Questions from Management Accounting

Q: At recent management meeting the following statement was made by the Chief

At recent management meeting the following statement was made by the Chief Operating Officer – “ this project is strategic for the firm and therefore non-discretionary”. Briefly comment on this statem...

Q: Forecasting the terminal value of equipment 20 years from now is difficult

Forecasting the terminal value of equipment 20 years from now is difficult to do accurately, but errors in estimation probably have a small effect on the NPV. Explain.

Q: When projects have longer lives, it is more difficult to accurately

When projects have longer lives, it is more difficult to accurately estimate the cash flows and discount rates over the life of the project. Explain why this statement is true.

Q: The present value of a given cash flow gets smaller as the

The present value of a given cash flow gets smaller as the number of periods gets larger, regardless of whether cash flow is discounted with a real rate or nominal rate. Explain why this relationship...

Q: Sherry North is the supply manager for West Industries, a manufacturer

Sherry North is the supply manager for West Industries, a manufacturer of garden furniture for the major department store in Australia. As part of her bonus plan, Sherry must meet the materials budget...

Q: Plush pet toys are produced in a largely automated factory in standard

Plush pet toys are produced in a largely automated factory in standard lots of 100 toys each. A standard cost system is used to control costs and to assign cost to inventory. Variable overhead, esti...

Q: The managers of Bathroom Cabinets established the following standards for Model 535

The managers of Bathroom Cabinets established the following standards for Model 535: Last month, 15 342 units of Model 535 were produced at a cost of $26 870 for direct mater...

Q: The following information pertains to Nell Company’s production of one unit of

The following information pertains to Nell Company’s production of one unit of its manufactured product during the month of June. The company recognises the materials price variance...

Q: Derf Company allocates overhead on the basis of direct labour hours.

Derf Company allocates overhead on the basis of direct labour hours. Two direct labour hours are required for each unit of product. Planned production for the period was set at 9000 units. Manufacturi...

Q: Plush pet toys are produced in a largely automated factory in standard

Plush pet toys are produced in a largely automated factory in standard lots of 100 toys each. A standard cost system is used to control costs and to assign cost to inventory. Variable overhead, esti...