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management and cost accounting
Questions and Answers of
Management And Cost Accounting
SBA is a company that produces televisions and components for televisions. The company has two divisions, Division S and Division B.Division S manufactures components for televisions. Division S
In April 2023, Bérangère Saunier, editor of The Sporting News (SN), decides to reduce the price per newspaper from €0.70 in April 2023 to €0.50 starting 1 May 2023. Actual paid circulation in
WebNews.co.uk is an Internet company. It offers subscribers multiple online services ranging from an annotated TV guide to local-area information on restaurants and cinemas. It has two main revenue
Management accountants at WebNews.co.uk can play three key roles in each of the five decisions described in Exercise 1.23: problem solving, scorekeeping and attention directing.Required 1 Distinguish
George Mathenge is a well-known motivational speaker. The Europe Speaker’s Bureau (ESB) wants Mathenge to be the sole speaker at an all-day seminar. Mathenge’s agent offers ESB the choice of
Calculate cost of goods manufactured and cost of goods sold from the following account balances relating to 2022 (in € millions): Property tax on plant building 0.45 Marketing, distribution and
Howell Ltd has the following account balances (in millions):Required Prepare an income statement and a supporting schedule of cost of goods manufactured for the year ended 31 December 2022. (For
A distraught employee, Guy Pirault-Manne, put a torch to a manufacturing plant on a blustery day, 26 February 2022. The resulting blaze completely destroyed the plant and its contents.Fortunately,
Overtoom International Nederland BV manufactures and sells metal shelving. It began operations on 1 January 2022. Costs incurred for 2022 (V stands for variable; F stands for fixed) are as
Assume management predicts that the selling price per unit and variable cost per unit will be the same in 2024 as in 2022. Fixed manufacturing costs and marketing, distribution and customer-service
Lutukka Oy owns the rights to extract minerals from beach sands in Enare Lappmark. Lutukka has costs in three areas:a Payment to a mining subcontractor who charges €80 per tonne of beach sand mined
Aran Sweaters Ltd designs and markets wool jumpers to many retailers and distributors around Europe. Its corporate headquarters are situated in Dublin, Ireland. Manufacturing is done by a
Consider the following selected cost data for Schwarzmetal GmbH for 2023.Schwarzmetal’s job-costing system has a single manufacturing overhead cost pool (allocated using a budgeted rate based on
Ti-Enne Srl uses a normal costing system with a single manufacturing overhead cost pool and machine-hours as the allocation base. The following data are for 2023:Machine-hours data and the closing
The Editions Sorbonne is wholly owned by the university. It performs the bulk of its work for other university departments, which pay as though the Editions Sorbonne were an outside business
For each journal entry in your answer to Exercise 3.18,(a) indicate the source document that would most probably authorise the entry and(b) give a description of the entry into the subsidiary
Solucions SA, an engineering consulting firm, specialises in analysing the structural causes of major building catastrophes. Its job-costing system in 2023 had a single direct-cost category
Giannacopoulos SA uses a job-costing system at its Korinthos plant. The plant has a Machining Department and an Assembly Department. Its job-costing system has two direct-cost categories (direct
Budenmayer BV is a small machine shop that uses highly skilled labour and a job-costing system (using normal costing). The total debits and credits in certain accounts just before year-end are as
Define cost pool, cost tracing, cost allocation and cost allocation base.
Michel Scaramouche, the president of Tax-Assistance SA, is examining alternative ways to calculate indirect-cost rates. He collects the following information from the budget for the year:• Budgeted
In the production of services, direct materials are usually the major cost.’ Is this quote accurate? Explain.
How does a job-costing system differ from a process-costing system?
Why might an advertising agency use job costing for an advertising campaign for Pepsi while a bank uses process costing for the cost of current account withdrawals?
Ti-Enne Srl uses a normal costing system with a single manufacturing overhead cost pool and machine-hours as the allocation base. The following data are for 2019:Budgeted manufacturing overhead
What are two major goals of a job-costing system?
The Editions Sorbonne is wholly owned by the university. It performs the bulk of its work for other university departments, which pay as though the Editions Sorbonne were an outside business
For each journal entry in your answer to Exercise 3.18, (a) indicate the source document that would most probably authorise the entry and (b) give a description of the entry into the subsidiary
Solucions SA, an engineering consulting firm, specialises in analysing the structural causes of major building catastrophes. Its job-costing system in 2019 had a single direct-cost category
Giannacopoulos SA uses a job-costing system at its Korinthos plant. The plant has a Machining Department and an Assembly Department. Its job-costing system has two directcost categories (direct
Refer to requirement 2 of Exercise 4.11.RequiredPrepare summary journal entries for the use of direct materials and conversion costs. Also prepare a journal entry to transfer out the cost of goods
What problems might arise in estimating the degree of completion of an aircraft blade in a machining shop?
