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NEW QUESTION 46
A company makes and sells three products A, B and C. The products are sold in the ratio of A:B:C = 1:1:4.
Monthly fixed costs are $150,000. Product details are shown below:
What sales value of product C is required to achieve a target profit of $72,000 next month?
Give your answer to the nearest whole $ (in '000s).
Answer:
Explanation:
270000
NEW QUESTION 47
You are a management accounting working for a car manufacturer. The company is publicly listed and has been around for many years.
The company produces 2 products. Car 1 and Car 2. Car 1 sells for £20,000 and Car 2 for £27,000.
Car 1 can be upgraded post production to the 1ZC model for £5,000 and Car 2 to the 2ZC model for
£3,500.
Post production upgrade the 1ZC sells for £25,500 and the 2ZCfor £30,000.
The company sources all of its supplies for the same supplier and has access to a large workforce. As a result there are no bottlenecks or limiting factors to production.
Based on the information above the company should...
- A. Upgrade both models
- B. Keep both Cars as base models
- C. Upgrade Car 1 but not Car 2
- D. Upgrade Car 2 but not Car 1
Answer: C
NEW QUESTION 48
XY, a not-for-profit charity organization which is funded by public donations, is concerned that it is not making the best use of its available funds. It has carried out a review of its budgeting system and is considering replacing the current system with a zero-based budgeting system.
Select ALL the potential advantages AND disadvantages for the charity of a zero-based budgeting system.
- A. The creation of decision packages and their subsequent ranking by top management is very time consuming and costly. The charity will need to assess whether the benefits of the system outweigh the costs involved.
- B. It discourages a questioning approach by focusing attention not only on the cost of the activity but on the benefits it provides. The charity managers will not articulate the benefits encouraging them to think clearly about the activities.
- C. In an organization like a charity, the decision packages are not very disparate and difficult t compare.
- D. Preparation of the decision packages will normally require the environment of many employees. This environment may produce useful ideas and promote job satisfaction.
- E. In applying traditional budgeting, 'activities' may result in functional departments rather than cross functional activities and thus distract attention from the real cost-reduction issues.
- F. It avoids the complacency inherent in the traditional incremental approach where it is assumed that future activities will be very similar to current ones.
Answer: A,D,F
NEW QUESTION 49
A medium-sized manufacturing company, which operates in the electronics industry, has employed a firm of consultants to carry out a review of the company's planning and control systems. The company presently uses a traditional incremental budgeting system and the inventory management system is based on economic order quantities (EOQ) and reorder levels. The company's normal production patterns have changed significantly over the previous few years as a result of increasing demand for customized products. This has resulted in shorter production runs and difficulties with production and resource planning. The consultants have recommended the implementation of activity based budgeting and a manufacturing resource planning system to improve planning and resource management.
What are the benefits for the company that could occur following the introduction of an activity based budgeting system?
Select ALL the correct answers.
- A. Under a traditional incremental budgeting system the focus is on existing resources and operations.
Adjustments are then made for changes in activity and price which results in past inefficiencies being perpetuated. Under an activity based budgeting system, only resources that are needed to perform activities required to meet the budgeted production and sales volumes are included. - B. The approach under an Activity based Budgeting System is to make arbitrary cuts in order to meet overall financial targets.
- C. Activity Based Budgeting Systems present costs under functional headings i.e. the emphasis is on the nature of the cost. The weakness if this approach is that it gives little indication of the link between the level of activity and the cost incurred.
- D. Activity based techniques including activity based budgeting focus on the outputs of a process rather than the input to the process. This approach provides a clear framework for understanding the link between costs and the level of activity. It allows the ranking of activities and the determination of how limited resources should be allocated across competing activities.
- E. Under an activity based budgeting system, resource allocation is linked to the strategic plan and is prepared after considering alternative strategies. This approach ensures that new activities that are required to meet the company's strategic objectives are included in the budget.
Answer: A,D,E
NEW QUESTION 50
The following statements relate to the advantage(s) that linear regression has over the high-low method in the analysis of cost behaviour:
Which statement(s) is/are true?
- A. 1 only
- B. 1, 2 and 3
- C. 1 and 2
- D. 2 and 3
Answer: C
NEW QUESTION 51
A company is bidding to win a special contract.
Which of the following is NOT a relevant cost to the company of undertaking the contract?
- A. The purchase cost of direct materials not currently in inventory.
