Q1 ABC Ltd. is a mid-sized electronics manufacturer facing increasing competition.
To maintain its market position, ABC’s leadership wants to upgrade its cost
management system and leverage innovative management accounting
techniques. The CFO has noticed inefficiencies in cost allocation, particularly in
overhead expenses, and believes refining the firm’s management accounting
practices could strengthen decision-making and secure a competitive advantage.
However, the management team is also aware of the potential limitations and
challenges of implementing new systems.
Briefly explain the distinction between cost accounting and management
accounting, and discuss why management accounting information is crucial for
ABC’s strategic decisions.
Q2 ABC Enterprises manufactures a single product. Below is the cost and sales
information for one month:
– Selling price per unit: Rs. 100
– Variable cost per unit: Rs. 60
– Fixed manufacturing and operating costs per month: Rs. 1,20,000
– Expected sales volume for the month: 4,000 units
Required:
1. Calculate the break-even point in units. (3 marks)
Determine the number of units ABC Enterprises must sell to earn a target
monthly profit of Rs. 40,000. (3 marks)
2.
Compute the margin of safety in both units and rupees if the company
actually sells 4,000 units. (4 marks)
3.
(10 Marks)
Q3 (A) Develop a strategic plan for a company to transition from traditional costing
methods to a more dynamic and competitive cost management system?
(5 Marks)
Q3 (B) Analyze the impact of adopting activity-based costing (ABC) on the financial performance of a service-oriented company?
(5 Marks)
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