A company makes two products using the same type of materials and skilled workers. The fol

e correct?

(1) It is useful if significant economies of scale can be achieved

(2) It is useful if demand for a product is highly elastic

A.1 only

B.2 only

C.Neither 1 nor 2

D.Both 1 and 2

standard price of the recycled plastic is $0·50 per kg and standard usage of recycled plastic is 0·2 kg for each basket. The budgeted production was 80,000 baskets.

Due to recent government incentives to encourage recycling, the standard price of recycled plastic was expected to reduce to $0·40 per kg. The actual price paid by the company was $0·42 per kg and 100,000 baskets were manufactured using 20,000 kg of recycled plastic.

What is the materials operational price variance?

A.$2,000 favourable

B.$1,600 favourable

C.$400 adverse

D.$320 adverse

vailable on the three processes is reduced because of the need for preventative maintenance and rest breaks.

The table below details the process times per product and daily time available:

Daily demand for product X and product Y is 10 units and 16 units respectively.

Which of the following will improve throughput?

A.Increasing the efficiency of the maintenance routine for Process 2

B.Increasing the demand for both products

C.Reducing the time taken for rest breaks on Process 3

D.Reducing the time product X requires for Process 1

s of $190,000. However, the bookkeeper forgot to account for the following:

A machine with a net book value of $40,000 was sold at the start of the year for $50,000 and replaced with a machine costing $250,000. Both the purchase and sale are cash transactions. No depreciation is charged in the year of purchase or disposal. The investment centre calculates return on investment (ROI) based on closing net assets.

Assuming no other changes to profit or net assets, what is the return on investment (ROI) for the year?

A.18·8%

B.19·8%

C.15·1%

D.15·9%

actors. One of the chosen methods is the percentage of students passing five exams or more.

Which of the three Es in the value for money framework is being measured here?

A.Economy

B.Efficiency

C.Effectiveness

D.Expertise

Which of the following is NOT likely to be a potential benefit of introducing this system?

A.Schedules of labour are prepared for manufacturing

B.Inventory records are updated automatically

C.Sales are recorded into the financial ledgers

D.Critical strategic information can be summarised

works outside of the department. There are many other government departments working within the same building.

Which of the following would NOT be an effective control procedure for the generation and distribution of the information within the government department?

A.If working from home, departmental employees must use a memory stick to transfer data, as laptop computers are not allowed to leave the department

B.All departmental employees must enter non-disclosed and regularly updated passwords to access their computers

C.All authorised employees must swipe an officially issued, personal identity card at the entrance to the department before they can gain access

D.All hard copies of confidential information must be shredded at the end of each day or locked overnight in a safe if needed again

Which of the following techniques is NOT relevant to target costing?

A.Value analysis

B.Variance analysis

C.Functional analysis

D.Activity analysis

life-cycle of a new product, P. The information in the following table relates exclusively to product P:

The company’s total fixed production overheads are budgeted to be $72 million each year and total machine hours are budgeted to be 96 million hours. The company absorbs overheads on a machine hour basis.

What is the budgeted life-cycle cost per unit for product P?

A.$24·40

B.$25·73

C.$27·40

D.$22·73

is split into two divisions: Division F and Division N. Each division operates separately as an investment centre, with each one having full control over its non-current assets. In addition, both divisions are responsible for their own current assets, controlling their own levels of inventory and cash and having full responsibility for the credit terms granted to customers and the collection of receivables balances. Similarly, each division has full responsibility for its current liabilities and deals directly with its own suppliers.

Each divisional manager is paid a salary of $120,000 per annum plus an annual performance-related bonus, based on the return on investment (ROI) achieved by their division for the year. Each divisional manager is expected to achieve a minimum ROI for their division of 10% per annum. If a manager only meets the 10% target, they are not awarded a bonus. However, for each whole percentage point above 10% which the division achieves for the year, a bonus equivalent to 2% of annual salary is paid, subject to a maximum bonus equivalent to 30% of annual salary.

The following figures relate to the year ended 31 August 2015:

During the year ending 31 August 2015, Division N invested $6·8m in new equipment including a technologically advanced cutting machine, which is expected to increase productivity by 8% per annum. Division F has made no investment during the year, although its computer system is badly in need of updating. Division F’s manager has said that he has already had to delay payments to suppliers (i.e. accounts payables) because of limited cash and the computer system ‘will just have to wait’, although the cash balance at Division F is still better than that of Division N.

Required:

(a) For each division, for the year ended 31 August 2015, calculate the appropriate closing return on investment (ROI) on which the payment of management bonuses will be based. Briefly justify the figures used in your calculations. Note: There are 3 marks available for calculations and 2 marks available for discussion. (5 marks)

(b) Based on your calculations in part (a), calculate each manager’s bonus for the year ended 31 August 2015. (3 marks)

(c) Discuss whether ROI is providing a fair basis for calculating the managers’ bonuses and the problems arising from its use at CIM Co for the year ended 31 August 2015. (7 marks)