Division A is an investment centre with assets of $7.3 million. The following is an extract from the annual budget for division A:
The cost of capital is 14%.
Calculate the residual income for division A.
An organization produces only two products. Each month it produces 1,000 units of product A and 10,000 units of product B.
Using traditional absorption costing the products have very similar unit costs. However when costs are calculated using activity-based costing (ABC), product A's unit cost is significantly higher than that of product B.
Which of the following factors has the potential to cause this difference?
Select ALL that apply.
Which of the following is a correct description of the key features of net present value?
A senior manager is concerned about the dysfunctional consequences of a company's current approach to budget preparation. The senior manager has discovered that budget holders are carrying budgetary slack forward from one period to the next without this being identified or challenged.
Which of the following approaches to budget preparation is the company using?
A manufacturing company has recently introduced a Total Quality Management (TQM) system. The company has invested heavily in the education and training of its staff, in addition to implementing new product design engineering. There is a plan to sample units from each batch of products manufactured to test for errors, although this has not yet been implemented due to budget constraints.
The company is experiencing high levels of customer complaints, with many faulty units being returned by the customer for refund or replacement. Sales revenue has fallen recently, mainly due to negative press coverage linked to dissatisfied customers.
Select the statement MOST likely to apply.
In order to support decision making, management accounting information categorizes costs in a variety of ways.
Responsibility accounting primarily distinguishes between costs on the basis that they are either:
A manufacturing company sells a large range of products. Forecast data for the next period for one of these products are as follows.
After manufacture, each complete batch must be stored in a local warehouse until it is subsequently sent to the company's main national warehouse. The company does not own a local warehouse. A local warehouse with a maximum capacity of 500 units could be rented for $2,450 for the next period.
Alternatively a larger local warehouse with a maximum capacity of 700 units could be rented for $3,430 for the next period.The company will not begin the manufacture of any new batch until the previous batch has been sent to its main national warehouse.
What would be the change in the total cost of set up and storage if the batch size was changed to 600 units?
Give your answer to the nearest whole $.
The starting point for developing a balanced scorecard for an organization should be:
Which of the following statements are correct with regard to responsibility centres?
Select ALL that apply.
PorkyCo is a leading bread manufacturer in Toyland operating two functional divisions: pulled and roasted. PorkyCo uses IT systems in all of its functions, for example, accounting has one system, manufacturing has its
system, warehousing has another and human resources is the latest to develop a dedicated system to manage training and development
The issue now is that when the CEO, Mr Button, needs information about two or more functions, he has to convene the department heads to get their reports and then study each in turn. As senior management
accountant at PorkyCo, help free up Mr Button's time by suggesting the most efficient way of getting all the information he needs.
