MAC3701 Exam pack 2024(Application of Management Accounting Techniques)Questions and answers)
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Course
Application of Management Accounting Techniques
Institution
University Of South Africa
MAC3701 Exam pack 2024(Application of Management Accounting Techniques)Questions and answers
With accurate answers and assurance that they are in the exam
QUESTION 1: COST CLASSIFICATION &
BEHAVIOUR; BUDGETING & PLANNING;
ADVANCED CVP ANALYSIS; STANDARD
COSTING; TRANSFER PRICING; DIRECT - &
ABSORPTION COSTING; PERFORMANCE
MANAGEMENT; RELEVANT DECISION –
MAKING – OPTIMISATION & ETHICAL, SOCIAL &
OTHER RELATED MATTERS
(a) Costs that are included in PW`s other direct variable manufacturing costs
(DVMC)
➢ Metal body shells:
➢ Electrical wiring including entertainment centres
➢ Seats
➢ Engine
These costs can be traced to the vehicles being manufactured as they are fitted to
each vehicle making them direct costs and they are standard per vehicle.
Furthermore these costs increase in total as the number of vehicles manufactured
increases and decrease in total if the number of vehicles manufactured decrease
thereby qualifying as variable costs.
(b)
(i) To some extent the assertion can be correct because low sales volume can
still be maintained due to their contribution per unit being higher which can
push the break – even point downwards. A product might have very high
sales volumes but if the product`s contribution is low, very high volumes need
to be sold in order to reach the break – even point.
Furthermore, low volume sales products can also be sold for other reasons
other than the break – even. This might be necessary for diversification in
order to hedge against market failure of a single product. If multiple products
are sold it is unlikely that all the products can result in negative outcomes in
terms of sales.
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