Radhika Khrishna is the corporate accountant of Manchester Suits plc. Manchester Suits has 20 plants worldwide that manufacture basic suits for retail stores. Each plant uses a process-costing
Do Exercise 4.22 (1) using FIFO and four decimal places for unit costs. Explain any difference between the cost of work completed and transferred out and cost of closing work in progress in the
Sligo Toys Ltd manufactures wooden toy figures at its Ballinode plant. It has two departments – the Forming Department and the Finishing Department. (Exercises 4.22 and 4.23 focused on the Forming
Azu-Cena Ltda is a manufacturer of motorcycles. Production and cost data for 2018 are as follows:A single cost pool is used for manufacturing overhead. For 2018, manufacturing overhead was €6.4
Koala Ltd has only two divisions: A and B. The following data apply to Division A. Fixed costs controllable outside division ...................................................
A company simultaneously produces three products (X, Y and Z) from a single process. X and Y are processed further before they can be sold; Z is a by product that is sold immediately for $6 per unit
Flori-Dante classifies animal feed as a by-product. The by-product is inventoried at its selling price when produced; the net realisable value of the product is used to reduce the joint production
In 2018, the Montpazier brewery of Bières Ronsard showed these results: The sales division of Bières Ronsard purchased 240,0000 barrels in 2018 at the € 68 per barrel rate. All
It is the end of 2019. Ginnungagap Oy began operations in January 2018. The company is so named because it has no variable costs. All its costs are fixed; they do not vary with output. Ginnungagap is
Audumla Oy began operations in 2018 and differs from Ginnungagap (described in Exercise 7.22) in only one respect: it has both variable and fixed manufacturing costs. Its variable manufacturing costs
Give an example of how a manager can decrease variable costs while increasing fixed costs.
Fill in the blanks for each of the following independent cases. Variable Total Total Selling price units contribution Operating fixed costs profit/loss costs Total Case per unit sold margin £30 £20
Knitwear Ltd is considering three countries for the sole manufacturing site of its new sweater: Cyprus, Turkey and Ireland. All sweaters are to be sold to retail outlets in Ireland at €32 per unit.
Koninklijke BolsWessanen NV has fixed costs of €300,000 and a variable-cost percentage of 80%. The company earns net profit of €84.000 in 2018. The income tax rate is
La Pilotta has two restaurants in Lausanne that are open 24 hours a day. Fixed costs for the two restaurants together total SFr 450,000 per year. Service varies from a cup of coffee to full meals.
The manager of a tourist attraction is considering whether to open on 1 January, a day when the attraction has, in previous years, been closed. The attraction has a daily capacity of 1000 visitors.
A company sells three products: D, E and F. The market for the products dictates that the numbers of products sold are always in the ratio of 3D:4E:5F. Budgeted sales volumes and prices, and
Presencia Equipajes SA retails two products, a standard and a deluxe version of a luggage carrier. The budgeted income statement is as follows: Required 1. Calculate the breakeven point in
S plc produces and sells three products, X, Y and Z. It has contracts to supply products X and Y, which will utilise all of the specific materials that are available to make these two products during
The controller of Iso-Mets Oy wants you to estimate a cost function from the following two observations in a general-ledger account called Maintenance: Required 1. Estimate the cost function for
Lorenzo-Netto, Srl, operates a brushless car wash. Incoming cars are put on an automatic, continuously moving conveyor belt. Cars are washed as the conveyor belt carries the car from the start
Bildt-Östersund AN wishes to set a flexible budget for its power costs, which are primarily a function of machine-hours worked. Data for the first four periods follows: Required 1. Plot the
Air Calabria owns a single jet aircraft and operates between Cantazaro and Venice. Flights leave Cantazaro on Mondays and Thursdays and depart from Venice on Wednesdays and Saturdays. Air Calabria
SVC is a car manufacturer. SVC is planning the development of a prototype hydrogen-powered car, the Model Q. The prototype Model Q car will have a limited production run of 250 cars. To ensure that
Fri-Flask specialises in the manufacture of one-litre plastic bottles. The plastic moulding machines are capable of producing 100 bottles per hour. The firm estimates that the variable cost of
‘Increasing the number of indirect-cost pools is guaranteed to sizably increase the accuracy of product, service or customer costs.’ Do you agree? Why?
Describe four levels of a manufacturing cost hierarchy.
