T11 - Cost and management accounting Tutorial Questions 19.22 Advanced(a Explain the meaning of each of the under-noted measures which may be used for

T11 - Cost and management accounting Tutorial Questions...

This preview shows page 1 out of 1 page.

Cost and management accounting - Tutorial Questions 19.22 Advanced. (a) Explain the meaning of each of the under-noted measures which may be used for divisional performance measurement and investment decision-making. Discuss the advantages and problems associated with the use of each. (i) Return on capital employed. (ii) Residual income. (iii) Discounted future earnings. (b) Comment on the reasons why the measures listed in (a) above may give conflicting investment decision responses when applied to the same set of data. Use the following figures to illustrate the conflicting responses which may arise: Additional investment of £60 000 for a 6 year life with nil residual value. Average net profit per year: £9000 (after depreciation). Cost of capital: 14 per cent. Existing capital employed: £300 000 with ROCE of 20 per cent. (8 marks) (Solutions should ignore taxation implications.) (9 marks) ACCA Level 2 Management Accounting ANSWER (a) For the answer to this question see ‘return on investment’ and ‘residual
Image of page 1

You've reached the end of your free preview.

Want to read the whole page?

  • Spring '16
  • Net Present Value, Tutorial, MANAGEMENT ACCOUNTING II, UKAM2043, UTAR, Generally Accepted Accounting Principles, residual income, ROCE, future earnings

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes