Def Co provides accounting services to government departments. On average, each staff member works six chargeable hours per day, with the rest of their working day being spent on non-chargeable administrative work. One of the company’s main objectives is to produce a high level of quality and customer satisfaction. Def Co has set its targets for the next year as follows:<br>(1) Cutting departmental expenditure by 5%<br>(2) Increasing the number of chargeable hours handled by advisers to 6·2 per day<br>(3) Obtaining a score of 4·7 or above on customer satisfaction surveys<br>Which of the above targets assesses economy, efficiency and effectiveness at Def Co？

A
B
C
D

X Co uses rolling budgeting, updating its budgets on a quarterly basis. After carrying out

A. Feedforward control
B. Negative feedback control
C. Positive feedback control
Double loop feedback control

A company manufactures two products, C and D, for which the following information is available: Other overhead costs are absorbed on the basis of labour hours per unit. Using activity-based costing, what is the budgeted overhead cost per unit of product D？

A. $43·84
B. $46·25
C. $131·00
D. $140·64

A company has the following production planned for the next four weeks. The figures reflect the full capacity level of operations. Planned output is equal to the maximum demand per product.<br>The direct labour force is threatening to go on strike for two weeks out of the coming four. This means that only 2,160 hours will be available for production rather than the usual 4,320 hours.<br>If the strike goes ahead, which product or products should be produced if profits are to be maximised？

A. D and A
B and D
C. D only
D. B and C

Dust Co has two divisions, A and B. Each division is currently considering the following separate projects: If residual income is used as the basis for the investment decision, which Division(s) would choose to invest in the project？

A. Division A only
B. Division B only
C. Both Division A and Division B
D. Neither Division A nor Division B

Oxco has two divisions, A and B. Division A makes a component for air conditioning units which it can only sell to Division B. It has no other outlet for sales.<br>Cold Co has offered to sell the component to Division B for $140 per unit. If Division B accepts this offer, Division A will be shut.<br>If Division B accepts Cold Co’s offer, what will be the impact on profits per year for the group as a whole？

A. Increase of $65,000
B. Decrease of $78,000
C. Decrease of $88,000
D. Increase of $55,000

P Co makes two products – P1 and P2 – budgeted details of which are as follows:<br>The fixed overhead costs included in P1 relate to apportionment of general overhead costs only. However, P2 also includes specific fixed overheads totalling $2,500.<br>If only product P1 were to be made, how many units (to the nearest unit) would need to be sold in order to achieve a profit of $60,000 each year？

A. 25,625 units
B. 19,205 units
C. 18,636 units
D. 26,406 units

The following table shows the number of clients who attended a particular accountancy practice over the last four weeks and the total costs incurred during each of the weeks:<br>Applying the high low method to the above information, which of the following could be used to forecast total cost ($) from the number of clients expected to attend (where x = the expected number of clients)？

A. 7,280 + 74x
B. 16,080 + 52x
C. 3,200 + 80x
D. 40,000/x

Notes<br>1 Variable production costs would be $12 per unit for production volumes up to and including 100,000 units each year. However, if production exceeds 100,000 units each year, the variable production cost per unit would fall to $11 for all units produced.<br>2 Advertising costs would be $900,000 per annum at a selling price of $30 and $970,000 per annum at a price of $35.<br>3 Fixed production costs would be $450,000 per annum.<br>Required:<br>(a) Calculate each of the six possible profit outcomes which could arise for Gam Co in the coming year. (8 marks)<br>(b) Calculate the expected value of profit for each of the two price options and recommend, on this basis, which option Gam Co would choose. (3 marks)<br>(c) Briefly explain the maximin decision rule and identify which price should be chosen by management if they use this rule to decide which price should be charged. (3 marks)<br>(d) Discuss the factors which may give rise to uncertainty when setting budgets. (6 marks)

Valet Co is a car valeting (cleaning) company. It operates in the country of Strappia, which has been badly affected by the global financial crisis. Petrol and food prices have increased substantially in the last year and the average disposable household income has decreased by 30%. Recent studies have shown that the average car owner keeps their car for five years before replacing it, rather than three years as was previously the case. Figures over recent years also show that car sales in Strappia are declining whilst business for car repairs is on the increase.<br>Valet Co offers two types of valet – a full valet and a mini valet. A full valet is an extensive clean of the vehicle, inside and out; a mini valet is a more basic clean of the vehicle. Until recently, four similar businesses operated in Valet Co’s local area, but one of these closed down three months ago after a serious fire on its premises. Valet Co charges customers $50 for each full valet and $30 for each mini valet and this price never changes. Their budget and actual figures for the last year were as follows:<br>The budgeted contribution to sales ratios for the two types of valet are 44·6% for full valets and 55% for mini valets.<br>Required:<br>(a) Using the data provided for full valets and mini valets, calculate:<br>(i) The total sales mix contribution variance; (4 marks)<br>(ii) The total sales quantity contribution variance. (4 marks)<br>(b) Briefly describe the sales mix contribution variance and the sales quantity contribution variance. (2 marks)<br>(c) Discuss the SALES performance of the business for the period, taking into account your calculations from part (a) AND the information provided in the scenario. (10 marks)