Financial and Management Accounting: Exam

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EXAMINATION PAPER: ACADEMIC SESSION 2007/2008 Campus School Department Course Code Course Title Level Duration Date Maritime Greenwich Business Accounting & Finance ACCO1116 Financial & Management Accounting (MAIB) M TWO HOURS August 2008

Course co-ordinator: Dr Agnieszka Herdan INSTRUCTIONS TO CANDIDATES

Answer TWO questions only. All questions carry equal marks. This is a CLOSED book examination Students are permitted to use non-programmable calculators. THIS PAPER MUST NOT BE REMOVED FROM THE EXAMINATION ROOM

August 2008 - RESIT Course Title Financial & Management Accounting (MAIB) Course Code ACCO1116

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APPROVED - Resit Question 1
Decisions Ltd. is a multinational company that produces and sells spare parts for the automotive industry. The traditional costing system used by the company is based on the number of units for charging overheads to products. However, and the CEO thinks that this could lead to poor pricing decisions, considering the different level of complexity of the three main lines of production. Recent improvements in the accounting information system, however, now allows the CEO to gather the information needed to improve pricing decisions. The information that follows is related to the old and the new system. Selected data from the old information system (year 2007) Total manufacturing overhead Total output (units) Model 1 Total production Material cost per unit Direct labour cost per unit 200 £24 £13 8,000 400 Model 2 160 £32 £11 Model 3 40 £24 £7

Selected data from the new information system (year 2007) Cost drivers Set-ups Inspection time - hours Machine maintenance - hours Purchasing related costs - orders Shipments received - shipments Cost drivers by line of production Set-ups Inspection time - hours Machine maintenance - hours Purchasing related costs - orders Shipments received - shipments Cost Annual volume £2,000 2,000 £1,600 100 £2,000 600 £800 1,200 £1,600 1,400 Model 1 600 40 160...
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