Question: S plc produces and sells three products,

> WebNews.co.uk is an Internet company. It offers subscribers multiple online services ranging from an annotated TV guide to local-area information on restaurants and cinemas. It has two main revenue sources: The following decisions were made in the June t

> Kari-Anna Nedregotten is the new corporate controller of a multinational company that has just overhauled its organizational structure. The company is now decentralized. Each division is under an operating vice-president who, within wide limits, has resp

> In April 2018, Beranger Saunier, editor of The Sporting News (SN), decides to reduce the price per newspaper from €0.70 in April 2018 to €0.50 starting 1 May 2018. Actual paid circulation in April is 7.5 million (250 000 per day * 30 days). Saunier estim

> A survey on ways organizations are changing their management accounting systems reported the following: a. Company A now reports a value-chain income statement for each of the brands it sells. b. Company B now presents in a single report all costs relate

> For each of the following activities, identify the major function the accountant is performing – scorekeeping, attention directing or problem solving. a. Interpreting differences between actual results and budgeted amounts on a shipping manager’s perform

> For each of the following activities, identify the major function (scorekeeping, attention directing or problem solving) the accountant is performing. a. Preparing a monthly statement of Spanish sales for the BMW marketing vice-president. b. Interpreting

> Six uses of feedback are described in the chapter: a. Changing goals. b. Searching for alternative means of operating. c. Changing methods for making decisions. d. Making predictions. e. Changing the operating process. f. Changing the reward system. Req

> Boots, which operates a chain of pharmacies in the UK, incurs the following costs: a. Cost of redesigning blister packs to make drug containers more tamperproof. b. Cost of videos sent to doctors to promote sales of a new drug. c. Cost of website’s ‘freq

> Matching terms with definitions: Terms a. Split-off point b. Joint cost c. Separable cost d. By-product e. Joint product f. Product Definitions 1. Product with low sales value compared with the sales value of the main or joint product(s). 2. Any output t

> Nor-Pharma AS manufactures three joint products from a joint process: Altox, Lorex and Hycol. Data regarding these products for the fiscal year ended 31 May 2018 are as follows: The joint production cost up to the split-off point where Altox, Lorex and H

> Dinamica Lda is planning to replace one of its production lines, which has a remaining useful life of 10 years, book value of €9 million, a current disposal value of €5 million, and a neglegible terminal disposal value 10 years from now. The average inve

> Protomastoras SA produces three products: Alpha, Beta and Gamma. Alpha and Gamma are joint products and Beta is a by-product of Alpha. No joint costs are to be allocated to the by product. The production processes for a given year are as follows: a. In D

> Schmidsendl GmbH buys crude vegetable oil. Refining this oil results in four products at the split-off point: A, B, C and D. Product C is fully processed at the split-off point. Products A, Band D can be individually further refined into Super A, Super B

> Jerónimos Ltda produces two products, turpentine and methanol (wood alcohol), by a joint process. Joint costs amount to €120 000 per batch of output. Each batch totals 40 000 litres: 25% methanol and 75% turpentine. Both products are processed further wi

> A company simultaneously produces three products (X, Y and Z) from a single process. X and Y are processed further before they can be sold; Z is a by-product that is sold immediately for $6 per unit without incurring any further costs. The sales prices o

> Joint product/by-product distinctions, ethics (continuation of Exercise 6.16) (20–30 minutes) Flori-Dante classifies animal feed as a by-product. The by-product is inventoried at its selling price when produced; the net realizable value of the product is

> Flori-Dante Srl grows, processes, packages and sells three joint apple products: (a) sliced apples that are used in frozen pies, (b) apple sauce, and (c) apple juice. The apple peel, processed as animal feed, is treated as a by-product. Flori-Dante uses

> Pohjanmaan Oy processes an ore in Department 1, out of which come three products, L, W and X. Product L is processed further through Department 2. Product W is sold without further processing. Product X is considered a by-product and is processed further

> Miljø-Såpe AS produces two joint products, cooking oil and soap oil, from a single vegetable oil refining process. In July 2018, the joint costs of this process were NOK 24 000000. Separable processing costs beyond the split-off point were cooking oil, N

> Archibald Ltd manufactures and sells one product. Its budgeted profit statement for the first month of trading is as follows: The budget was prepared using absorption costing principles. If budgeted production in the first month had been 2000 units then

