Lecture 5 - Relevant Costing

A recap: life cycle costing & environmental costing

Match

Please match the main characteristics with the certain stages of the product lifecycle:

• Research & Development

• Introduction

• Growth

• Maturity

• Decline

No revenue

Large advertising expenditure

Growth in demands, production, revenues

Peak sales, maximum profits, competitors

Start to fall in sales, loss-maker

• No revenue

• Large advertising expenditure

• Growth in demands, production, revenues

• Peak sales, maximum profits, competitors

• Start to fall in sales, loss-maker

Multiple Select

Why we should use lifecycle costing for new product/new project?

• provide accurate profitability analysis regarding the whole life of the product.

• good for companies who develop new product with a shorter lifecycle, like Apple.

• Better decision-making for the products

• Longtermism thinking

• It's regulated.

Multiple Choice

What environment costing method is used regarding the case: A juice factory processes 1,000 kg of fresh oranges (input) to produce 600 litres of orange juice (output). The remaining 400 kg, consisting of peels, seeds, and pulp, is considered residual waste.

• Input/output analysis

• Flow cost accounting

• Environmental ABC

• Environmental life cycle costing

Multiple Choice

In a paper manufacturing company, waste management is identified as an environmental activity, and an activity cost centre is created for it. The costs related to waste disposal and recycling are allocated to this cost centre and then absorbed into the overall product costs based on the amount of waste generated per production batch. What method is applied for the environment costing in this case?

• Input/output analysis

• flow cost accounting

• Environmental ABC

• Environmental life cycle costing

Relevant Costing

Multiple Choice

Given the machinery user costs case, how much should be recorded as the relevant costs?

• £500

• £1800

• £2400

• £2600

Multiple Choice

Given the relevant cost of labour case, how much should be recorded for the relevant labour costs?

• £300

• £540

• £240

• £570

Multiple Choice

Given the material costs cases, what should be the relevant costs of Material A

• 0

• 6000

• 1000

• 2000

Multiple Choice

What should be the relevant costs of Material B

• 2000

• 2500

• 5000

• 7500

Multiple Choice

What should be the relevant costs of Material C

• 3000

• 2500

• 4000

• 2950

Multiple Choice

What should be the relevant costs for material D

• 800

• 1200

• 1800

• 1500

Multiple Choice

Regarding the opportunity costs case, how much is the relevant costs (opportunity costs)?

• 600

• 1350

• 1600

• 1800