Question 56
A firm of accountants uses an activity-based costing system. The firm's costing system permits staff to indicate specific tasks undertaken for clients, such as requesting missing information. The amount charged for a request for missing information is based on the following analysis.
Each request takes an average of 15 minutes of professional staff time. Professional staff are charged out at $100 per hour.
Administrators then process the information request and prepare a standard letter. The average time administration staff spend on each information request is 20 minutes. The cost of administration staff at the firm is $75,600 per year. Administration staff work for a total of 6,000 hours per year. The cost of printing and posting a letter is $1.
Calculate the cost of an information request.
Give your answer to 2 decimal places.
Each request takes an average of 15 minutes of professional staff time. Professional staff are charged out at $100 per hour.
Administrators then process the information request and prepare a standard letter. The average time administration staff spend on each information request is 20 minutes. The cost of administration staff at the firm is $75,600 per year. Administration staff work for a total of 6,000 hours per year. The cost of printing and posting a letter is $1.
Calculate the cost of an information request.
Give your answer to 2 decimal places.
Question 57
Which TWO of the following expressions are correct?
Question 58
Kaizen costing is being used by an organization to gradually reduce the unit cost of one of its products in order to achieve a 20% mark up on the product's cost.
The selling price of the product must be $72 per unit and this selling price has been maintained for two years.
Two years ago the product's cost was $3 per unit more than its selling price. Kaizen costing has achieved an 8% reduction from the previous period's unit cost in each of the past two years. The organization expects to continue to achieve the same rate of cost reduction next year.
Which of the following statements provides an accurate analysis of the extent to which Kaizen costing has been successful in achieving the required unit cost for the product?
The selling price of the product must be $72 per unit and this selling price has been maintained for two years.
Two years ago the product's cost was $3 per unit more than its selling price. Kaizen costing has achieved an 8% reduction from the previous period's unit cost in each of the past two years. The organization expects to continue to achieve the same rate of cost reduction next year.
Which of the following statements provides an accurate analysis of the extent to which Kaizen costing has been successful in achieving the required unit cost for the product?
Question 59
Company X is considering the launch of a new product. In order to compete in the market the selling price must be $100 per unit. Company X aims to achieve a sales margin of 25 per cent.
Direct materials cost is $75 for each unit. It takes 15 minutes for workers to assemble each unit. Workers are paid $16 per hour. 5 per cent of paid time is idle. Overheads are absorbed at $6.50 per unit.
What is the value of any cost gap between the forecast total cost and the target cost?
Direct materials cost is $75 for each unit. It takes 15 minutes for workers to assemble each unit. Workers are paid $16 per hour. 5 per cent of paid time is idle. Overheads are absorbed at $6.50 per unit.
What is the value of any cost gap between the forecast total cost and the target cost?
Question 60
A company is considering two mutually exclusive projects, an analysis of which is given below:
The company's cost of capital is 12%.
Assuming an objective of maximising shareholders' wealth, which project would be recommmended?
The company's cost of capital is 12%.
Assuming an objective of maximising shareholders' wealth, which project would be recommmended?