> Pinafore Ltd manufactures and sells a single product. The budgeted profit statement for this month, which has been prepared using marginal costing principles, is as follows: The normal monthly level of production is 25 000 units and stocks are valued at

> Bayern-Bauwerk is thinking of buying, at a cost of €220 000, some new packaging equipment that is expected to save €50 000 in cash-operating costs per year. Its estimated useful life is 10 years, and it will have zero terminal disposal value. The requir

> Soleil Voyages SA is a travel agency specializing in flights between Paris and London. It books passengers on Air Chanson. Air Chanson charges passengers €1000 per round-trip ticket. Soleil Voyages receives a commission of 8% of the ticket price paid by

> Haselbach GmbH sells its razors at €3 per unit. The company uses a first-in, first-out actual costing system. A new fixed manufacturing overhead allocation rate is calculated each year by dividing the actual fixed manufacturing overhead

> Ennerdale Ltd has been asked to quote a price for a one-off contract. The company’s management accountant has asked for your advice on the relevant costs for the contract. The following information is available: Materials The contract r

> Vier-und-Zwanzig GmbH operates a chain of food stores open 24 hours a day. Each store has a standard 4000 square meter of floor space available for merchandise. Merchandise is grouped in two categories: grocery products and dairy products. Vier-und-Zwanz

> Fiordi-Ligi Srl assembles and sells two products: printers and desktop computers. Customers can purchase either (a) a computer, or (b) a computer plus a printer. The printers are not sold without the computer. The result is that the quantity of printers

> Jääskinen Oy has just today paid for and installed a special machine for polishing cars at one of its several outlets. It is the first day of the company’s fiscal year. The machine cost €20 000. Its annual operating costs total €15 000, exclusive of depr

> Jours-Daim SA operates a printing press with a monthly capacity of 2000 machine-hours. Jours-Daim has two main customers, Harpes-à Gonds, SNC and Fourbe-Riz SA. Data on each customer for January follow: Each of the following requirements ref

> Monteagudo-Playa SA is a take-away food store at a popular beach resort. Consuelo Herreros, owner of Monteagudo-Playa, is deciding how much refrigerator space to devote to four different drinks. Pertinent data on these four drinks are as follows: Consuel

> Pauline Raphaël, executive assistant to the principal of Ecole Supérieure des Mines de St Etienne,is concerned about the overhead costs at her university. Cost pressures are severe, so controlling and reducing overheads is very

> Assume the same information for Genève Défense Systèmes as in Exercise 9.17 except that Genève Défense Systèmes uses a 90% incremental unit-time learning curve as a basis for forecasting direct manufacturing labour-hours. (A 90% learning curve implies q

> Les Saturniens SA makes digital watches. Les Saturniens is preparing a product life-cycle budget for a new watch, MX3. Development on the new watch with features such as a calculator and a daily diary is to start shortly. Les Saturniens expects the watch

> Genève Défense Systèmes manufactures radar systems. It has just completed the manufacture of its first newly designed system, RS-32. It took 3000 direct manufacturing labor-hours (DMLH) to produce this one unit. Genève Défense Systèmes believes that a 90

> Hans Mehrlich owns a catering company that prepares banquets and parties for both individual and business functions throughout the year. Mehrlich’s business is seasonal, with a heavy schedule during the summer months and the year-end ho

> Pierre Corneille, managing director of Marre-Quise Consultants SA, is examining how overhead costs behave with variations in monthly professional labour-hours billed to clients. Assume the following historical data: Required 1. Calculate the linear cost

> Lorenzo-Netto, Srl, operates a brushless car wash. Incoming cars are put on an automatic, continuously moving conveyor belt. Cars are washed as the conveyor belt carries the car from the start station to the finish station. After the car moves off the co

> Given below are a number of charts, each indicating some relationship between cost and a cost driver. No attempt has been made to draw these charts to any particular scale; the absolute numbers on each axis may be closely or widely spaced. Required Indi

> Bellingwolde BV operates car rental agencies at over 20 airports. Customers can choose from one of three contracts for car rentals of one day or less:  Contract 1: €50 for the day.  Contract 2: €30 for the day plus €0.20 per km travelled.  Contract 3:

> SVC is a car manufacturer. SVC is planning the development of a prototype hydrogen-powered car, the Model Q. The prototype Model Q car will have a limited production run of 250 cars. Toensure that the Model Q is ready by SVC’s stated de

> Espasso SA has just finished production of Tornado, the latest action film directed by Domingos Vieira and starring Arnaldo Moura and Victoria Rebello. The total production cost to Espasso was €5 million. All the production personnel and actors on Tornad

> Koninklijke BolsWessanen NV has fixed costs of €300 000 and a variable-cost percentage of 80%. The company earns net profit of €84 000 in 2018. The income tax rate is 40%. Required Calculate: (1) operating profit (2) contribution margin (3) total revenu

> Knitwear Ltd is considering three countries for the sole manufacturing site of its new sweater: Cyprus, Turkey and Ireland. All sweaters are to be sold to retail outlets in Ireland at €32 per unit. These retail outlets add their own mark

> Ella Ltd recently started to manufacture and sell product DG. The variable cost of product DG is £4 per unit and the total weekly fixed costs are £18 000. The company has set the initial selling price of product DG by adding a

> Maria Kabaliki is planning to sell a vegetable slicer-dicer for €15 per unit at a country fair. She purchases units from a local distributor for €6 each. She can return any unsold units for a full refund. Fixed costs for booth rental, set-up and cleaning

> Grünberg Lehrmittelverlag GmbH manufactures and sells pens. Present sales output is 5 million annually at a selling price of €0.50 per unit. Fixed costs are €900 000 per year. Variable costs are €0.30 per unit. Required (Consider each case separately.)

> Air Chanson changes its commission structure to travel agents. Up to a ticket price of €600, the 8% commission applies. For tickets costing €600 or more, there is a fixed commission of €48. Assume Soleil Voyages has fixed costs of €22 000 per month and v

> Bomuldstaft AS is considering two new colours for their umbrella products – emerald green and shocking pink. Either can be produced using present facilities. Each product requires an increase in annual fixed costs of €4

> GF is a company that manufactures clothes for the fashion industry. The fashion industry is fast moving and consumer demand can change quickly due to the emergence of new trends. GF manufactures three items of clothing: the S, the T and the B using the s

> The Ville de Genève, Switzerland, makes a SFr 400 000 lump-sum budget appropriation to an agency to conduct a counseling programmed for drug addicts for a year. All of the appropriation is to be spent. The variable costs for drug prescriptions average SF

> A company sells three products: D, E and F. The market for the products dictates that the numbers of products sold are always in the ratio of 3D:4E:5F. Budgeted sales volumes and prices, and cost details for the previous period were as follows: The budge

> The manager of a tourist attraction is considering whether to open on 1 January, a day when the attraction has, in previous years, been closed. The attraction has a daily capacity of 1000 visitors. If the attraction opens for business on that day it will

> Kristina Larsson is the Stockholm promoter for Gustav Häglund Larsson is promoting a new world championship fight for Häglund The key area of uncertainty is the size of the cable payper-view TV market. Larsson will pay H&Ati

> CombraiInformatique (CI) manufactures and sells computers and computer peripherals to several nationwide retail chains. Marcel Proust is the manager of the printer division. Its two largest selling printers are P-41 and P-63. The manufacturing cost of ea

> It is the end of 2019. Ginnungagap Oy began operations in January 2018. The company is so named because it has no variable costs. All its costs are fixed; they do not vary with output. Ginnungagap is located on the bank of a river and has its own hydroel

> In 2018, the Montpazier brewery of Bières Ronsard showed these results: The Montpazier brewery had actual costs of: The sales division of Bières Ronsard purchased 2 400 000 barrels in 2018 at the €68 per barrel ra

> Bières Ronsard SA recently purchased a brewing plant from a bankrupt company. The brewery is in Montpazier, France. It was constructed only two years ago. The plant has budgeted fixed manufacturing overhead of €42 million (&a

> Espasso is negotiating for Tornado 2, a sequel to its mega-blockbuster Tornado. This negotiation is proving more difficult than for the original movie. The budgeted production cost (excluding payments to the director Vieira and the stars Moura and Rebell

> Svenborg AS manufactures and sells wide-screen television sets. It uses an actual-costing system, in which unit costs are calculated on a monthly basis. Data relating to January, February and March of 2018 are: The selling price per unit is DKr 2500. Re

