2011%20Solutions%20to%20Practice%20Questions%20Students -...

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Solutions to Practice Questions for the ACCT2522 Final Exam
Please note that some information in the answers to the
questions may not be relevant to you as the course has changed
over the years.
Question 1 [10 marks in total]
(a)
item identified
(a)
explaining any of
the two NVA
identified
(b)
one root cause for
each NVA
(c)
Storing
materials
 Resources spent
in housing
other idle
resources.
Does not
contribute to
product.
 If inventory
management
practices are
in place, the
need to store
materials would
be minimal.
 Unreliable
suppliers
resulting in
inconsistent
supply.
 Inflexible
suppliers
unable to
deliver at
short notice.
 Unable to
predict
production
requirements
accurately.
Assess quality of
recommendations:
 reference to
appropriate
method of
reducing
activity costs.
 reference to
appropriate
type of
improvement.
 good
recommendation.
Material
Handling and
movement
 Doesn’t
contribute to
the production
of the product
– resource
spent simply in
shifting
materials from
one point to
the next.
 Factory layout.
 Inadequate
infrastructure
for efficiently
moving
materials
around.
Inspect and
test helmet
 Cover for
fixing problems
elsewhere
(upstream
activity
quality
issues).
 Poor quality
control in
production
area.
 Poor quality
materials
 Inexperienced
production
staff.

2
Question 2 [35 marks in total] – This is the solution relating
to the lecture exercise.
Question 3 [28 marks in total]
Required:
Data provided:
Standard
DM (see below) [note
1] 0.2 Sq m
DL 0.5 hr
DL rate ($20 plus 25%
on costs) $25
DM price $35
Thus DL allowed
(0.5*1800 units) 900
Actual
DM Purchased 440 sq m
DM Used 396 sq m
DL Used 910 hrs
Actual DM price $34
DL rate 30
[note 1] std material is 0.16 sq metres; but scrap is 20%.
Thus for 1800 units we need 360 sq metres. Thus need
input = 0.16/0.8 = 0.2 sqm
(a) Variance Analysis [12 marks]
 For each answer, deduct 0.5 mark if no F or UF.
 Direct labour rate variance = AR*AH - SR*AH = 4,550 U - (1
mark for calculating direct labour rate: $20*1.25 = $25
 Direct labour efficiency variance = SR*AH - SR*SH = 250 U
 Direct materials usage variance = SP*(AQ-SQ) = 1,260 U (1
mark for calculating SQ – see note 1 above)
 Direct material price variance = AQ*(AP-SP) = $594 F
(b) Provide one likely explanation each for the direct
material usage variance and the direct labour rate variance
you calculated in requirement (a). [3 marks]
 Allow for carry over mistakes.

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 DM usage: Used more scrap than planned, possibly due to
greater rework (confirmed by unfavourable labour variance)
(allow for other logical explanations)
 DL rate: Changes in class/experience of labour used. (allow
for other logical explanations).
Question 4 [12 marks in total]