McCarthy Potatoes processes potatoes into chips at its highly automated Longford plant. For many years, it processed potatoes for only the retail consumer market where it had a superb reputation for
Wolfgang Iser, the accountant of Starkuchen, wants to further examine the relative profitability of raisin cake and layered carrot cake. He questions the accuracy of the activity-based normal costing
Langholmen-Sverige AB crushes and refines mineral ore into three products in a joint-cost operation. Costs and production for 2018 were as follows: ● Department 1, at initial joint costs of
Nor-Pharma AS manufactures three joint products from a joint process: Altox, Lorex and Hycol. Data regarding these products for the fiscal year ended 31 May 2018 are as follows: The joint
Forza San Marino Srl installed standard costs and a flexible budget on 1 January 2018. The president had been pondering how fixed manufacturing overhead should be allocated to products. Machine-hours
Pinafore Ltd manufactures and sells a single product. The budgeted profit statement for this month, which has been prepared using marginal costing principles, is as follows: The normal monthly
Archibald Ltd manufactures and sells one product. Its budgeted profit statement for the first month of trading is as follows: The budget was prepared using absorption costing principles. If
Langdale Ltd is a small company manufacturing and selling two different products – the Lang and the Dale. Each product passes through two separate production cost centres – a machining
X Ltd has two production departments, Assembly and Finishing, and two service departments, Stores and Maintenance. Stores provides the following service to the production departments: 60% to Assembly
Starzmann GmbH assembles and sells motor vehicles. It uses an actual-costing system, in which unit costs are calculated on a monthly basis. Data relating to April and May of 2018 are: The
Bières Ronsard SA recently purchased a brewing plant from a bankrupt company. The brewery is in Montpazier, France. It was constructed only two years ago. The plant has budgeted fixed manufacturing
Ericsson AB manufactures and sells a single product. The following data cover the two latest years of operations: The denominator level is 30,000 output units per year. Ericsson’s accounting
Svenborg AS manufactures and sells wide-screen television sets. It uses an actual-costing system, in which unit costs are calculated on a monthly basis. Data relating to January, February and March
Exercise 11.11 reports ABC data for the three activity areas (cleaning, cutting and packaging) on a per output-unit basis (per kilogram of chips). This format emphasises product costing. An
Starkuchen GmbH has been in the food-processing business for three years. For its first two years (2017 and 2018), its sole product was raisin cake. All cakes were manufactured and packaged in 1 kg
CJD Ltd manufactures plastic components for the car industry. The following budgeted information is available for three of their key plastic components: Required 1. Calculate the budgeted
Baden-Möbel GmbH manufactures a variety of prestige boardroom chairs. Its job-costing system was designed using an activity-based approach. There are two direct-cost categories (direct materials and
Aircomposystèmes SA has a machining facility specialising in work for the aircraft components market. The prior job-costing system had two direct-cost categories (direct materials and direct
Give two examples each of a value-added cost and a non-value-added cost.
‘It is not important for a firm to distinguish between cost incurrence and locked-in costs.’ Do you agree? Explain.
Describe three alternative cost-plus methods.
Alexon SL is an electronics business with eight product lines. Profit data for one of the products (XT-107) for the month just ended (June 2018) are as follows: Xuclà Mecàniques Fluvià SA, an
Pagnol-Carrelages SNC is a small distributor of marble tiles. Pagnol-Carrelages identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and reports the
Hospedeiras de Portugal Lda, a large labour contractor, supplies contract labour to building construction companies. For 2018, Hospedeiras has budgeted to supply 80,000 hours of contract labour. Its
Østerbro AS cans peaches for sale to food distributors. All costs are classified as either manufacturing or marketing. Østerbro prepares monthly budgets. The March 2018 budgeted absorption-costing
Ella Ltd recently started to manufacture and sell product DG. The variable cost of product DG is £4 per unit and the total weekly fixed costs are £18,000. The company has set the initial selling
Decision Support Systems (DSS) is examining the profitability and pricing policies of its software division. The DSS software division develops software packages for engineers. DSS has collected data
Overloon BV is a repair-service company specialising in the rapid repair of photocopying machines. Each of its 10 clients pays a fixed monthly service fee (based on the type of photocopying machines
Describe the accounting rate of return method. What are its main strengths and weaknesses?
How is the accounting rate of return method different from the payback method?
Euro-Jouets SNC sells neon-coated ‘Feu-Follet’ cars to several local toy stores. It has the capacity to make 250,000 of these units per year, but during the year ending 31 December 2018, it made
Bread Products Ltd is considering the replacement policy for its industrial size ovens which are used as part of a production line that bakes bread. Given its heavy usage, each oven has to be
Meer has been offered a special-purpose metal-cutting machine for €110,000. The machine is expected to have a useful life of eight years with a terminal disposal value of €30 000. Savings in
Aalesund Fotballklubb is a Norwegian football team with a long tradition of winning. However, the last three years have been traumatic. The team has not won a major championship, and attendance at
Assume that six projects, A–F in the table that follows, have been submitted for inclusion in the coming year’s budget for capital expenditures: Required 1. Calculate the internal rates of
The board of directors of a company is considering two mutually exclusive projects. Both projects necessitate buying new machinery, and both projects are expected to have a life of five
Hraxin Co is appraising an investment project which has an expected life of four years and which will not be repeated. The initial investment, payable at the start of the first year of operation, is
ST operates in a highly competitive market and is considering introducing a new product to expand its current range. The new product will require the purchase of a specialised machine costing
Define master budget.
What are the elements of the budgeting cycle?
Define kaizen budgeting.
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