January 2021

Q Limited has in stock 10,000 kg of V, a raw material which it bought for £5 per kg 5 years ago. This was bought for a product line which was discontinued 4 years ago. At present, V has no use in its existing state but could be sold as scrap for £1.50 per kg. […]

A. When comparing the performance of two factories, one of which is owned and the other rented, the inclusion of rent as an expense in the profit statement of the factory owned is known as the inclusion of: (A) a relevant cost; (B) a notional cost; (C) a controllable cost; (D) an indirect cost. B. In the

A. The adoption of JIT normally requires which one of the following factors to increase: (A) stock levels; (B) work-in-progress levels; (C) batch sizes; (D) quality standards. B. In the practice of ABTs, a cost driver is: (A) a reduction in unit cost without any loss of value; (B) a factor that causes the total cost of

CLE is a small company wishing to enter the lower end of the PC market. It has a product that has been well tested and proved reliable. To date 2,000 have been made at an average cost per unit of £650. However, the product was aimed originally at the cheaper end of the market and

(a) Certain types of costing system encourage operational managers to produce in excess of both budget and demand. Requirement Discuss the statement made above. Your answer should cover the following areas: ● the types of costing system that encourage this behaviour; ● how these costing systems encourage over-production; ● what can be done to overcome

Companies operating in an advanced manufacturing environment are finding that about 90 per cent of a product’s life cycle cost is determined by decisions made early in the cycle. Management accounting systems should therefore be developed that aid the planning and control of product life cycle costs and monitor spending at the early stages of

ABC Ltd produces a large number of products including A and B. A is a complex product of which 1,000 are made and sold in each period. B is a simple product of which 25,000 are made and sold in each period. A requires one direct labour hour to produce and B requires 0.6 direct

A.In an ABC system, which of the following is likely to be classified as a batch level activity? (A) Machine set-up (B) Product design (C) Inspection of every item produced (D) Production manager’s work (E) Advertising. B. XY Ltd manufactures two products, the X and the Y. Data for last period were as follows:                                                    X

Which of the following is a correct definition of activity-based management? (A) An approach to the costing and monitoring of activities which involves tracing resource consumption and costing final outputs. Resources are assigned to activities and activities to cost objects based on consumption estimates. The latter utilise cost drivers to attach activity costs to outputs.

Apex Ltd has just completed the development of a new personal alarm device. Development costs totalled £50,000 and marketing costs to date total £5,000. A market survey suggests that the optimum price for the personal alarm is £49.90, at which price 2,000 units would be sold each month. The personal alarm market changes rapidly and