> Starzmann GmbH assembles and sells motor vehicles. It uses an actual-costing system, in which unit costs are calculated on a monthly basis. Data relating to April and May of 2018 are: The selling price per motor vehicle is €24 000. Requ

> Overhead cost issues (From CIMA Management Accounting Pillar Managerial Level 1 Paper, November 2006) (25 minutes) X Ltd has two production departments, Assembly and Finishing, and two service departments, Stores and Maintenance. Stores provide the follo

> Absorption vs marginal costing (From ACCA Financial Information for Management, Part1, June 2004) (40 minutes) Langdale Ltd is a small company manufacturing and selling two different products – the Lang and the Dale. Each product passes

> E plc provides a computer upgrading, servicing and repair facility to a variety of business and personal computer users. The management team has managed the business to date by using a standard costing and budgetary control system. However, the team has

> Mayfair Limited currently subsidizes cafeteria services for its 200 employees. Mayfair is in the process of reviewing the cafeteria services as cost-cutting measures are needed throughout the organization to keep the prices of its products competitive.

> Spring Distribution has decided to analyze the profitability of another five customers (see pages 373 of the text). It buys bottled water at €0.50 per bottle and sells to wholesale customers at a list price of €0.60 per

> Wright Air is a no-frills airline that services the Midwest. Its mission is to be the only short-haul, low-fare, high-frequency, point-to-point carrier in the Midwest. However, there are several large commercial carriers offering air transportation, and

> Comtrex Company provides cable and internet services in the Greater Boston area. There are many competitors that provide similar services. Comtrex believes that the key to financial success is to offer a quality service at the lowest cost. Comtrex curren

> Refer to the information in Exercise 21.18 in answering the following requirements; there is no connection between the situations. Required 1. An outside contractor offers to do the finishing operation for 12 000 units at €10 per unit, double the €5 p

> Salamanca SA manufactures filing cabinets in two operations: machining and finishing. Additional information is as follows. Each cabinet sells for €72 and has direct materials costs of €32 incurred at the start of the m

> Range-Tout SARL builds and distributes industrial storage racks using a just-in-time system and maintaining minimal stocks. Range-Tout’s earnings increased sharply in 2017 and earnings-based bonuses were paid to the management sta for the first time in

> Arjun Manraj runs a print shop. Manraj requires 100 000 boxes of printing paper each year. He wants his suppliers to deliver the boxes on a JIT basis in order quantities of 400 boxes. Papyrus Ltd currently supplies the paper to Manraj. Papyrus charges

> Keep-Kool makes air conditioners. It purchases 12 000 units of a particular type of compressor part, CU29, each year at a cost of £50 per unit. Keep-Kool requires a 12% annual return on investment. In addition, relevant carrying costs (for insurance, mat

> Kari-Klær AS buys and sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming fre

> Assume the same facts as in Exercise 21.11. Now assume that there is only one trigger point, the completion of good finished units of product, which are debited to Finished Goods Control at standard costs. Any under- or overallocated conversion costs are

> Sloan Moving Ltd transports household goods from one city to another within the UK. It measures quality of service in terms of (1) time required to transport goods, (2) on-time delivery (within 2 days of agreed-upon delivery date), and (3) number of lost

> Overloon BV is a repair-service company specializing in the rapid repair of photocopying machines. Each of its 10 clients pays a fixed monthly service fee (based on the type of photocopying machines owned by that client and the number of employees at tha

> LappalainenOy manufactures pharmaceutical products in two departments: Mixing and Tablet Making. Additional information on the two departments follows. Each tablet contains 0.5 gram of direct materials. The Mixing Department makes 200 000 grams of direc

> Assume the same facts as in Exercise 21.11. Assume that the second trigger point for Papadopoulos is the sale – rather than the production – of finished units. Also, the Stock Control account is confined solely to direct materials, whether these material

> Jane plc purchases its requirements for component RB at a price of £80 per unit. Its annual usage of component RB is 8760 units. The annual holding cost of one unit of component RB is 5% of its purchase price and the cost of placing an order is £12.50.