- B. The cost of a training course for staff which will be undertaken if the contract is won.
- C. The depreciation charge on the tools which will be used during the contract.
- D. The cost of hiring a machine which will be hired if the contract is won.
Answer: C
NEW QUESTION 52
Sales volumes reported for the latest period are used by managers as the basis to forecast sales for the forthcoming period. The forecasts are compared with the budgeted sales and plans are adjusted to ensure that the budgeted sales are achieved.
This is an example of:
- A. Incremental budgeting
- B. Feedforward control
- C. Flexed budgets
- D. Feedback control
Answer: B
NEW QUESTION 53
XY can choose from four mutually exclusive projects. The projects will each last for one year and their net cash inflows will be determined by market conditions. The forecast net cash inflows for each of the possible outcomes are shown below.
If the company applies the maximin criterion the project chosen would be:
- A. Project D
- B. Project B
- C. Project A
- D. Project C
Answer: C
NEW QUESTION 54
RT 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 the products are shown below:
Market research shows that the maximum demand for products R and T during June 2010 is 500 units and 800 units respectively. This does not include an order that RT has agreed with a commercial customer for the supply of 250 units of R and 350 units of T at selling prices of $100 and $135 per unit respectively. Although the customer will accept part of the order, failure by RT to deliver the order in full by the end of June will cause RT to incur a $10,000 financial penalty. At a recent meeting of the purchasing and production managers to discuss the production plans of RT for June, the following resource restrictions for June were identified:
Direct labour hours 7,500 hours
Material A 8,500 kgs
Material B 3,000 litres
Machine hours 7,500 hours
Assuming that RT completes the order with the commercial customer, prepare calculations to show, from a financial perspective, the optimum production plan for June 2010 and the contribution that would result from adopting this plan.
The optimum production plan will be:
- A. Contract: R = 250, T = 360 and Market: R = 660 T = 720
- B. Contract: R = 250, T = 360 and Market: R = 500 T = 710
- C. Contract: R = 250, T = 360 and Market: R = 500 T = 700
- D. Contract: R = 250, T = 360 and Market: R = 650 T = 710
- E. Contract: R = 250, T = 360 and Market: R = 600 T = 710
Answer: C
NEW QUESTION 55
JRL manufactures two products from different combinations of the same resources. Unit selling prices and unit cost details for each product are as follows:
Identify, using graphical linear programming, the weekly production schedule for products J and L that will maximize the profits of JRL during the next four weeks.
- A. The solution from the graph is to produce 330 units of J and 290 units of L. (A simplex solution shows the true optimum to be 332.333 units of J and 293.333 units of L.)
- B. The solution from the graph is to produce 330 units of J and 280 units of L. (A simplex solution shows the true optimum to be 332.333 units of J and 283.333 units of L.)
- C. The solution from the graph is to produce 312 units of J and 295 units of L. (A simplex solution shows the true optimum to be 312.333 units of J and 294.999 units of L.)
- D. The solution from the graph is to produce 317 units of J and 270 units of L. (A simplex solution shows the true optimum to be 316.666 units of J and 269.666 units of L.)
- E. The solution from the graph is to produce 315 units of J and 290 units of L. (A simplex solution shows the true optimum to be 316.333 units of J and 293.333 units of L.)
- F. The solution from the graph is to produce 310 units of J and 280 units of L. (A simplex solution shows the true optimum to be 308.333 units of J and 283.333 units of L.)
Answer: F
NEW QUESTION 56
Your company operates using TQM. As the accountant you have been tasked with producing a quality report so that management can understand how well their new range of products is being received and how the quality of the products has improved. In order to produce the report you have requested information from different departments, but you soon realise not all the information is relevant. You have information regarding the following:
Cost of downtime Training costs Environmental costs Customer returns and refunds Number of defects per unit Which pieces of information are relevant to your report? Select ALL that apply.
- A. Environmental costs
- B. Number of defects per unit
- C. Customer returns and refunds
- D. Training costs
- E. Cost of downtime
Answer: B,C
NEW QUESTION 57
A company's management is considering investing in a project with an expected life of 4 years. It has a positive net present value of $180,000 when cash flows are discounted at 8% per annum. The project's cash flows include a cash outflow of $100,000 for each of the four years. No tax is payable on projects of this type.
