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Unformatted text preview: Accelerated Program – Test 4 – July 26, 2008 Markers’ Comments Overall Statistics – Q1 Maximum marks Averages (%) 40 54 Q2 18 71 Q3 10 83 Q4 11 84 Q5 9 57 Q6 12 57 Tot 100 63.7 391 91
Total Writers Highest Grade The above statistics do not include writers who scored below 30% on the exam. I have attached a histogram showing the distribution of marks. Question 2 – Capital Budgeting Marking Key – Initial investment – machine and software Initial investment – working capital Tax shield on equipment Tax shield on software PV of salvage value PV of tax shield lost PV of recovery of working capital Incremental operating cost savings Wages and payroll taxes avoided Labels, glue and other supplies Utilities Repairs Ignoring 1/5 of employee time Multiply by 1-t and PVIFA Recommendation Most Significant Errors deducting the salvage value from the initial investment (salvage should be deducted at its present value) not multiplying by the tax rate when calculating tax shields for the equipment and software not considering the software tax shield as an annual savings not including repairs in incremental cost savings by assuming that repairs will always be greater than $800 0.5 0.5 2 2 1 2 1 1 2 1 1 2 1 1 - calculating the PV of the incremental cost savings on the entire amount rather than the after-tax portion (should have been multiplied by 1-t or 58%) including the management salary as an incremental cost, although this employee is already working within the company and is therefore a fixed/sunk cost not calculating the tax shield lost on the salvage value not making a recommendation based on the results of the NPV calculation Question 3 – Transfer Pricing Marking Key – a. b. c. Savings by not purchasing externally Variable cost of producing Opportunity cost of lost sales Maximum TP Minimum TP Regular division CM on internal sales Opportunity cost of lost sales Boiler Division Savings 1 1 2 1 2 1 1 1 Most Significant Errors – incorporating the fixed costs in the calculation of the transfer price assuming the selling price is the transfer price Question 4 – Relevant Costs – Make or Buy Marking Key – a. Cost to buy Cost to make Variable cost per sail (DM + DL + VOH) What the president did not consider Difference in the cost to make Three valid qualitative issues 1 4 1 2 3 b. c. Most Significant Errors – Part (a) not calculating the variable overhead cost per sail Part (b) was well done Part (c) – generally well done, but the question asked for qualitative issues not quantitative issues Question 5 – Relevant Costs / Variable Cost Transfer Pricing Marking Key – a. Lost CM on external sales Incremental cost to company of outsourcing Binder Avoidable fixed costs Avoidable allocated corporate overhead Should be transferring at market price Inherent problems with variable cost transfers 2 2 1 1 1 2 b. Most Significant Errors – Part (a) – not calculating the incremental cost to the company of purchasing Binder from an external source (and yes, all the information to do this calculation was available to you). Fewer than 10 students did this calculation. Part (b) – not discussing the inherent problems associated with variable cost transfers Question 6- Cost Variances Marking Key – a. Labour rate variance Labour efficiency variance Labour yield variance Labour mix variance Skilled cost Unskilled cost 1 2 2 3 2 2 b. Most Significant Errors Part a: Labour rate variance: using standard hours allowed rather than actual hours used Labour efficiency variance: using actual labour rates rather than budgeted Labour yield variance: separating the calculation for skilled/semiskilled workers and using different labour rates Labour mix variance:using actual units produced rather than actual total hours used; not deducting the budgeted average labour rate per hour from the budgeted labour rate per hour Part b: - using budgeted mix % - using budgeted rate per hour rather than actual rate - using total actual hours used rather than actual units produced Question 1 Answers Management Accounting 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. a d c c b a d b b b a b c b c b b a c b b d a d d a c c Cost Classifications Job Order Costing Process Costing Process Costing Service Dept Allocation Cost Estimation Joint and by-products Direct costing Direct costing CVP Analysis CVP Analysis CVP Analysis Relevant costs – make vs. buy Relevant costs – make vs. buy Relevant costs – special order Budgeting Budgeting Budgeting Linear Programming Uncertainty Revenue Variances Revenue Variances Revenue Variances Performance Evaluation Performance Evaluation Lease vs. buy Relevant Costs – Scarce Resources Uncertainty Internal Control, Corporate Governance and Risk Management 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. c b c b a b c c c a b c Test 4 - July 26, 2008
80 73 70 76 60 50 Frequency 43 40 47 30 30 25 24 16 23 20 14 10 15 3 0 0-30 31-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85-89 2 90+ Marks Range ...
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This note was uploaded on 01/15/2010 for the course ACCOUNTING CMA CERTIF taught by Professor Pro-said during the Spring '09 term at Cairo University.
- Spring '09