HA2011 full ques

Question (7 marks) a) You are representing your college in a management accounting school debate. The topic of the debate is: 'Managers of many companies criticize standard costing because they believe it keeps workers from continuous improvement. These managers argue that workers who achieve standards do not try to improve beyond those standards.' Required: a) Write a response to the above statement, given that you are to support using a standard costing system in the debate. (3 marks) ANSWER a): b) Quality Containers Ltd is an Australian-owned company located in Cairns, Australia. The company produces a single and popular heavy-duty container that is sold worldwide. It has spare capacity in its factory, and the company is planning to increase its market share. Production data are as follows: - It is currently working at 50% capacity and produces 15,000 units. - At 50% capacity, the unit costs are $190 per unit, and it is sold at $220 per unit. - The unit cost of $190 consists of the following: Material: $90 Labor: $30 Factory overhead: $40 (40\% fixed) Admin overhead: $30 (60\% fixed) Required: i) Determine the capacity in units at 100% or full capacity. (1 mark)