in determining the strategic approach to adopt in dealing with customers. It is possible to identify a four-way relationship (as in Module 4) between the net margin earned from sales and customer-service costs. According to this four-way relationship which of the following is NOT correct? A. Some customers require suppliers to create specialised capabilities to meet their needs. Such customers are potentially profitable for their supplier in the long term B. Aggressive customers are large and often important customers but the combinations of demands they impose tend to make them 'low profit customers' C. Passive customers are unlikely to be profitable even if they engage in relatively low purchasing activity D. A customer who is inexpensive to service is not always a desirable customer as they will tend to generate low net margins and are thought to be 'prepared to change supplier' solely on the basis of pricing 36. Total quality management (TQM) stresses that all operations of an organisation must be focused on improving the reliability of which of the following? A. Business models B. Employee practices C. Compensation methods D. Product or service offerings 37. Oration Ltd is a telecommunication manufacturer and supplier. Oration markets its products to customers and includes support services (through one of two enquiry channels) to its customers at no additional cost. The two enquiry channels are by telephone call or online. Therefore, the cost of providing support service has been divided into two cost pools. The cost driver for phone enquiries is the number of calls and the cost driver for online enquiries is the number of emails received. The following budget provides details relating to three of Oration's major customers. Calculate profitability against sales (including support service resources used by each customer) using the figures provided. Customer: R Ltd S Ltd T Ltd Total Sales: $100,000 $120,000 $80,000 $300,000 Cost of goods sold: $ 45,000 $ 40,000 $28,000 $113,000 Support Activities: Phone enquiries 150 900 300 1,350 On-line enquiries 1,400 600 300 2,300 Cost pools for Support Service Activities: Phone Support enquiries $90,000 On-line Support enquiries $25,000 Your task: Based on your calculations regarding overall customer profitability (as need to be calculated from the above figures), advise Oration by selecting correctly from the available options in MC25 and MC 26: Which of the following is correct regarding Oration and its customers? A. T Ltd is the best customer with whom Oration deals based on margin as a percentage of sales B. R Ltd is the best customer with whom Oration deals based on margin as a percentage of sales C. Phone enquiries supplied by Oration cost less than $10 each; Online enquiries supplied by Oration cost less than $65 each D. Phone enquiries supplied by Oration cost over $65 each; Online enquiries supplied by Oration cost over $10 each 38. Oration Ltd is a telecommunication manufacturer and supplier. Oration markets its products to customers and includes support services (through one of two enquiry channels) to its customers at no additional cost. The two enquiry channels are by telephone call or online. Therefore, the cost of providing support service has been divided into two cost pools. The cost driver for phone enquiries is the number of calls and the cost driver for online enquiries is the number of emails received. The following budget provides details relating to three of Oration's major customers. Calculate profitability against sales (including support service resources used by each customer) using the figures provided. Customer: R Ltd S Ltd T Ltd Total Sales: $100,000 $120,000 $80,000 $300,000 Cost of goods sold: $ 45,000 $ 40,000 $28,000 $113,000 Support Activities: Phone enquiries 150 900 300 1,350 On-line enquiries 1,400 600 300 2,300 Cost pools for Support Service Activities: Phone Support enquiries $90,000 On-line Support enquiries $25,000 Your task: Based on your calculations regarding overall customer profitability (as need to be calculated from the above figures), advise Oration by selecting correctly from the available options in MC25 and MC 26: Which of the following is correct regarding Oration and its customers? A. Overall, S Ltd is the best customer with which to deal as 40% of sales are made to S B. Overall, S Ltd is the first customer with whom discussions should be held to discuss value chain difficulties affecting overall profitability C. Overall, R Ltd is the first customer with whom discussions should be held to discuss value chain difficulties affecting overall profitability D. Overall, T limited is the least profitable company for Oration and T should be advised that Oration is considering deleting T as a custome