CORK INSTITUTE OF TECHNOLOGY INSTITIÚID TEICNEOLAÍOCHTA CHORCAÍ

Semester 1 Examinations 2008/09

Module Title: Strategic Management Accounting 1

Module Code: ACCT 8004 School: Business Programme Title: Bachelor of Business (Honours) Studies (ACCS) - Award Programme Code: BBUSA_8_Y4 External Examiner(s): Ms. Marian Duggan Internal Examiner(s): Mr.B.Ahern Instructions: Answer any THREE questions Duration: Two Hours Sitting: Winter 2008 Requirements for this examination: Note to Candidates: Please check the Programme Title and the Module Title to ensure that you have received the correct examination paper. If in doubt please contact an Invigilator.

Q1. (a) Discuss how the role of the modern management accountant has changed?

(You should discuss the role in terms of strategic management accounting

and traditional management accounting) (10 marks)

(b) Evaluate the potential benefits to be gained by organizations who undertake

Life Cycle Costing exercises? (10 marks)

Total 20 marks

Q2. (a) Explain what is meant by Target Costing. (4 marks)

(b) Critically compare target costing and standard costing, particularly in

today’s global environment. (10 marks)

(c) Discuss the Cost of Quality as found in the Cost of Quality Report. (6 marks)

Total 20 marks

Q3. (a) Define Value Analysis and outline the main steps involved. (12 marks)

(b) It is useful to distinguish two types of value – Utility Value and Esteem Value.

Compare and contrast these terms. (8marks)

Total 20 marks

Q4. (a) Explain the following terms:

Theory of Constraints

Bottleneck Resource (5 marks)

(b) Discuss Throughput Accounting? (4 marks) (c) A company produces three products, A, B and C. The capacity of the company’s

plant is restricted by the coating process machine. This machine is operational

for ten hours per day and can produce the following outputs:

Units

Product Per Hour

A 1,250

B 1,000

C 400

Selling prices and material costs for each product (per unit) are as follows: Throughput Product Selling Price Material Cost Contribution € € €

A 170 80 90

B 130 50 80

C 350 140 210 Conversion costs are currently running at €780,000 per day.

Required:

(1) Calculate the profit per day, if the company is currently producing the

following unit output each day.

Product Output (Units)

A 6,100

B 4,600

C 1,180 (1 mark)

(2) Calculate the efficiency of the bottleneck process, based on the output

currently achieved. (4 marks)

(3) Calculate the Throughput Accounting ratio for each of the three products, A, B,

C. (3 marks)

(4) Recommend an optimal production plan to company management. (You may

assume that there are no demand restrictions for the three products). (3 marks)

Total 20 marks

Q5. ‘Costing systems attempt to explain how products consume resources but do not indicate the

joint benefits of having multiple products’

Required:

(a) Explain how the addition of a new product to the product range may affect the

cost of existing products (10 marks)

(b) Discuss in terms of overall profitability, the consequences of decisions to increase

or decrease the product range (10 marks)

Total 20 marks