PM Ch-4 ( Specially cost and managment accounting techniques)

The following costs have arisen in relation to the production Of a product:

(1) Planning and concept design costs

(2) Testing costs

(3) Production costs

(4) Distribution and customer service costs

In calculating the life cycle costs Of a which Of the items would be included?

• 3 only

• 1, 2 and 3

• 1,2 and 4

• All Of the above

Which TWO of the following activities are environmental INTERNAL failure costs?

(1) Quality control inspections to monitor pollution levels in water leaving a production

process.

(2) Water purification treatment to clean waste water before it leaves the factory

(3) Fitting Of carbon filters to machine processes to reduce carbon emissions

(4) Power usage measuring system to monitor energy consumption within the factory

(5) Payment Of fines for breaching environmental regulations in the industry

(6) Insulation of heating in the factory to reduce heat loss

(7) Public relations costs to remedy reputational damage caused by accidental river

(8) Capturing and recycling Of waste exhaust gases to generate energy

• 1,2,3,4,5

• 5,6,7,8

• 4,5,6,7,8

• 2, 8

One Of the products manufactured bg a company is Product X. which sells for SL+•O unit

and has a material cost of $10 per unit and a direct labour cost of $7 unit. The total

direct labour budget for the year is 50,000 hours Of labour time at a COSt Of $12 per hour.

Factory overheads are $2,920,000 year.

The cormyxtny is considering the introduction of a system of throughput accounting. It has

identified that machine time is the bottleneck in production. X needs 0.01 hours Of

machine time unit produced. The maximum capacity for machine time is hours

per year.

What is the throughput accounting ratio for X (to two decimal places)?

• $3.41

• $2.41

• $4.51

• $5.51

Are the following statements material flow cost accounting (MFCA) true or false?

(1) In material flow COSt accounting. waste is treated as a

negative product and given a cost.

(2) Material flow COSt acx:ounting should encourage

BPP.

• True, False

• True, True

• False , True ,

• False,False,

Which Of the following statements about activity based costing is true?

• The cost driver for quality inspection is likely to be size

• The cost driver for materials handling and despatch costs is likely to the of orders handled

• In the short run, all the overhead costs for an activity vary with the amount of the cost

  driver for the activity

• A cost driver is an activity based cost

Which THREE of the following statements about activity-based costing (ABC) and

traditional costing systems (absorption costing and marginal costing) are correct?

(1) No over-absorption or under-absorption of overheads can occur under ABC

(2) ABC is useful for businesses which have high overheads in their Cost structure

(3) ABC is not suitable for use in businesses that provide services

(4) Marginal costing understates the true cost of a product when compared to ABC

(5) ABC is better than absorption costing in understanding what costs to be

incurred.

(6) Both ABC and marginal costing treat all costs as product costs.

• 1, 2,and 3, 4

• 3 , 5 and 6

• 2 , and 4 ,5

• 5 and 1

When activity based costing is used for environmental accounting, which statement is

correct for environment-related costs and environment-driven costs?

• Environment-related costs can be attributed to joint cost centres and environment-

  driven costs cannot be

• Environment-driven costs can attributed to joint cost centres and environment-related cannot be

• Both environment-related costs and environment-driven costs can attributed to joint cost centres

• Neither environment-related costs nor environment-driven costs can to

  joint cost centres

The following statements have been made about traditional absorption costing and activity

based costing (ABC).

(1) Traditional absorption costing may used to set prices for products, but activity

based costing cannot.

(2) Traditional absorption costing tends to allocate too many overhead costs to low-

volume and not enough overheads to high-volume prcxiucts.

(3) Implernenting ABC is expensive and time consuming.

Which Of the above statements is/are true?

• 1 only

• 3 Only

• 1,2 and 3

• 1 and 2 only

Are the following statements about environmental cost accounting true or false?

(1) The majority of environmental costs are already captured

within a typical organisation's accounting system. The

difficulty lies in identifying them.

(2) Input/output analysis divides material flows within an

organisation into three categories: material flows; system

flows; and delivery and flows.

(3) Creating employment is an example Of social

sustainability.

(4) There are standard key performance indicators (KPIs)

relating to sustainability,

• True,False,True ,False

• True,True,True,True

• False,Ture ,True ,False

• False,False,False,False

ABC is felt to give a more useful prcxiuct cost than classic absorption costing (with

overheads on labour hours) if which Of the following TWO apply?

• Labour costs are a relatively minor proportion of total costs

• Overheads vary with many different measures Of activity

• Overheads ore difficult to predict

• Cost drivers are difficult to identify