The following statements have been made about traditional absorption costing and activity based costing.
(1) Traditional absorption costing may be used to set prices for products, but activity based costing may not.
(2) Traditional absorption costing tends to allocate too many overhead costs to low-volume products and not enough overheads to high-volume products.
(3) Implementing ABC is expensive and time consuming
Which of the above statements is/are true?
ABC can be used for cost-plus pricing. Traditional absorption costing tends to allocate insufficient overhead costs to low-volume products that use up a disproportionate amount of time for order handling, production runs and set-ups. ABC is expensive and time consuming to implement. It is therefore important to assess whether the benefits will outweigh the costs before implementing ABC.
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A government is trying to assess schools by using a range of financial and non-financial factors. One of the chosen methods is the percentage of students passing five exams or more.
Which of the three Es in the value for money framework is being measured here?
The following statements have been made about measuring performance in not-for-profit organisations:
(1) Output does not usually have a market value, and it is therefore more difficult to measure effectiveness.
(2) Control over the performance can only be satisfactorily achieved by assessments of ‘value for money’.
Which of the above statements is/are true?
The senior manager is suspicious of a local manager’s accounts and thinks that the profit performance may have been overstated.
Which of the following would be a plausible explanation of an overstatement of profit?
Which of the following statements regarding standard setting is correct?
When setting performance measurement targets it should be considered that there is the possibility that managers will take a short term view of the company and may even be tempted to manipulate results in order to achieve their targets.
Which of the following would assist in overcoming the problems of short-termism and manipulation of results?
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