ACCT20001 Cost Management
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ACCT20001 Cost Management
Department of Accounting
CM additional exam review questions and tasks
Note: these are in addition to the questions in the practice exam
1.
In Table 1 below is the output from the product-line profitability analysis following the application of activity analysis at A Votre Sante or AVS (a case used during the semester). AVS has three wine products or wine varieties: C-Estate; C-Reg; and B de B. Since the case analysis, A Votre Sante has commenced selling its wine varieties on winetubesales.com, an online retailer for wineries. This provides AVS with two key distribution channels: local restaurants and the online platform.
a. How can the ABC-generated information contained in Table 1 help AVS improve profitability? Identify ONE possible action which could be taken by management to achieve this.
b. With the introduction of the second distribution channel through the online platform; the management of A Votre Sante is interested in monitoring profitability across the two distribution channels. How might activity-analysis assist with this objective and briefly explain the benefits of determining this.
2.
Consider the flexible budget for Berkshire Toys and respond to the questions below.
Note: the full case for Berkshire Toys is provided separately.
a. Identify the factors likely to influence the achievement of budget targets at Berkshire Toys for year ended June 2017.
b. State TWO key considerations management would need to take into account in the determination of the budget targets for the following year (ending June 2018) for Berkshire Toys.
c. Using the case facts and/or data in the exhibit below, calculate the flexible budget number for variable overhead (the shaded cell below).
d. Would activity-based costing (ABC) be of benefit to Berkshire Toys in the determination of product cost? Briefly explain.
e. Following discussions with other managers, Jo Ramaido has decided to explore an analysis of the profitability of each of the three distribution-channels. You have been asked to assist.
I. Identify ONE key benefit of constructing a distribution-channel profitability report for Berkshire Toys?
II. At the management meeting to discuss this, Fran (a senior accountant) argues that activity- analysis is the best tool to structure the distribution-channel profitability analysis.
III. Outline TWO key attributes of a reliable distribution-channel profitability report prepared using activity analysis. Use the case facts to demonstrate.
3.
Review the Picture Frames Unlimited case
4.
Review the AVS Wine case
5.
Review the Can management accounting help aid associations make tough choices in Haiti? Case.
6.
Latiefa is the cost accountant at Hallet and Sons, manufacturer of exquisite glass serving bowls. The materials used for the bowls are inexpensive but the process is labour intensive. The supervisor decided to use cheaper labour this period to see whether costs could be reduced. Latiefa needs to prepare a report for her supervisor about how effective operations had been during the month of January. She had set the following standards.
|
Direct materials Direct labour Factory overhead: Variable |
3 kg @ $2.50 5 h @ $15 $3 per direct labour hour |
Cost per unit $7.50 75.00
15.00 |
|
Fixed |
$20 per unit |
20.00 |
Variable overhead is allocated by labour hours, and fixed overhead is allocated by unit. Estimated production per month is 40 000 standard direct labour hours.
Records for January based on production of 7800 units indicated the following:
25 000 kg @ $2.60
23 100 kg
40 100 hours @ $14.60
$119 000
$180 000
The entity’s policy is to record direct material price variances at the time materials are purchased.
REQUIRED
(a) Calculate direct materials, direct labour and overhead variances.
(b) Discuss the insights revealed by the variance analysis in (a) above.
7.
Review the article: Kaplan & Porter (2011) titled How to solve the cost crisis in healthcare
2022-10-29