Accounting for Managers: Interpreting accounting information for decision-making

SOLUTIONS TO QUESTIONS 417 Solutions for Chapter 9 9.1 Variable costs are £2 per unit (£10,000/5,000), for December 10,000 @ £2= ...

418 ACCOUNTING FOR MANAGERS 9.5 Production will be 8,000 units special order plus 12,000 units regular sales to give a maximum p ...

SOLUTIONS TO QUESTIONS 419 Table A2.8 Sales 850,000 Less cost of production Materials 450,000 Labour 175,000 Variable manufactur ...

420 ACCOUNTING FOR MANAGERS 10.3 Direct materials and variable costs are relevant costs as they are only incurred if manufacture ...

SOLUTIONS TO QUESTIONS 421 10.6 The comparison of costs under each alternative is shown in Table A2.10. Direct labour and fixed ...

422 ACCOUNTING FOR MANAGERS Table A2.13 Manufacture 100 Purchase 100 Direct labour 20,000 Direct material 60,000 Variable overhe ...

SOLUTIONS TO QUESTIONS 423 Solutions for Chapter 11 11.1 See Table A2.15. 11.2 Machining Assembly Finishing Total Overhead costs ...

424 ACCOUNTING FOR MANAGERS 11.4 Cost pool Estimated Expected activity cost Product A Product B Total Rate £/activity Activity 1 ...

SOLUTIONS TO QUESTIONS 425 If £120,000 of costs were recovered over the number of units produced (20, 000 + 20 , 000 = 40 ,000), ...

426 ACCOUNTING FOR MANAGERS Assembly overheads: Widgets 50 , 000 ×7@£0. 825 288,750 Gadgets 40 , 000 × 3 ×£0. 825 99,000 Helios ...

SOLUTIONS TO QUESTIONS 427 Table A2.18 Widgets Gadgets Helios Sales volume 50,000 40,000 30,000 Total contribution 650,000 440,0 ...

428 ACCOUNTING FOR MANAGERS Strategy should be to shift sales mix as far as possible to Product A (highest contribution per unit ...

SOLUTIONS TO QUESTIONS 429 Table A2.21 A B C Total No. units 150,000 200,000 350,000 700,000 Sales revenue 7,500,000 7,000,000 8 ...

430 ACCOUNTING FOR MANAGERS Table A2.23 Year 0 Year 1 Year 2 Year 3 Cash flows 1,000 800 700 Present value 2,029 Initial investm ...

SOLUTIONS TO QUESTIONS 431 On a payback basis, the ranking of projects (with preference to the quickest payback) is C, then A th ...

432 ACCOUNTING FOR MANAGERS NPV Inflow Outflow Net Factor PV Year 1 75,000 30,000 45,000 .9091 40,910 Year 2 90,000 40,000 50,00 ...

SOLUTIONS TO QUESTIONS 433 Using residual income, both Green and Brummy see an increase and will support the investment. 13.4 Co ...

434 ACCOUNTING FOR MANAGERS Overall, Compax has a higher ROI, a higher RI and a higher cash value added based on the NPV. This i ...

SOLUTIONS TO QUESTIONS 435 14.2 Profit See Table A2.26. Note: Depreciation is £2,400 p.a. or £200 per month. Cash See Table A2.2 ...

436 ACCOUNTING FOR MANAGERS Table A2.27 July August September Total Receipts 20,000 30,000 50,000 Payments to creditors −5,000 − ...