Question 1:

1. Explain the difference between prime and conversion costs, using any organisation you are familiar with as an example.
2. Explain how the distinction between these cost types could help organisations to reduce their costs.

Question 2:

1. Explain how contribution analysis and the amended break-even formula can be used to work out a target profit, using as your example any type of sole trader who would like to make a 20,000 profit per year and providing numbers to support your points.
2. Highlight two potential limitations of contribution analysis and explain how these limitations might apply to your example.

Question 3:

1. Explain the difference between strategic, tactical and operational planning. To illustrate your points, use the example of a sole trader working from home, making and selling jewellery online.

Question 4:

A,)Explain the controllability principle and give two reasons why it might be difficult to apply in practice.

1. For an organisation you are familiar with, give an example of a cost centre and a revenue centre. For each of these centres, explain why the controllability principle might be difficult to apply in practice.