Questions and Answers of Management Accounting 4th edition

Now try for yourself to carry out the calculations using absorption costing and marginal costing for the month of August. In August there is an opening stock of 400 units but no closing stock. When
The table below sets out data for the Mobile Phone Manufacturing Company for the four quarters of Year 1.The fixed overhead production cost for each month is based on budgeted production of 1,000
This case study shows a typical situation in which management accounting can be helpful.Read the case study now but only attempt the discussion points after you have finished studying the chapter.The
Work out how the answers in Tables 5.3 and 5.4 would change if the inventory levels were rising. Then check with the next section.Tables 5.3Tables 5.4 Month of August Sales (10,400 at 20) Opening
Playtime Ltd produces jigsaws for sale in model shops. The following information relates to the sales and costs of producing the jigsaws. Selling price per unit is £20 Variable cost per unit is £10
The board of directors of Performance Ltd appointed a new manager to the Southern division of the company at the start of year 6. The expectation was that the manager would improve the gross profit
This extract from a newspaper article discusses the full cost of absorbing operating costs.TRANSPORT group Go-Ahead expects a hit to profits from its bus business after failing to recover £2.5m of
Go back to the data of Table 5.11. Cover up the answer in Table 5.12 and then attempt to write out the profit calculation under absorption costing. Add a note of narrative explanation to each line as
Look back at the data of Table 5.11. Before turning to the answer in Table 5.13 attempt to write out the profit calculation under marginal costing. Add a note of narrative explanation to each line as
The following extract discusses whether companies should give away their products free when the marginal cost of production is relatively high.Giving products away free, from browsers to newspaper
When the volume of closing inventory is lower than the volume of opening inventory, which will show the greater profit, absorption costing or marginal costing?
(a) Explain what is meant by (i) absorption costing; and (ii) variable costing.(b) Explain the arguments in favour of absorption costing and the arguments in favour of variable costing.
Before reading the rest of this section, write a brief commentary on the most significant features of Table 5.14. Table 5.14 Comparison of profit, using absorption costing and marginal costing
A company produces and sells one type of product. The details for last year were as follows:There was no inventory at the start of the year.Calculate the actual profit for the year that would be
When the volume of closing inventory is greater than the volume of opening inventory, which will show the greater profit, absorption costing or marginal costing?
Now that you understand the difference between marginal costing and absorption costing, write a short evaluation of the two approaches.
When the volume of closing inventory is the same as the volume of opening inventory, which will show the greater profit, absorption costing or marginal costing?
What are the requirements of financial reporting with regard to the absorption of fixed overhead costs of production?
What have researchers found about full costing in the NHS?
How is the idea of ‘full costing’ extended when long-term environmental costs are considered?
This case study shows a typical situation in which management accounting can be helpful.Read the case study now but only attempt the discussion points after you have finished studying the chapter.The
You have been employed as the management accountant at a car repair garage. Write down a list of the types of costs you would expect to find on a job cost record for a car service and repair.
Frames Ltd produces wooden window frames to order for the building industry. The size of frame depends on the specification in the contract. For the purposes of providing job cost estimates the size
What is a job-costing system?
From Exhibit 6.2 note the transactions which you think are directly relevant to the cost of jobs 601, 602 and 603. Then read the rest of this section and compare your answer with the text. Exhibit
The following advice is offered on the website of a company designing and making wedding cakes to order.Costs involved in making a wedding cake:Wedding cakes come in all shapes, sizes and price
What is a job cost record?
This is an extract from a case study provided by Best Software, a company in the Sage group. It provides an example of a job cost system in a service business.Fulcrum Lighting Ltd specialises in the
Go back to the start of section 6.3 and check that you understand the effect of each transaction on the accounting equation. When you are happy that you understand them all, work through the next
Resistor Ltd manufactures electrical units. All units are identical. The following information relates to June and July Year 5.(a) Budgeted costs and selling prices were:(b) Actual production and
What have researchers found about the use of job costing to record the cost of handproducing a bound book?
Imagine that you are in charge of a cycle hire business in a holiday resort. You have 50 cycles available for hire. Some customers hire cyles for one day; others take them for up to one week. Write
Think of an organised activity in which you participate at college or at home. To what extent does this activity involve planning, decision making and control? Who carries out the planning? Who makes
Think again about the organised activity which you identified in Activity 1.2. Prepare an organisation chart to include all the persons involved in the activity. Draw green lines with arrows to show
Imagine that you want to set up a business as a travel agent booking low-cost holidays with the emphasis on good value. List two activities that you might carry out in each of the stages of planning,
Look back to your list from Activity 1.4 for planning, decision making and control in setting up a travel agency business. Make another list of ways in which management accounting will help in
Read the text of each case study (set out in the box at the beginning of each case) and then make a note of the way in which you think management accounting may help each person. Compare your answer
The UK won’t meet its targets on renewable energy if offshore wind farm costs continue to spiral, the government has been warned.Centrica said the chance of making any money from wind farms being
The following advertisement appeared on the website of the National Health Service Careers section.Management accountant working for the Commission for Patient and Public Involvement(CPPIH). This
Explain why management decisions will normally require more than a management accounting input .
Why is management accounting required to take on an outward-looking role of contributing to business strategy by identifying, measuring and communicating financial information about a wider business
Explain the needs of internal users for management accounting information (section 1.2).1.2 Meeting the needs of internal usersAlthough the definition of accounting remains appropriate for internal
Explain, giving a suitable example in each case, what is meant by the management functions of:(a) planning ;(b) decision making ; and(c) control .
Explain, giving a suitable example in each case, how management accounting may serve the purposes of:(a) directing attention ;(b) keeping the score ; and(c) solving problems .
Describe, and explain each stage of, the cycle of profit planning and control .
In the chapter there are four case studies where Fiona McTaggart explains what she is able to offer in four situations, using her management accounting experience. Her advice is primarily inward
Suggest reasons for the lack of an agreed set of standard terminology of management accounting.
How has the role of the management accountant been ‘reinvented’ in recent years ?
How do high-level managers and lower-level managers use accounting information in different ways ?
How do managers differ from management accountants in their view of accounting information?
A record company is planning to launch an internet music service. Subscribers who pay £15 per month will be allowed to download 100 songs per month to a personal computer. If the subscription
This extract is taken from an article describing the problems faced by dairy farmers.David Shaw who farms at Grey Leys Farm, Elvington, near York was elected as NFU county vice-chairman for York East
The following extract shows the costs of using water in the home.Questions 1 What kinds of variable cost might be included in these cost estimates?2 What kinds of fixed costs might be used in the
The cost of owning and running a home has fallen by nearly a fifth during the past year to its lowest level since 2006. The average property cost £7,298 a year to run in the 12 months to April, 17
Think about any activity that you carry out during the week(e.g. travel to college, eating meals, washing clothes). How would you measure the volume of that activity in a week? How might the cost of
At this point, be sure that you are comfortable with the idea of variable costs, fixed costs and semi-variable costs. These will appear frequently in later chapters and it is important to understand
Think of some activity observed in your everyday life where costs are involved. (It could, for example, be travelling on a bus, watching the sales assistant in a shop, or asking the television repair
Imagine that you are the manager of a department store in the centre of town. Write down one planning question, one decision-making question and one control question that you might ask and suggest a
Create a six-digit coding system which would allow you to classify all the items of expenditure you make in a year. ( You will need to write down the items of expenditure first of all and then look
Explain the meaning of ‘activity’ and ‘output’.
[S] For each of the following cost classification terms, give a definition and give one example of how the definition applies in practice to a person providing car repairs from a rented garage:(a)
[S] Explain how each of the following cost items could be classified under more than one of the headings given in question A2.3:(a) raw materials to be used in production;(b) subcontracted labour in
Classify each of the following as being primarily a fixed cost or a variable cost, and, if necessary, explain why you think such a classification would be difficult without more information being
Explain how cost classification must be matched to the purpose of planning, decision making or control.
How does cost classification vary to meet particular circumstances?
How do the production and sales volume of a new product need to compare to its break-even point to make it worthwhile to introduce the product?
What are the factors included in the complete mathematical model for the Special Products Company problem, in addition to an equation for profit?
What is the purpose of what-if analysis?
How can a spreadsheet be used to perform what-if analysis?
In which categories of analytics does management science mainly focus?
What does the MIN(a, b) Excel function do?
What is a major emphasis of analytics that draws mainly from certain other quantitative decision sciences instead of management science?
What does the IF(a, b, c) Excel function do?
In the past, drug makers have been reluctant to invest in cures for diseases in developing countries such as Africa and South America. Most people in these countries cannot afford to pay for
While she was watching operations at a food processing plant, a consultant noticed a large amount of soup on the floor under a filling machine. An operator washed this soup away each day. When asked
A dilemma that individuals face is whether to be truthful when it appears that a project is over budget. Being over budget typically means that actual costs exceed budgeted costs or that a planned
The Australian government has contracted with alternative energy industry organisations to develop new energy technologies. These contracts are sometimes based on cost. Because these organisations
When activity-based costing was first developed, consultants sometimes promoted it for inappropriate uses. Many consulting services focused on using ABC information for short-term decisions, such as
In October 2015, Statistics New Zealand published the first comprehensive and independent report on the state of the country’s environment. This provided information on five ‘domains’ — air,
In an Environment Victoria audit, it was found that Australian supermarkets could save $41.6 million annually if ‘green bags’ were universally adopted.59 This audit was conducted at Leo’s Fine
Consider the carbon footprint of an airline such as Qantas. Could an airline ever become carbon neutral or positive? Explain. What about a botanical garden? Discuss.
Search the newspapers/internet to find examples of Australian companies disclosing their sustainability practices using management accounting information or tools such as the balanced scorecard.
Using the following table, classify each sustainability cost according to its appropriate category (levels 1–5). Category level 1-5 Sustainability cost Contingent costs Clean-up costs from a
Using Bank Australia as an example, list some of the positive externalities that might be achieved as a result of its operations. What are some of the negative externalities that could result from
List some costs that could be considered to be ‘contingent’ sustainability-related costs for the mining industry.
Comment on how the inclusion of environmental and social indicators in a balanced scorecard might contribute to an organisation’s profitability.
(a) Explain how carbon trading might reduce greenhouse gas emissions.(b) How might the existence of carbon trading schemes affect the management accounting system within organisations?
The World Coal Institute claims that coal provides 26.5 per cent of global primary energy needs and generates 41.5 per cent of the world’s electricity. Coal is one of the cheapest forms of fuel
Briefly comment on how legislation and societal expectations could influence the scope of sustainability management practice within organisations.
What are some of the sustainability-related considerations that managers should acknowledge when evaluating their organisation’s value chain?
What key measures should be included in a sustainability balanced scorecard?
Discuss the importance of ethical decision making in a sustainability management accounting framework.
Outline the relationship between the scope (levels) of costs and full cost accounting.
Why should the economic, environmental and cultural dimensions be managed in unison?
Is sustainability achievable in all entities regardless of their operating activities?
Define the terms ‘sustainability’, ‘sustainability management’ and ‘sustainability management accounting’.
What is the link between sustainability strategies and management accounting?
Matahari Ltd manufactures and installs renewable energy systems. It has four divisions in Australia: Wind, Thermal Solar, Photo Voltaic (PV) and Installation. The company was listed on the
Part AIn the early 1980s, Bernard Hancock built a small brewery on his 150-acre property in the Macedon Ranges. The brewery, named Mountain Mist Brewery, was designed with ales in mind and Bernard
Regal Foods is a multi-divisional company operating in a range of locations around the globe. Its product-based divisions are: Ice Cream and Associated Dairy Products, Confectionery, Nutrition, and

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