2014年12月ACCA-F5考试真题答案.doc

Answers

Fundamentals Level – Skills Module, Paper F5
Performance Management
December 2014 Answers
Section A
1
A
Division A: Profit = $14·4m x 30% = $4·32m
Imputed interest charge = $32·6m x 10% = $3·26m
Residual income = $1·06m
Division B: Profit = 8·8m x 24% = $2·112m
Imputed interest charge = $22·2m x 10% = $2·22m
Residual income = $(0·108)m
2
3
4
5
D
All costs are included when using life cycle costing.
A
This is the definition of a basic standard.
B
The first statement is describing management control, not strategic planning.
C
Number of units required to make target profit = fixed costs + target profit/contribution per unit of P1.
Fixed costs = ($1·2 x 10,000) + ($1 x 12,500) – $2,500 = $22,000.
Contribution per unit of P = $3·20 + $1·20 = $4·40.
($22,000 + $60,000)/$4·40 = 18,636 units.
6
A
Product
A
B
C
D
Selling price per unit
Raw material cost
Direct labour cost at $11 per hour
Variable overhead cost
Contribution per unit
$160
$24
$66
$24
$214
$56
$88
$18
$100
$22
$33
$24
$140
$40
$22
$18
$46
$52
$21
$60
––––
––––
––––
––––
Direct labour hours per unit
Contribution per labour hour
Rank
6
$7·67
2
8
$6·50
4
3
$7
2
$30
1
3
Normal monthly hours (total units x hours per unit)
1,800
1,000
720
800
If the strike goes ahead, only 2,160 labour hours will be available.
Therefore make all of D, then 1,360 hours’ worth of A (2,160 – 800 hrs).
7
8
B
460 – 400 = 60 clients
$40,000 – $36,880 = $3,120
VC per unit = $3,120/60 = $52
Therefore FC = $40,000 – (460 x $52) = $16,080
B
Increase in variable costs from buying in (2,200 units x $40 ($140 – $100)) = $88,000
Less the specific fixed costs saved if A is shut down = ($10,000)
Decrease in profit = $78,000
17

9
A
Only the first statement is correct. Traditional absorption costing tends to over-allocate costs to high volume products, not
under-allocate them.
10
11
B
By definition, a shadow price is the amount by which contribution will increase if an extra kg of material becomes available. 20 x
$2·80 = $56.
C
Neither statement is correct. Responsibility is not assigned solely to senior managers as, for example, in a TQM environment quality
is everybody’s responsibility. In addition, standard costing can be difficult to apply in dynamic situations.
12
13
A
The second statement is talking about flow cost accounting, not input/output analysis.
D
Target 1 is a financial target and so assesses economy factors. Target 2 is measuring the rate of work handled by staff which is an
efficiency measure. Target 3 is assessing output, so is a measure of effectiveness.
14
15
B
In comparison to participative budgeting, an advantage of non-participative budgeting is that it should be less time consuming, as
less collaboration will be required in order to produce the budgets.
C
The target costing process always begins with the target selling price being set. The required profit is then determined and deducted
from the target selling price to estimate the target cost. The target cost is then compared to the estimated current cost and the cost
gap is then calculated.
16
17
A
This is a description of an incremental budget.
A
New profit figures before salary paid:
Good manager: $180,000 x 1·3 = $234,000
Average manager: $180,000 x 1·2 = $216,000
Poor: $180,000 x 1·1 = $198,000
EV of profits = (0·35 x $234,000) + (0·45 x $216,000) + (0·2 x $198,000) = $81,900 + $97,200 + $39,600 = $218,700
Deduct salary cost and EV with manager = $178,700
Therefore do not employ manager as profits will fall by $1,300.
18
B
Set-up costs per production run = $140,000/28 = $5,000
Cost per inspection = $80,000/8 = $10,000
Other overhead costs per labour hour = $96,000/48,000 = $2
Overheads costs of product D:
$
Set-up costs (15 x $5,000)
Inspection costs (3 x $10,000)
Other overheads (40,000 x $2)
75,000
30,000
80,000
––––––––
185,000
––––––––
Overhead cost per unit = 185,000/4,000 = $46·25
18

19
20
A
This is an example of feedforward control as the manager is using a forecast to assist in making a future decision.
A
If demand is inelastic or the product life cycle is short, a price skimming approach would be more appropriate.
19

