Company X’s manager stated the

following sentences:

I.

If there are 10000 abnormal spoiled physical units and only 5000 normal spoiled

physical units, therefore the unit cost of abnormal spoilage will be higher

than the unit cost of normal spoilage.

II.

It is

possible to get no abnormal spoilage in a particular month.

III.

It is

possible to get no normal spoilage in a particular month.

Company X is in the process of deciding whether to maintain or discontinue brand A. The following information refers to Brand A:

• Contribution margin = $69949

• Avoidable fixed costs = $62954,1

• Non-avoidable fixed costs = $55959,2

Company X should ___________

Company X is analysing the project of expanding into a new geographical area. The company needs to double their sales force in terms of headcount.

Which of the following are relevant costs in what concerns this decision?

a) Inventory costs of products held in stock;

b) Sales force commissions (percentage of sales revenue);

Company X uses process costing and uses a weighted average cost flow. In

this

·      

direct material 1 is added at

the end of the process;

·      

direct material 2 is added

homogenously between 10% and 40% of the process;

·      

direct material 3 is added

homogenously between 50% and 70% of the process; and

·      

conversion costs are added

evenly.

The company presented the following

information:

Company X manufactures and sells a single product. When analysing last month's results the controller found a favourable efficiency variance regarding material A used in the process.

This variance means __________

As

you remember, Tangerine Inc. (TGRN) designs, assembles and markets personal

computers and mobile devices. The range of products include:

-

tStem, a very popular desktop computer, which has been produced since 2001;

-

tLeaf, a professional ultralight laptop computer introduced in 2010;

-

tSky, a newer and powerful tablet launched in 2018.

Tangerine

Inc. uses four operations to assemble computers and mobile devices:

Processors

are directly transferred from the Processors Department to the Assembly

Department and are introduced in production at the beginning of the assembly

process. The remaining components are also introduced at the beginning of the

process, except the packaging materials that are introduced when assembly is

between 90% and 100% complete. Conversion costs are added evenly during the

entire process.

When

the four operations described above are done, computers and mobile devices are

immediately transferred to the Store, where finished units of tStem, tLeaf, and

tSky are stored and placed for sale.

The

percentages of completion are as follows:

Question: 

Give

one suggestion to improve the system and get better information about the

Assembly costs of each product line.

Consider the list of multinational companies shown below tagged C1 to C7. Also consider the list of variance types listed below tagged V1 to V7.

Companies:

• C1: PepsiCo (food and drinks; flagships: Pepsi, Lay’s, Ruffles)

• C2: Danone (food-products; products: yoghurts, desserts)

• C3: Inditex (clothing; flagship brand: Zara)

• C4: L’Oréal (personal care; products: shampoo; shower gel)

• C5: McDonalds (fast food company; flagship brands: McMenu; Sundae)

• C6: Nestle (food and drink processing corporation; products: chocolates; breakfast cereals)

• C7: Starbucks (chain of coffee houses; products: coffee; tea)

Variance types:

• V1: sales volume variance

• V2: flexible budget variance

• V3: sales price variance

• V4: variable cost variance

• V5: price variance (in the context of acquiring raw materials)
• V6: efficiency variance (in the context of acquiring raw materials)

Choose one of the companies and choose one of the variances and do the following:

i) Use an example (non-numerical) to explain the selected Variance for the selected Company and 

ii) Explain one possible cause for this variance to be Favourable.

We are not expecting you to have a deep knowledge of the companies, instead we need you to give sound and meaningful examples that could be real.

Consider the list of multinational companies shown below tagged C1 to C7. Also consider the list of factors/concepts used for decision-making purposes listed below tagged F1 to F7.

Companies:

• C1: Apple (technology company that designs, develops and sells consumer electronics, computer software and online services)

• C2: Banco Santander (bank)

• C3: Inditex (clothing; flagship brand: Zara)
• C4: L’Oréal (personal care)

• C5: Lufthansa (airline)

• C6: Marriott International (hospitality company that manages and franchises a broad portfolio of hotels)

• C7: Walmart (retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores) 

Factors/concepts used for decision-making purposes:

• F1: Relevant costs

• F2: Relevant revenues

• F3: Opportunity cost

• F4: Avoidable cost

• F5: Supplier’s reputation

• F6: Sunk cost

• F7: Capacity constraint

Choose one of the companies and choose one of the factors/concepts and describe a situation requiring a decision that could possibly happen in the selected Company in which the selected factor/concept would be applicable. 

We are not expecting you to have a deep knowledge of the companies, instead we need you to give sound and meaningful examples that could be real.

Company X uses process

costing and has 2 departments. Direct materials are added at the start of the

process and conversion costs are added evenly during the process. The company

presented the following information regarding department 2 for June:

Company X uses the FIFO

method of process costing. Direct materials are added when the production

process is at 30% and conversion costs are added evenly during the process. The

company presented the following information related to March: