Questions and Answers of Management And Cost Accounting 11th

Shoe Co., a shoe manufacturer, has developed a new product called ‘Smart Shoe’ for children, which has a built-in tracking device. The shoes are expected to have a life cycle of two years, at
Which of the following BEST describes target costing?(a) Setting a selling price for the company to aim for in the long run(b) Setting a cost for the use in the calculation of variances(c) Setting a
RT plc sells three products.Product R has a contribution to sales ratio of 30%.Product S has a contribution to sales ratio of 20%.Product T has a contribution to sales ratio of 25%.Monthly fixed
CD manufactures and sells a number of products. All of its products have a life cycle of less than one year. CD uses a four-stage life cycle model (Introduction, Growth, Maturity and Decline).CD has
Kinn Co produces a single product. Each finished product requires 3kg of raw materials. The raw material costs $6 per kg. You are given the following information:1. Kinn Co prepares budgets on a
A company’s managers are considering investing in a project that has an expected life of five years. The project is expected to generate a positive net present value of $240,000 when cash flows are
A company has recorded the following variances for a period:Sales volume variance .................................. $10,000 adverseSales price variance ...................................... $5,000
Tabula Ltd manufactures a range of writing desks. One type, the Office Standard, has a standard cost of £95 made up as follows:The standard selling price of the desk is £120. The monthly budget
A company’s operating costs are 60 per cent variable and 40 per cent fixed.Which of the following variances’ values would change if the company switched from standard marginal costing to standard
Product GX consists of a mix of three materials J, K and L. The standards material cost of a unit of GX is as follows:During March, 3,000 units of GX were produced and actual usage was:What was the
A company uses marginal costing. The following variances occurred in the last period when the actual net profit was $40,000.Materials ................................................... $900
PlasBas Co. uses recycled plastic to manufacture shopping baskets for local retailers. The standard price of the recycle plastic is $0.50 per kg and standard usage of recycled plastic is 0.2kg for
Glove Co. makes high quality, handmade gloves which it sells for an average of $180 per pair. The standard cost of labour for each pair is $42 and the standard labour time for each pair is three
The School Uniform Company (SU Co.) manufactures school uniforms. One of its largest contracts is with the Girls’ Private School Trust, which has 35 schools across the country, all with the same
‘In the control of divisional operations within a large company, conflicts often arise between the aims of the organization as a whole and the aspirations of the individual divisions.’What forms
Divisionalized structures are normal in large firms, and occur even when centralized structures would be feasible.Required:(a) Explain and discuss the arguments for divisionalized structures in large
The director of Donny Co. is reviewing the performance of its division.The following information is available for the year ending 31 March 20X9 for its South division.South division operates in the
A company has capital employed of $200,000.It has a cost of capital of 12% per cent per year. Its residual income is $36,000.What is the company’s return on investment?
At the end of 20X1, an investment centre has net assets of $1m and annual operating profits of $190,000. However, the bookkeeper forgot to account for the following:A machine with a net book value of
Sports Co. is a large manufacturing company specializing in the manufacture of a wide range of sports clothing and equipment. The company has two divisions: Clothing (Division C) and Equipment
Jenson, Lewis and Webb (JLW) manufactures tubes of acrylic paint for sale to artists and craft shops in Kayland and Seeland. JLW has two divisions, Domestic division and Export division, both based
A manufacturing company, Man Co., has two divisions: Division L and Division M. Both divisions make a single standardized product. Division L makes component L, which is supplied to both Division M
The One Stop Car Co. (OSC Co.) offers a range of services for car owners at its 55 service centres across the country. The car maintenance business is extremely competitive in all regions across the
Which of the following are suitable measures of performance at strategic level?1 Return on investment2 Market share3 Number of customer complaints(a) 2 and 3(b) 1 and 3(c) 2 only(d) 1 and 2
A government is trying to assess schools by using a range of financial and non-financial factors. One of the chosen methods is the percentage of students passing five exams or more.Which of the three
Victoria-Yeeland Logistics (Victoria) is a logistics support business, which operates a fleet of lorries to deliver packages of goods on behalf of its customers within the country of Yeeland.
A manufacturing company benchmarks the performance of its accounts receivable department with that of a leading credit card company.Which type of benchmarking is the company using?(a) Internal
Helot Co. develops and sells computer games. It is well known for launching innovative and interactive role-playing games and its new releases are always eagerly anticipated by the gaming community.
Dibble is formed of two autonomous divisions, Timber and Steel, and manufactures components for use in the construction industry. Dibble has always absorbed production overheads to the cost of each
Which of the following techniques is NOT relevant to target costing?(a) Value analysis(b) Variance analysis(c) Functional analysis(d) Activity analysis
(a) Contrast the features of organizations that would benefit from ABC with those that would not.(b) Explain in what ways ABC may be used to manage costs, and the limitations of these approaches.(c)
Luvij manufactures high quality, luxury women’s footwear. It sells its products on its own website and also to small independent retailers. In order to monitor performance and aid decision-making,
Identify whether each of the following statements about the uses of big data analytics in organizations is TRUE or FALSE.(a) It helps to better understand customer behaviour and preferences.(b) It
A manufacturer and retailer of kitchens introduces an enterprise resource planning system.Which of the following is NOT likely to be a potential benefit of introducing this system?(a) Schedules of
A government department generates information which should not be disclosed to anyone who works outside of the department. There are many other government departments working within the same
P plc is a multinational conglomerate company with manufacturing divisions, trading in numerous countries across various continents. Trade takes place between a number of the divisions in different
Discuss the conditions that should apply if linear regression analysis is to be used to analyse cost behaviour.
(a) Briefly discuss the problems that occur in constructing cost estimation equations for estimating costs at different output levels.(b) Describe four different cost estimation methods and for each
Present a table of production times showing the following columns for E. Condon Ltd, which produces up to 16 units while experiencing a 90 per cent learning curve, the first unit requiring 100 hours
The following statements relate to the advantages that linear regression analysis has over the high–low method in the analysis of cost behaviour:1. The reliability of the analysis can be
Which TWO of the following are feasible values for the correlation coefficient?(a) + 1.40(b) + 1.04(c) 0(d) – 0.94
The number of daily complaints to a local government office has a mean of 12 and a standard deviation of 3 complaints.What is the coefficient of variation as a percentage?
A company is developing a new product. During its expected life, 16,000 units of the product will be sold for $82 per unit.Production will be in batches of 1,000 units throughout the life of the
A company always determines its order quantity for a raw material by using the economic order quantity (EOQ) model.What would be the effects on the EOQ and the total annual holding cost of a decrease
The purchase price of an inventory item is $25 per unit. In each three-month period the usage of the item is 20,000 units. The annual holding costs associated with one unit equate to 6 per cent of
Gregorie Tool & Die reports the following information for the quarter:RequiredSelect the answer for each of the following costs.a. Variable cost per unit.1. $302. $353. $424. $45 b.
Consider again the Business Application “Components of Cost of Goods Sold for a Retailer.” Some of the costs associated with opening during the COVID-19 pandemic were outlay costs and some were
Lillibridge & Friends, Inc. provides you with the following data for its single product: RequiredGive the amounts for each of the following:a. Prime cost per unit.b. Contribution margin per
Lillibridge & Friends, Inc. provides you with the following data for its single product: RequiredGive the amounts for each of the following:a. Prime cost per unit.b. Contribution margin per
Harbor Island Investments (HII) is a discount brokerage firm offering clients investment advice, trading services, and a variety of mutual funds for investment. HII has collected the following
Trumball Catering served 4,000 meals last month. Trumball recorded the following costs with those meals:RequiredUnit variable costs and total fixed costs are expected to remain unchanged next month.
Otsego Industries manufactured 300,000 units of product last year and identified the following costs associated with the manufacturing activity:RequiredUnit variable costs and total fixed costs are
Baubee Meal Delivery Service (BMDS) provides restaurant to customer meal deliveries for food establishments in a suburban neighborhood. The company provides you with the following information for the
Alwar Brothers is a small, family-owned business that produces animal feed for dairy farms. The administrative offices and manufacturing plant of Alwar share the same building. Financial records
Cheyenne Contractors makes fixtures for aircraft fueling and hydraulic systems. As a supplier to the aircraft industry, the annual volumes can vary greatly depending on both civilian and military
Kessler Brothers produces products for farms and ranches. The administrative and manufacturing operations occupy the same 240,000-square-foot building. The manufacturing plant uses 180,000 square
Guilford Boards started operations on March 3. There were no direct materials in inventory as of March 2. Data for the month of March include the following:a. Unit cost based on units produced in
The chapter describes how to incorporate income taxes into CVP analysis. Why are other taxes not discussed? Is CVP analysis unable to analyze other taxes, such as property taxes, carbon taxes, sales
Coastal Bistro has the following information for July, when several new employees were added to the waitstaff: a 10 percent of this cost was for food that was not used by the expiration date,
Accounting records for The Ralston Company show the following for the most recent fiscal year:RequiredPrepare:a. A gross margin income statement.b. A contribution margin income statement. Units
The controller at Wesson Company’s manufacturing plant has provided you with the following information for the first quarter’s operations: RequiredDetermine each of the following unit
In product costing, the costs attributed to each unit of production may be calculated by using either:(i) Absorption costing, or(ii) Marginal (or direct or variable) costing.Similarly, in
Discuss the arguments for and against the inclusion of fixed overheads in stock valuation for the purpose of internal profit measurement.
The accountant’s approach to cost–volume– profit analysis has been criticized in that, among other matters, it does not deal with the following:(a) Situations where sales volume differs
A company makes and sells product X and product Y. Twice as many units of product Y are made and sold as that of product X. Each unit of product X makes a contribution of £10 and each unit of
Swim Co offers training to athletes and has prepared the following break-even chart:Required:(a) State the break-even sales revenue for Swim Co and estimate, to the nearest $10,000, the company’s
A manufacturing company uses three processes to make its two products, X and Y. The time available on the three processes is reduced because of the need for preventative maintenance and rest
The Aika Hotel is situated in a major city close to many theatres and restaurants. The Aika Hotel has 25 double bedrooms and it charges guests $180 per room per night, regardless of single or double
Darwin uses decision tree analysis in order to evaluate potential projects. The company has been looking at the launch of a new product which it believes has a 70 per cent probability of success. The
A decision-maker using the maximin decision criterion will:(a) Assume that uncertainty can be ignored and will select the option with the highest expected value;(b) Assume that he/she will regret not
Mylo runs a cafeteria situated on the ground floor of a large corporate office block. Each of the five floors of the building are occupied and there are in total 1,240 employees. Mylo sells lunches
Euclid plc has a factory that manufactures a wide range of specialist carpentry tools. One type of product, the Chipper, is made on a purpose-built machine that was installed in January 2017 at a
Using an interest rate of 10 per cent per year the net present value (NPV) of a project has been correctly calculated as $50. If the interest rate is increased by 1 per cent the NPV of the project
Fabrix plc is a large, all-equity financed, divisionalized company that supplies the construction industry. It has a current cost of capital of 15 per cent. The annual performance of its four
A company is deciding which of two alternative machines (X and Y) to purchase. The useful lives for machines X and Y are two years and three years respectively. The cash flows associated with each of
PK is a large public company in the telecommunications sector. One of its main planning and control tools is the preparation and use of traditional annual budgets. Whilst this may be appropriate for
The preparation of budgets is a lengthy process which requires great care if the ultimate master budget is to be useful for the purposes of management control within an organization.Required:(a)
A master budget will consist of many individual budgets.Outline and briefly explain the steps that should be taken in the preparation of master budgets in a manufacturing company, indicating the main
A company manufactures and sells on product which requires 8kg of raw materials in its manufacture. The budgeted data related to the next period are as follows:What is the budgeted raw material
Which of the following would NOT be expected to appear in an organization’s mission statement?(a) The organization’s values and beliefs(b) The products or services offered by the organization(c)
Which TWO of the following are benefits of budgeting?(a) It is a starting point for strategic planning.(b) It fulfils legal reporting obligations.(c) It helps coordinate the activities of different
Corfe Co. is a business which manufactures laptop batteries and it has developed a new battery which has a longer usage time than batteries currently available in laptops. The selling price of the
The Eastland Postal Service is government owned. The government requires it to provide parcel delivery service to every home and business in Eastland at a low price which is set by the government.
The major reason for introducing budgetary control and standard costing systems is to influence human behaviour and to motivate the managers to achieve the goals of the organization. However, the
The final impact which any accounting system has on managerial and employee behaviour is dependent not only upon its design and technical characteristics but also in the precise manner in which the
Information relating to two processes (F and G) was as follows:For each process, was there an abnormal loss or an abnormal gain?(a) Process F(b) Process G Process Normal loss as % of
‘Motivation is the over-riding consideration that should influence management in formulating and using performance measures, and in designing management control systems.’Discuss this statement in
ABC Co. has a manufacturing capacity of 10,000 units. The flexed production cost budget of the company is as follows:What is the budgeted total production cost if the company operates at 85%
The following statements relate to the participation of junior management in setting budgets:1 It speeds up the setting of budgets.2 It increases the motivation of junior managers.3 It reduces the
A profit centre manager claims that the poor performance of her division is entirely due to factors outside her control. She has submitted the following table along with notes from a market expert,
Prancer Co. uses standard costing to control its costs and revenues. A standard cost card for its only product is given below together with a standard cost operating statement for last month.Actual
A company has calculated a $10,000 adverse direct material variance by subtracting its flexed budget direct material cost from its actual direct material cost for the period.Which TWO of the
A company uses a standard costing system. The company’s sales budget for the latest period includes 1,500 units of a product with a selling price of $400 per unit. The product has a budgeted
Which TWO of the following statements relating to management accounting information are TRUE?(a) It is produced for parties external to the organization.(b) There is usually a legal requirement for
Up to a given level of activity in each period the purchase price per unit of a raw material is constant. After that point, a lower price per unit applies both to further units purchased and also
Which of the following statements regarding market penetration as a pricing strategy is/are correct?1. It is useful if significant economies of scale can be achieved.2. It is useful if demand for a
Jewel Co. is setting up an online business importing and selling jewellery headphones. The cost of each set of headphones varies depending on the number purchased, although they can only be purchased
A company makes two products using the same type of materials and skilled workers. The following information is available:Fixed costs relating to material handling amount to $100,000.The cost driver
A company uses an activity -based costing system.The company manufactures three products, details of which are given below:Annual inspection costs are $150,000.The inspection cost per unit of Product
Sweet Cicely (SC) manufactures sweets and confectionery and has delivered stable but modest increases to the shareholder wealth for many years. Following a change in ownership, the new shareholders

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