> Mannklein AG is a major manufacturer of metal-cutting machines. It has plants in Frankfurt and Stuttgart. The managers of these two plants have different manufacturing philosophies. LiisaKurunmäki, the recently appointed manager of the Fra

> RèveAndalou retails a broad line of Spanish merchandise at its Mont-St-Michel store. It sells 26000 Juanita linen bedroom packages (two sheets and two pillow cases) each year. RèveAndalou pays Juanita, SA, €104 per package. Its ordering costs per purchas

> Anna de Noailles, the plant manager at Electro-Sons, calls Pauline Eluard, the plant controller, into her office. She had just finished reviewing Eluard’s report on the financial benefits from implementing JIT. The report described the

> TurunTelelaitosOy manufactures cordless telephones. TurunTelelaitos is planning to implement a JIT production system, which requires annual tooling costs of €150 000. TurunTelelaitos estimates that the following annual benefits would arise from JIT produ

> Grano BV and Henco BV manufacture fairly similar remote-controlled toy cars. Sido BV, a retailer of children’s toys, expects to buy and sell 4000 of these cars each year. Both Grano and Henco can supply all of Sido’s

> Krügsmann AG has a plant that manufactures transistor radios. The production time is only a few minutes per unit. The company uses a just-in-time production system and a back flush costing system with two trigger points for journal entries

> AlcazarquivirLda manufactures and sells industrial grinders. The following table presents financial information pertaining to quality in 2017 and 2018 (in €000): Required 1. Classify the cost items in the table into prevention, appraisa

> Duff Co manufactures three products, X, Y and Z. Demand for products X and Y is relatively elastic while demand for product Z is relatively inelastic. Each product uses the same materials and the same type of direct labor but in different quantities. For

> John Emburey, division manager of the Household Products Division, a maker of kitchen dishwashers, has just seen the balanced scorecard for his division for the year. He immediately calls Patricia Conley, the management accountant for the division into h

> Lee SA manufactures various types of colour laser printer in a highly automated facility with high fixed costs. The market for laser printers is competitive. The various colour laser printers on the market are comparable in terms of features and price. L

> Colombe-Déménagements SA is a removals company that transports household goods from one Belgian city to another. It measures service quality in terms of (a) time required to transport goods, (b) on-time delivery (within two day

> ZaccariaSrl manufactures automotive parts. A major customer has just given Zaccaria an edict: ‘Improve quality or no more business.’ Lorenzo Da Ponte, the controller of Zaccaria, is given the task of developing a COQ programme. He seeks your advice on c

> Meredith Ltd makes a special-purpose machine D4H used in the textile industry. Meredith has designed the D4H machine for 2018 to be distinct from its competitors. It has been generally regarded as a superior machine. Meredith presents the following data

> PB is a car production company. PB uses a system of standard costing to set its budgets. Budgets are set annually by the Finance department and approved by the Board of Directors of PB. The Finance department prepares variance reports each month for revi

> AST is a grocery and general merchandise retail group. AST has supermarkets located in most towns and cities in its home country. Over the last few years, profits have fallen and AST has recognized that it has paid insufficient attention to customer car

> TSH provides courses for students who are studying for accountancy examinations. The accountancy education sector is extremely competitive; it is dominated by a small number of national organizations but there is also a large number of smaller regional t

> YY is a large banking organization. It has a branch in most of the towns in the country in which it operates. The bank’s business is mainly concerned with private individuals. It is a very ‘traditional’ bank that offers only ‘over the counter’ services d

> Jamair was founded in September 2007 and is one of a growing number of low-cost airlines in the country of Shania. Jamair’s strategy is to operate as a low-cost, high-efficiency airline, and it does this by: ● operating mostly in secondary cities to redu

> Beckley Hill (BH) is a private hospital carrying out two types of procedures on patients. Each type of procedure incurs the following direct costs: BH currently calculates the overhead cost per procedure by taking the total overhead cost and simply divi

> Alexon SL is an electronics business with eight product lines. Profit data for one of the products (XT-107) for the month just ended (June 2018) are as follows: XuclàMecàniquesFluvià SA, an instruments company, h

> Let y be any response variable and x a binary explanatory variable. Let {(xi, yi): i = 1, . . . , n} be a sample of size n. Let n0 be the number of observations with xi = 0 and n1 the number of observations with xi = 1. Let y0 be the average of the yi wi