Section B
1 Chair Co
(a)
Learning curve formula = y = axb
Cumulative average time per unit for 8 units:
Y = 12 x 8–·415
= 5·0628948 hours.
Therefore cumulative total time for 8 units = 40·503158 hours.
Cumulative average time per unit for 7 units:
Y = 12 x 7–·415
= 5·3513771 hours.
Therefore cumulative total time for 7 units = 37·45964 hours.
Therefore incremental time for 8th unit = 40·503158 hours – 37·45964 hours = 3·043518 hours.
Total labour cost for 8th unit =3·043518 x $15 = $45·65277
Material and overheads cost per unit = $230
Therefore total cost per unit = $275·65277
Therefore price per unit = $413·47915
(b)
(i)
Actual learning rate
Cumulative number of
seats produced
1
2
4
8
Cumulative total
Cumulative average
hours per unit
12·5
12·5 x r
12·5 x r2
hours
12·5
?
?
34·3
12·5 x r3
Using algebra: 34·3 = 8 x (12·5 x r3)
4·2875 = (12·5 x r3)
0·343 = r3
r = 0·70
The learning effect was 70% as compared to the forecast rate of 75%, meaning that the labour force learnt more quickly
than anticipated.
(ii)
Adjusted price
The adjusted price charged will be lower than the original price calculated in part (a). This is because the incremental
cost of the 8th unit will be lower given the 70% learning rate, even though the first unit took 12·5 hours. We know this
because we are told that the cumulative time for 8 units was actually 34·3 hours. This is lower than the estimated
cumulative time in part (a) for 8 units of 40·503158 hours and therefore, logically, the actual incremental time for the
8th unit must be lower than the estimated 3·043518 hours calculated in part (a). Consequently, total cost will be lower
and price will be lower, given that this is based on cost.
2
Glam Co
Bottleneck activity
(a)
The bottleneck may have been worked out as follows:
Total salon hours = 8 x 6 x 50 = 2,400 each year. The capacity for each senior stylist must be 2,400 hours, which equates
to 2,400 cuts each year (2,400/1). Since there are three senior stylists, the total capacity is 7,200 hours or 7,200 cuts each
year. Using this method, the capacity for each activity is as follows:
Cut
Treatment
16,000
4,800
Assistants
Senior stylists
Junior stylists
48,000
7,200
9,600
9,600
The bottleneck activity is clearly the work performed by the senior stylists.
The senior stylists’ time is called a bottleneck activity because it is the activity which prevents the salon’s throughput from
being higher than it is. The total number of cuts or treatments which can be completed by the salon’s senior stylists is less
than the number which can be completed by other staff members, considering the number of each type of staff available and
the time required by each type of staff for each client.
20

(b)
TPAR
Cut
$
Treatment
$
Selling price
60
110
Materials
Throughput
Throughput per bottleneck hour
Total salon costs per BN hour (w1)
TPAR
0·60
59·40
59·40
42·56
1·4
8 (7·40+0·6)
102
68
42·56
1·6
Working 1: Total salon costs
(3 x $40,000) + (2 x $28,000) + (2 x $12,000) + $106,400 = $306,400
Therefore cost for each bottleneck hour = $306,400/7,200 = $42·56
Note: Answers based on total salary costs were $80,000 were also equally acceptable since the wording of question was
open to interpretation.
3
Hi Life Co
Direct materials:
Fabric
Wood
Note
1
2
$
200 m2 at $17·50 per m2
20 m at $8·20 per m
30 m at $8·50 per m
3,500
164
255
2
Direct labour:
Skilled
Semi-skilled
Factory overheads
Administration overheads
50 hours at $24 per hour
300 hours at $14 per hour
20 hours at $15 per hour
3
4
5
6
1,200
4,200
300
–––––––
Total cost
9,619
––––––
1
2
Since the material is in regular use by HL Co, it is replacement cost which is the relevant cost for the contract.
30 m will have to be ordered from the alternative supplier for immediate delivery but the remaining 20 m can be used from
inventory and replaced by an order from the usual supplier at a cost of $8·20 per m.
3
4
5
There is no cost for the first 150 hours of labour because there is spare capacity. The remaining 50 hours will be paid at time
and a half, which is $16 x 1·5, i.e. $24 per hour.
HL Co will choose to use the agency workers, who will cost $14 per hour, since this is cheaper than paying existing
semi-skilled workers at $18 per hour ($12 x 1·5) to work overtime.
None of the general factory costs are incremental, so they have all been excluded. However, the supervisor’s overtime pay is
incremental, so has been included. The supervisor’s normal salary, on the other hand, has been excluded because it is not
incremental.
6
These are general overheads and are not incremental, so no value should be included for them.
4
Jamair
(a)
The four perspectives
Financial perspective – this perspective is concerned with how a company looks to its shareholders. How can it create value
for them? Kaplan and Norton identified three core financial themes which will drive the business strategy: revenue growth
and mix, cost reduction and asset utilisation.
Customer perspective – this considers how the organisation appears to customers. The organisation should ask itself: ‘to
achieve our vision, how should we appear to our customers?’ The customer perspective should identify the customer and
market segments in which the business will compete. There is a strong link between the customer perspective and the
revenue objectives in the financial perspective. If customer objectives are achieved, revenue objectives should be too.
Internal perspective – this requires the organisation to ask itself: ‘what must we excel at to achieve our financial and customer
objectives?’ It must identify the internal business processes which are critical to the implementation of the organisation’s
strategy. These will include the innovation process, the operations process and the post-sales process.
Learning and growth perspective – this requires the organisation to ask itself whether it can continue to improve and create
value. The organisation must continue to invest in its infrastructure – i.e. people, systems and organisational procedures – in
order to improve the capabilities which will help the other three perspectives to be achieved.
21