The percentage increase in the annual cash outflow that would cause the company's management to reject the project from a financial perspective is, to the nearest 0.1%:
- A. 55,6%
- B. 54.3%
- C. 184.0%
- D. 45.0%
Answer: B
NEW QUESTION 58
D3 makes 2 types of toilets - the Executive (Ex) and the Classic (CI). Direct labour costs $6 per hr and overheads are absorbed on a machine hour basis. The overhead absorption rate for the period is $28 per machine hour. What is the traditional cost per unit for (Ex) and (CI)?
- A. (Ex) 58, (CI) 53
- B. (Ex) 62, (CI) 52
- C. (Ex) 60, (CI) 56
- D. (Ex) 65, (CI) 49
- E. (Ex) 63, (CI) 48
Answer: D
NEW QUESTION 59
A museum charges a reduced entrance fee for students in full-time education. The budgeted cost per customer is the same regardless of the entrance fee paid.
4,000 customers were budgeted to visit the museum during period 6, with 25% of customers paying the reduced fee.
3,000 customers visited the museum during period 6 and 1,000 of these paid the reduced entrance fee.
Costs were as budgeted but the actual full-priced entrance fee was $2 higher than budgeted.
Which of the following statements is true?
- A. The sales mix variance is zero and the sales quantity variance is adverse.
- B. The sales mix variance is zero and the sales quantity variance is favourable.
- C. The sales mix variance is adverse and the sales quantity variance is adverse.
- D. The sales mix variance is adverse and the sales quantity variance is favourable.
Answer: C
NEW QUESTION 60
Which of the following, regarding costing methods, is true?
- A. A company produces two products which undergo similar processes. The company has very low overhead costs. This company should consider activity based costing rather than traditional absorption costing to ensure that its pricing decisions are more accurate.
- B. A company which has introduced technology to reduce labour costs now incurs a greater proportion of non volume-related support activities. Activity based costing would be more appropriate than traditional absorption costing in this environment.
- C. In traditional absorption costing, overheads are charged to a product by absorbing them at the cost driver rate for an activity based on their usage of the activity.
- D. A company is making short term decisions based on the contribution per unit of its different products.
These decisions are based upon full absorption costing data.
Answer: B
NEW QUESTION 61
A company reports planning and operational variances to its managers. The following data are available concerning the price of direct material M in the last period. Material M is the only material used by the company. The company operates a just-in-time (JIT) purchasing system.
Which TWO of the following statements about last period are definitely correct based on this information?
The direct material price operational variance was adverse.
- A. The direct material price operational variance was favourable.
- B. The direct material price planning variance was adverse.
- C. The direct material price planning variance was favourable.
- D. The direct material usage operational variance was adverse.
Answer: A,C
NEW QUESTION 62
A manufacturing company has fixed production overhead costs, direct material costs and direct labour costs. The number of units of closing finished goods inventory is lower than the opening inventory.
Which of the following statements is true?
- A. The profit using marginal costing will be higher than if throughput costing is used.
- B. The profit using marginal costing will be higher than if absorption costing is used.
- C. The profit using absorption costing will be higher than if marginal costing is used.
- D. The profit using absorption costing will be higher than if throughput costing is used.
Answer: B
NEW QUESTION 63
Each finished unit of product G contains 2 litres of ingredient L. Losses during production are 10% of input of ingredient L. Budgeted data for next period are as follows:
The budgeted purchases of ingredient L for next period are:
- A. 5,710 litres
- B. 5,170 litres
- C. 5,770 litres
- D. 6,230 litres
Answer: C
NEW QUESTION 64
For a company that does not have any production resource limitations, what would be the correct sequence for budget preparation?
Answer:
Explanation:
NEW QUESTION 65
A company manufactures a single product. The following budgeted data applies to month 6:
What was the budgeted fixed production overhead for month 6?
Give your answer to the nearest whole $ (in '000s).
Answer:
Explanation:
$60000
NEW QUESTION 66
A company manufactures a single product. The company absorbs fixed production overhead using a pre- determined rate per unit.
The following data applies for month 7:
During month 7 fixed production overhead was over absorbed by $40,000.
What was the actual number of units produced during month 7?
- A. 8,000
- B. 14,000
- C. 16,000
- D. 6,000
Answer: C
NEW QUESTION 67
When classifying quality costs, which of the following is NOT likely to be an appraisal cost?
- A. Performance testing costs
- B. Cost of supervision of testing and inspection activities
- C. Cost of maintaining inspection equipment
- D. Cost of product liability insurance
Answer: D
NEW QUESTION 68
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