Questions and Answers of Management Cost Accounting

Cam Co. manufactures webcams, devices which can provide live video and audio streams via personal computers. It has recently been suffering from liquidity problems and hopes that these will be eased
(a) The year end is 31 December.(b)The comparative figure is for the same month in the previous year.(c) ROCE is an annualized figure.(d) YTD means year to date.There are additional performance
Kolmog Hotels is a large, listed chain of branded hotels in Ostland. Its stated mission is: ?To become the No. 1 hotel chain in Ostland, building the strength of the Kolmog brand by consistently
HPR harvests, processes and roasts coffee beans. The company has two divisions: Division P is located in Country Y. It harvests and processes coffee beans. The processed coffee beans are sold to
Division A of a large divisionalized organization manufactures a single standardized product. Some of the output is sold externally while the remainder is transferred to Division B where it is a
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
Bath Co. is a company specializing in the manufacture and sale of baths. Each bath consists of a main unit plus a set of bath fittings. The company is split into two divisions, A and B. Division A
Stillwater Services (SS) is a listed water utility company providing water and sewage services to the public and businesses of a region of Teeland. The company was formed when the government-owned
Alpha Division, which is part of the Delta Group, is considering an investment opportunity to which the following estimated information relates: 1. An initial investment of $45m in equipment at the
Beach Foods (Beach) is a family-owned business which has grown strongly over its 100-year history. The objective of the business is to maximize the family?s wealth through their shareholdings. Beach
Bronte Ltd manufactures a single product, a laminated kitchen unit with a standard cost of £110 made up as
Woodalt plc has two automated machine groups X and Y, through which timber is passed in order to produce two models of an item of sports equipment. The models are called ?Traditional? and
Kattalist Ltd is a distributor of an industrial chemical in the northeast of England. The chemical is supplied in drums that have to be stored at a controlled temperature.The company’s objective is
Pink Ltd is experiencing some slight problems concerning two stock items sold by the company.The first of these items is product Exe, which is manufactured by Pink. The annual demand for Exe of 4000
A domestic appliance retailer with multiple outlets stocks a popular toaster known as the Autocrisp 2000, for which the following information is available:Average sales.....................75 per
Maxmarine plc builds boats. Earlier this year the company accepted an order for 15 specialized ‘Crest’ boats at a fixed price of £100 000 each. The contract allows four months for building and
Mic Co. produces microphones for mobile phones and operates a standard costing system. Before production commenced, the standard labour time per batch for its latest microphone was estimated to be
FGH Telecom (FGH) is one of the largest providers of mobile and fixed line telecommunications in Ostland. The company has recently been reviewing its corporate objectives in the light of its changed
Navier Aerials Co (Navier) manufactures satellite dishes for receiving satellite television signals. Navier supplies the major satellite TV companies who install standard satellite dishes for their
Telecoms At Work (TAW) manufactures and markets office communications systems. During the year ended 31 May, TAW made an operating profit of $30 million on sales of $360 million.However, the
JMM is a car manufacturer. It is a relatively new company and the directors are keen to establish a reputation for high quality. The management of JMM recognizes the need to establish a culture of
PBB is a toy manufacturer and retailer. PBB sells toys to consumers through its large network of retail outlets in its home country and via the company’s website.PBB purchases the materials and
Graviton Clothing (Graviton) is a listed manufacturer of clothing with a strong reputation for producing desirable, fashionable products which can attract high selling prices. The company?s objective
Soup operates passenger rail services in Deeland, a technologically advanced country, with high demand for fast reliable rail travel from business and leisure passengers. Many passengers choose train
Pharmaceutical Technologies Co. (PT) is a developer and manufacturer of medical drugs in Beeland, It is one of the 100 largest listed companies on the national stock exchange. The company focuses on
Squarize is a large company which, for many years, operated solely as a pay-tv broadcaster. However, five years ago, it started product bundling, offering broadband and telephone services to its
Iron Chicken (IC) is a multinational business which manufactures commercial building control systems. Building control systems include heating and air-conditioning systems, lighting controls, power
The GHYD company comprises two divisions: GH and YD. GH manufactures components using a specialized machine. It sells the same components both externally and to YD. The variable costs of producing
HK Coffee Machines Co. (JHK) manufactures coffee makers for use in bars and cafes. It has been successful over the last five years and has built and maintained a loyal customer base by making a
Landual Lamps (Landual) manufactures and delivers floor and table lamps for homes and offices in Beeland. The company sells through its website and uses commercial logistics firms to deliver their
You are the management accountant of the SSA Group that manufactures an innovative range of products to provide support for injuries to various joints in the body. The group has adopted a divisional
Distinguish between return on investment, residual income and economic value added.
(a) In high technology small batch manufacture, accountants sometimes take the view that standard costing cannot be applied. The move into high technology is generally accompanied by a shift away
The Safe Soap Co makes environmentally-friendly soap using three basic ingredients. The standard cost card for one batch of soap for the month of September was as follows: The budget for production
Chaff Co. processes and sells brown rice. It buys unprocessed rice seeds and then, using a relatively simple process, removes the outer husk of the rice to produce the brown rice. This means that
HB makes and sells a single product. The company operates a standard marginal costing system and a just-in-time purchasing and production system. No inventory of raw materials or finished goods is
LM produces two products from different quantities of the same resources using a just-in-time (JIT) production system. The selling price and resource requirements of each of these two products are as
PTP produces two products from different combinations of the same resources. Details of the selling price and costs per unit for each product are shown below: The fixed costs of the company are $50
The Cosmetic Co. is a company producing a variety of cosmetic creams and lotions.The creams and lotions are sold to a variety of retailers at a price of $23.20 for each jar of face cream and $16.80
THS produces two products from different combinations of the same resource. Details of the products are shown below: THS is preparing the production plan for next month. The maximum resource
Taree Limited uses linear programming to establish the optimal production plan for the production of its two products, A and U, given that it has the objective of minimizing costs. The following
Explain how sensitivity analysis can be applied to the output of a linear programming model.
