2014年12月ACCAF5考试真题答案

Answers

December2014Answers

FundamentalsLevel–SkillsModule,PaperF5

PerformanceManagement

SectionA

1A

DivisionA:Profit=$14·4mx30%=$4·32m

Imputedinterestcharge=$32·6mx10%=$3·26m

Residualincome=$1·06m

DivisionB:Profit=8·8mx24%=$2·112m

Imputedinterestcharge=$22·2mx10%=$2·22m

Residualincome=$(0·108)m

2

D

Allcostsareincludedwhenusinglifecyclecosting.

3

A

Thisisthedefinitionofabasicstandard.

4

B

Thefirststatementisdescribingmanagementcontrol,notstrategicplanning.

5

C

Numberofunitsrequiredtomaketargetprofit=fixedcosts+targetprofit/contributionperunitofP1.

Fixedcosts=($1·2x10,000)+($1x12,500)–$2,500=$22,000.

ContributionperunitofP=$3·20+$1·20=$4·40.

($22,000+$60,000)/$4·40=18,636units.

6A

C

$100$22$33$24$21

––––

D

$140$40$22$18$60

––––

B

$214$56$88$18$52

––––

A

$160$24$66$24$46

Product

Sellingpriceperunit

Rawmaterialcost

Directlabourcostat$11perhour

Variableoverheadcost

Contributionperunit

––––

6$7·672

perunit)1,800

8$6·50 41,000

3 $7 3720

2$30 1800

Directlabourhoursperunit

Contributionperlabourhour

Rank

Normalmonthlyhours(totalunitsxhours

Ifthestrikegoesahead,only2,160labourhourswillbeavailable.

ThereforemakeallofD,then1,360hours’worthofA(2,160–800hrs).

7

B

460–400=60clients

$40,000–$36,880=$3,120

VCperunit=$3,120/60=$52

ThereforeFC=$40,000–(460x$52)=$16,080

8

B

Increaseinvariablecostsfrombuyingin(2,200unitsx$40($140–$100))=$88,000

LessthespecificfixedcostssavedifAisshutdown=($10,000)

Decreaseinprofit=$78,000

17

9A

Onlythefirststatementiscorrect.Traditionalabsorptioncostingtendstoover-allocatecoststohighvolumeproducts,notunder-allocatethem.

10B

Bydefinition,ashadowpriceistheamountbywhichcontributionwillincreaseifanextrakgofmaterialbecomesavailable.20x$2·80=$56.

11

C

Neitherstatementiscorrect.Responsibilityisnotassignedsolelytoseniormanagersas,forexample,inaTQMenvironmentqualityiseverybody’sresponsibility.Inaddition,standardcostingcanbedifficulttoapplyindynamicsituations.

12

13

14

15

16

17

18

A

Thesecondstatementistalkingaboutflowcostaccounting,notinput/outputanalysis.

D

Target1isafinancialtargetandsoassesseseconomyfactors.Target2ismeasuringtherateofworkhandledbystaffwhichisanefficiencymeasure.Target3isassessingoutput,soisameasureofeffectiveness.

B

Incomparisontoparticipativebudgeting,anadvantageofnon-participativebudgetingisthatitshouldbelesstimeconsuming,aslesscollaborationwillberequiredinordertoproducethebudgets.

C

Thetargetcostingprocessalwaysbeginswiththetargetsellingpricebeingset.Therequiredprofitisthendeterminedanddeductedfromthetargetsellingpricetoestimatethetargetcost.Thetargetcostisthencomparedtotheestimatedcurrentcostandthecostgapisthencalculated.

A

Thisisadescriptionofanincrementalbudget.

A

Newprofitfiguresbeforesalarypaid:

Goodmanager:$180,000x1·3=$234,000

Averagemanager:$180,000x1·2=$216,000

Poor:$180,000x1·1=$198,000

EVofprofits=(0·35x$234,000)+(0·45x$216,000)+(0·2x$198,000)=$81,900+$97,200+$39,600=$218,700

DeductsalarycostandEVwithmanager=$178,700

Thereforedonotemploymanagerasprofitswillfallby$1,300.

B

Set-upcostsperproductionrun=$140,000/28=$5,000

Costperinspection=$80,000/8=$10,000

Otheroverheadcostsperlabourhour=$96,000/48,000=$2

OverheadscostsofproductD:

$

Set-upcosts(15x$5,000)75,000

Inspectioncosts(3x$10,000)30,000

Otheroverheads(40,000x$2)80,000

––––––––

185,000

––––––––

Overheadcostperunit=185,000/4,000=$46·25

18

19A

Thisisanexampleoffeedforwardcontrolasthemanagerisusingaforecasttoassistinmakingafuturedecision.

20

A

Ifdemandisinelasticortheproductlifecycleisshort,apriceskimmingapproachwouldbemoreappropriate.

19

SectionB

1ChairCo

(a)Learningcurveformula=y=axb

Cumulativeaveragetimeperunitfor8units:

Y=12x8–·415

=5·0628948hours.

Thereforecumulativetotaltimefor8units=40·503158hours.

Cumulativeaveragetimeperunitfor7units:

Y=12x7–·415

=5·3513771hours.

Thereforecumulativetotaltimefor7units=37·45964hours.

Thereforeincrementaltimefor8thunit=40·503158hours–37·45964hours=3·043518hours.

Totallabourcostfor8thunit=3·043518x$15=$45·65277

Materialandoverheadscostperunit=$230

Thereforetotalcostperunit=$275·65277

Thereforepriceperunit=$413·47915

(b)(i)Actuallearningrate

CumulativenumberofCumulativetotalCumulativeaverage

seatsproducedhourshoursperunit

112·512·5

2?12·5xr

4?12·5xr

2

834·312·5xr

3

Usingalgebra:34·3=8x(12·5xr3)

4·2875=(12·5xr3)

0·343=r3

r=0·70

Thelearningeffectwas70%ascomparedtotheforecastrateof75%,meaningthatthelabourforcelearntmorequicklythananticipated.

(ii)Adjustedprice

Theadjustedpricechargedwillbelowerthantheoriginalpricecalculatedinpart(a).Thisisbecausetheincrementalcostofthe8thunitwillbelowergiventhe70%learningrate,eventhoughthefirstunittook12·5hours.Weknowthisbecausewearetoldthatthecumulativetimefor8unitswasactually34·3hours.Thisislowerthantheestimatedcumulativetimeinpart(a)for8unitsof40·503158hoursandtherefore,logically,theactualincrementaltimeforthe8thunitmustbelowerthantheestimated3·043518hourscalculatedinpart(a).Consequently,totalcostwillbelowerandpricewillbelower,giventhatthisisbasedoncost.

2GlamCo

(a)

Bottleneckactivity

Thebottleneckmayhavebeenworkedoutasfollows:

Totalsalonhours=8x6x50=2,400eachyear.Thecapacityforeachseniorstylistmustbe2,400hours,whichequatesto2,400cutseachyear(2,400/1).Sincetherearethreeseniorstylists,thetotalcapacityis7,200hoursor7,200cutseach

year.Usingthismethod,thecapacityfor

eachactivityisasfollows:

Treatment

16,000

4,800

9,600

Cut

AssistantsSeniorstylistsJuniorstylists

48,000

7,200

9,600

Thebottleneckactivityisclearlytheworkperformedbytheseniorstylists.

Theseniorstylists’timeiscalledabottleneckactivitybecauseitistheactivitywhichpreventsthesalon’sthroughputfrombeinghigherthanitis.Thetotalnumberofcutsortreatmentswhichcanbecompletedbythesalon’sseniorstylistsisless

thanthenumberwhichcanbecompletedbyotherstaffmembers,consideringthenumberofeachtypeofstaffavailableandthetimerequiredbyeachtypeofstaffforeachclient.

20

Working1:Totalsaloncosts

(3x$40,000)+(2x$28,000)+(2x$12,000)+$106,400=$306,400

Thereforecostforeachbottleneckhour=$306,400/7,200=$42·56

Note:Answersbasedontotalsalarycostswere$80,000werealsoequallyacceptablesincethewordingofquestionwasopentointerpretation.

(b)TPAR

Cut

$

60 0·6059·4059·4042·561·4

Treatment

$110

8(7·40+0·6)

Sellingprice

Materials

Throughput

ThroughputperbottleneckhourTotalsaloncostsperBNhour(w1)

TPAR

102

68

42·56

1·6

3HiLifeCo

Directmaterials:Note$

Fabric200m2at$17·50perm213,500

Wood20mat$8·20perm2164

30mat$8·50perm2255

Directlabour:

Skilled50hoursat$24perhour31,200

Semi-skilled300hoursat$14perhour44,200

Factoryoverheads20hoursat$15perhour5300

Administrationoverheads6–––––––

Totalcost9,619

––––––

1SincethematerialisinregularusebyHLCo,itisreplacementcostwhichistherelevantcostforthecontract.

230mwillhavetobeorderedfromthealternativesupplierforimmediatedeliverybuttheremaining20mcanbeusedfrom

inventoryandreplacedbyanorderfromtheusualsupplieratacostof$82·0perm.

3Thereisnocostforthefirst150hoursoflabourbecausethereissparecapacity.Theremaining50hourswillbepaidattimeandahalf,whichis$16x1·5,i.e.$24perhour.

4HLCowillchoosetousetheagencyworkers,whowillcost$14perhour,sincethisischeaperthanpayingexistingsemi-skilledworkersat$18perhour($12x1·5)toworkovertime.

5Noneofthegeneralfactorycostsareincremental,sotheyhaveallbeenexcluded.However,thesupervisor’sovertimepayisincremental,sohasbeenincluded.Thesupervisor’snormalsalary,ontheotherhand,hasbeenexcludedbecauseitisnotincremental.

6Thesearegeneraloverheadsandarenotincremental,sonovalueshouldbeincludedforthem.

4Jamair

(a)Thefourperspectives

Financialperspective–thisperspectiveisconcernedwithhowacompanylookstoitsshareholders.Howcanitcreatevalueforthem?KaplanandNortonidentifiedthreecorefinancialthemeswhichwilldrivethebusinessstrategy:revenuegrowthandmix,costreductionandassetutilisation.

Customerperspective–thisconsidershowtheorganisationappearstocustomers.Theorganisationshouldaskitself:‘toachieveourvision,howshouldweappeartoourcustomers?’Thecustomerperspectiveshouldidentifythecustomerandmarketsegmentsinwhichthebusinesswillcompete.Thereisastronglinkbetweenthecustomerperspectiveandtherevenueobjectivesinthefinancialperspective.Ifcustomerobjectivesareachieved,revenueobjectivesshouldbetoo.

Internalperspective–thisrequirestheorganisationtoaskitself:‘whatmustweexcelattoachieveourfinancialandcustomerobjectives?’Itmustidentifytheinternalbusinessprocesseswhicharecriticaltotheimplementationoftheorganisation’s

strategy.Thesewillincludetheinnovationprocess,theoperationsprocessandthepost-salesprocess.

Learningandgrowthperspective–thisrequirestheorganisationtoaskitselfwhetheritcancontinuetoimproveandcreatevalue.Theorganisationmustcontinuetoinvestinitsinfrastructure–i.e.people,systemsandorganisationalprocedures–inordertoimprovethecapabilitieswhichwillhelptheotherthreeperspectivestobeachieved.

21

(b)Goalsandmeasures

FinancialGoal

perspective

Performancemeasure

Tousefewerplanestotransportcustomers

Leasecostsofplanepercustomer

Explanation–operatingefficiencywillbedrivenbygettingmorecustomersonfewerplanes.Thisgoalandmeasurecoverthecostsideofthis.

Goal

Toincreaseseatrevenueperplane

Explanation–thiscoversthefirstpart

Performancemeasure

Revenueperavailablepassengermile

ofachievingoperatingefficiency–byhavingfeweremptyseatsonplanes.

perspective

CustomerGoal

Performancemeasure

Toensurethatflightsareontime

‘Ontimearrival’rankingfromtheaviationauthority

Explanation–Jamairiscurrentlynumber7intherankings.Ifitbecomesknownasaparticularlyreliableairline,customersaremorelikelytouseit,whichwillultimatelyincreaserevenue.

Goal

Toreducethenumberofflightscancelled

Explanation–again,ifflightsareseentobeperceivedasreliablebyitscustomers.

Performancemeasure

Thenumberofflightscancelled

cancelledfrequentlybyJamair,customerswillnotwanttouseit.Itneedstobe

Internalperspective

Goal

Toimproveturnaroundtimeontheground

Performancemeasure

‘Ontheground’time

Explanation–lesstimespentonthegroundmeansfewerplanesareneeded,whichwillreduceplaneleasingcosts.However,itisimportantnottocompromisethequalityofcleaningormakeerrorsinrefuellingasaconsequenceofreducingonthegroundtime.