(b)
Goals and measures
Financial perspective
Goal
Performance measure
To use fewer planes to transport customers
Lease costs of plane per customer
Explanation – operating efficiency will be driven by getting more customers on fewer planes. This goal and measure cover the
cost side of this.
Goal
Performance measure
To increase seat revenue per plane
Revenue per available passenger mile
Explanation – this covers the first part of achieving operating efficiency – by having fewer empty seats on planes.
Customer perspective
Goal
Performance measure
To ensure that flights are on time
‘On time arrival’ ranking from the aviation authority
Explanation – Jamair is currently number 7 in the rankings. If it becomes known as a particularly reliable airline, customers
are more likely to use it, which will ultimately increase revenue.
Goal
Performance measure
To reduce the number of flights cancelled
The number of flights cancelled
Explanation – again, if flights are seen to be cancelled frequently by Jamair, customers will not want to use it. It needs to be
perceived as reliable by its customers.
Internal perspective
Goal
Performance measure
To improve turnaround time on the ground
‘On the ground’ time
Explanation – less time spent on the ground means fewer planes are needed, which will reduce plane leasing costs. However,
it is important not to compromise the quality of cleaning or make errors in refuelling as a consequence of reducing on the
ground time.
Goal
Performance measure
To improve the cleanliness of Jamair’s planes
The percentage of customers happy with the standard of the planes,
as reported in the customer satisfaction surveys.
Explanation – at present, only 85% of customers are happy with the standard of cleanliness on Jamair’s planes. This could
be causing loss of revenue.
Goal
Performance measure
To develop the online booking system
Percentage downtime.
Explanation – since the company relies entirely on the booking system for customer booking of flights and check-in, it is
critical that it can deal with the growing number of customers.
Learning perspective
Goal
Performance measure
To reduce the employee absentee rate
The number of days absent per employee
Explanation – it is critical to Jamair that its workforce is reliable as, at worse, absent staff lead to cancelled flights.
Goal
Performance measure
To increase ground crew training on cleaning and
refuelling procedures
Number of days’ training per ground crew member
Explanation – if ground crew are better trained, they can reduce the number of minutes that the plane stays on the ground,
which will result in fewer planes being required and therefore lower costs. Also, if their cleaning is better, customer satisfaction
and retention will increase.
Note: Only one goal and measure were required for each perspective. In order to gain full marks, answers had to be specific
to Jamair as stated in the requirements.
22

5
Safe Soap Co
(a) Variance calculations
Mix variance
Total kg of materials per standard batch = 0·25 + 0·6 + 0·5 = 1·35 kg
Therefore standard quantity to produce 136,000 batches = 136,000 x 1·35 kg = 183,600 kg
Actual total kg of materials used to produce 136,000 batches = 34,080 + 83,232 + 64,200 = 181,512 kg
Material
Actual quantity
Standard mix
kgs
181,512 x 0·25/1·35 = 33,613·33
181,512 x 0·6/1·35 =
Actual quantity
Actual mix
kgs
34,080
83,232
Variance Standard cost
per kg
Variance
kgs
(466·67)
(2,560)
$
10
4
$
(4,666·70)
(10,240)
Lye
Coconut oil
Shea butter
80,672
181,512 x 0·5/1·35 = 67,226·67
64,200
3,026·67
3
9,080·01
–––––––––
––––––––
–––––––––
181,512
181,512
(5,826·69)A
–––––––––
–––––––––
––––––––
Yield variance
Material
Standard quantity
Standard mix
Actual quantity
Standard mix
kgs
33,613·33
80,672
Variance Standard cost
per kg
Variance
kgs
386·67
928
$
10
4
$
3,866·70
3,712
Lye
Coconut oil
Shea butter
0·25 x 136,000 =
0·6 x 136,000 =
0·5 x 136,000 =
34,000
81,600
68,000
67,226·67
773·33
3
2,319·99
––––––––
183,600
–––––––––
–––––––––
181,512
9,898·69F
–––––––––
––––––––
––––––––