Provide illustrations of how the information derived from linear programming can be applied to a variety of management accounting problems.
What are slack variables?
Explain the circumstances when it is appropriate to use the simplex method.
Explain what is meant by the term ‘shadow price’.
What is the marginal rate of substitution?
What is the feasible production area?
Explain what is meant by the term ‘objective function’.
Describe the situations when it may be appropriate to use linear programming.
A company has determined that the EOQ for its only raw material is 2000 units every 30 days. The company knows with certainty that a four-day lead time is required for ordering. The following is the
CDE has recently won a contract to supply a component to a major car manufacturer that is about to launch a new range of vehicles. This is a great success for the design team of CDE as the component
BB manufactures a range of electronic products. The supplier of component Y has informed BB that it will offer a quantity discount of 1.0 percent if BB places an order of 10 000 components or more at
The annual demand for an item of raw materials is 4000 units and the purchase price is expected to be £90 per unit. The incremental cost of processing an order is £135 and the cost of storage is
N Ltd?s chief executive believes the company is holding excessive stocks and has asked for the management accountant to carry out an investigation.Information on the two stock items is given
PR is a retailer of bicycles. The most popular children’s bicycle has an annual demand of 30 000 units. Demand is predictable and spread evenly throughout the year.The bicycles are purchased by PR
What are the essential features of just-in-time purchasing arrangements?
Describe the other factors, besides the economic order quantity, that should be taken into account when choosing an order quantity.
Describe the ABC classification method. What purposes does it serve?
Explain what is meant by the re-order point.
What determines which holding and ordering costs should be included in the economic order quantity calculation?
What are holding costs? Provide some examples.
WTI is planning to launch a new component. Production volume will be limited, with only 128 components to be produced in total.WTI expects the manufacture of the first component to take 25 direct
Bokco is a manufacturing company. It has a small permanent workforce but it is also reliant on temporary workers, whom it hires on three-month contracts whenever production requirements increase. All
Albatross Plc, the Australian subsidiary of a British packaging company, is preparing its budget for the year to 30 June 2019. In respect of fuel oil consumption, it is desired to estimate an
A company is estimating its costs based on past information. The total costs incurred by the company at different levels of output were as follows:Output ......................Total costs(units)
The table below shows the output, total costs and the cost inflation index for a business in two periods.Cost behaviour patterns were the same in both periods. The variable cost per unit at an
Explain the meaning of coefficient of variation.
Describe what is meant by ‘goodness of fit’.
Define the steady-state production level.
Describe what is meant by the learning curve effect.
Why is a scatter graph a useful first step in estimating cost functions?
Describe the steps that should be followed in estimating cost functions.
Describe the least-squares method. Why is this method better than the high–low and scattergraph methods?
Describe how the scattergraph method is used to analyse costs into their fixed and variable elements.
What is the major limitation of the high–low method?
Describe the high–low method.
Under what circumstances can the engineering method be used to estimate costs?
Explain what is meant by the term ‘cost function’.
PLX Refinery Co is a large oil refinery business in Kayland. Kayland is a developing country with a large and growing oil exploration and production business which supplies PLX with crude oil.
Environmental management is considered to be one of the most important issues facing companies today. An effective environmental costing system will not only support a company’s environmental
Explain the meaning of intellectual capital and its implications for management accounting.
Explain why management accounting practices tend not to differ across countries.
Describe the meaning of the term Big Data.
What factors influence the decision as to whether to adopt cloud computing?
Describe enterprise resource planning systems and their impact on management accountants.
Provide examples of unethical behaviour in an organization.
Describe how management accounting can support shared value and sustainable development.
Discuss the value of an environmental cost report.
Describe input/output analysis.
Why was there virtually no innovation in management accounting practices until the mid 1980s.
The budget for the production, planning and development department of Obba plc, is currently prepared as part of a traditional budgetary planning and control system. The analysis of costs by expense
Ganymede University (GU) is one of the three largest universities in Teeland, which has eight universities in total. All of the universities are in the public sector. GU obtains the vast majority of
Tench Cars (Tench) is a large national car manufacturing business. It is based in Essland, a country that has recently turned from state communism to democratic capitalism. The car industry had been
Fit Co. specializes in the manufacture of a small range of hi-tech products for the fitness market. They are currently considering the development of a new type of fitness monitor, which would be the
Fit Co. specializes in the manufacture of a small range of hi-tech products for the fitness market. They are currently considering the development of a new type of fitness monitor, which would be the
What are the essential features of just-in-time purchasing arrangements?
Explain how bench-marking can be used to manage costs and improve activity performance. What are the major features of a just-in-time manufacturing philosophy?
Explain what is meant by value chain analysis. Illustrate how value chain analysis can be applied.
Describe what is meant by a zero defects policy.

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