GoalPerformancemeasure

ToimprovethecleanlinessofJamair’splanesThepercentageofcustomershappywiththestandardoftheplanes,

asreportedinthecustomersatisfactionsurveys.

Explanation–atpresent,only85%ofcustomersarehappywiththestandardofcleanlinessonJamair’splanes.Thiscouldbecausinglossofrevenue.

GoalPerformancemeasure

TodeveloptheonlinebookingsystemPercentagedowntime.

Explanation–sincethecompanyreliesentirelyonthebookingsystemforcustomerbookingofflightsandcheck-in,itiscriticalthatitcandealwiththegrowingnumberofcustomers.

Learningperspective

Goal

Toreducetheemployeeabsenteerate

peremployee

Performancemeasure

Thenumberofdaysabsent

Explanation–itiscriticaltoJamairthatitsworkforceisreliableas,atworse,absentstaffleadtocancelledflights.

Goal

Performancemeasure

Numberofdays’trainingpergroundcrewmember

Toincreasegroundcrewtrainingoncleaningand

refuellingprocedures

Explanation–ifgroundcrewarebettertrained,theycanreducethenumberofminutesthattheplanestaysontheground,whichwillresultinfewerplanesbeingrequiredandthereforelowercosts.Also,iftheircleaningisbetter,customersatisfactionandretentionwillincrease.

Note:Onlyonegoalandmeasurewererequiredforeachperspective.Inordertogainfullmarks,answershadtobespecifictoJamairasstatedintherequirements.

22

5SafeSoapCo(a)Variancecalculations

Mixvariance

Totalkgofmaterialsperstandardbatch=0·25+0·6+0·5=1·35kg

Thereforestandardquantitytoproduce136,000batches=136,000x13·5kg=183,600kg

Actualtotalkgofmaterialsusedtoproduce136,000batches=34,080+83,232+64,200=181,512kg

Material

LyeCoconutoilSheabutter

Actualquantity

Standardmix

kgs

181,512x0·25/1·35=33,613·33

181,512x0·6/1·35=80,672

181,512x0·5/1·35=67,226·67

–––––––––

181,512

–––––––––

StandardquantityStandardmix

Yieldvariance

Material

LyeCoconutoilSheabutter

34,000

81,600

68,000

0·25x136,000=

0·6x136,000=

0·5x136,000=

––––––––

183,600

––––––––

ActualquantityActualmix

kgs

34,080

83,232

64,200

––––––––

181,512

––––––––

Actualquantity

Standardmix

kgs

33,613·33

80,672

67,226·67

–––––––––

181,512

–––––––––

Variance

kgs(466·67)

(2,560)3,026·67

Variance

kgs

386·67

928

773·33

Standardcostperkg

$

10

4

3

Standardcostperkg

$

10

4

3

Variance

$

(4,666·70)

(10,240)

9,080·01

–––––––––

(5,826·69)A

–––––––––

Variance

$

3,866·70

3,712

2,319·99

–––––––––

9,898·69F

–––––––––

(b)(i)Amaterialsmixvariancewilloccurwhentheactualmixofmaterialsusedinproductionisdifferentfromthestandard

mix.So,itisinputswhicharebeingconsidered.SincethetotalmixvarianceisadversefortheSafeSoapCo,thismeansthattheactualmixusedinSeptemberandOctoberwasmoreexpensivethanthestandardmix.

Amaterialyieldvariancearisesbecausetheoutputwhichwasachievedisdifferentfromtheoutputwhichwouldhavebeenexpectedfromtheinputs.So,whereasthemixvariancefocusesoninputs,theyieldvariancefocusesonoutputs.InbothSeptemberandOctober,theyieldvariancewasfavourable,meaningthattheinputsproducedahigherlevelofoutputthanonewouldhaveexpected.

(ii)WhilstthemixandyieldvariancesprovideSafeSoapCowithacertainlevelofinformation,theydonotnecessarily

explainanyqualityissueswhicharisebecauseofthechangeinmix.Theconsequencesofthechangemaywellhaveanimpactonsalesvolumes.InSafeSoapCo’scase,thesalesvolumevarianceisadverse,meaningthatsalesvolumeshavefalleninOctober.ItisnotknownwhethertheyalsofellinSeptemberbutitwouldbeusualfortheeffectsonsalesofthechangeinmixtobeslightlydelayed,inthiscasebyonemonth,giventhatitisonl