🇳🇬 PATRIOT ODUNARO BABATUNDE JIMOH
141 TUTORIAL QUESTIONS on
acc 303- MANAGEMENT ACCOUNTING
(CONTACT
PATRIOT FOR SOLUTIONS ON 08038454008)
141
TUTORIAL QUESTIONS ON
ACC 303-MANAGEMENT ACCOUNTING
TOPIC 1: EVALUATE AND APPLY APPROPRIATE BUDGETING
AND
STANDARD COSTING TECHNIQUES TO PLANNING AND
CONTROL IN BUSINESS AS WELL AS ESTIMATION AND
PROCESS COSTING
- Explain the concept of budgetary control and
discuss any five of its benefits in an organization.
- Describe forecasting and explain its
relationship to budgeting.
- Enumerate and explain the main components of a
master budget.
- Write short notes on the following:
(a) Sales Budget
(b) Production Budget
(c) Direct Labour Budget
(d) Capital Expenditure Budget - What is a cash budget? Explain five of its
importance.
6. Explain the concept of a flexible budget and outline
five advantages of using it
- Differentiate between a fixed budget and a
flexible budget.
- ABC Limited
expects to sell 5,000 units
of Product Z next month.
Opening inventory is 800 units
and the company desires a closing inventory of 1,200 units.
Required:
Prepare the production budget
for the period.
- Foyegbe Nigeria Limited is operating a system
of flexible budgetary control.
The budget for the year 2025 is as
follows:
Level
of Activity
80% 90% 100%
800Units 900Units 1,000Units
Prime
Cost 16,000 18,000 20,000
Variable
Selling Overhead 2,400 2,700 3,000
18,400 20,700 23,000
Selling
Variable Selling Overhead:
Distribution 3,600
3,800 4,000
Other
Fixed Overhead 5,000 5,000 5,000
Total
Cost 27,000 29,500 32,000
You are required to present the above to the
management, separating the semi-variable overhead to variable and fixed, and
also include the cost of attaining 120% level of activity. Fixed costs remain
unchanged.
10. Enumerate
five each merits and demerits of the Standard Costing Techniques.
11. List six
needs for Variance Analysis.
12. For a
product, the following data are given by Foyegbe Nigeria Limited.
Standard details per unit of product:
Direct material 4kgs at N0.75 per kg
Direct labour 2hours at N1.60 per hour
Actual details for given financial period:
Output produced in units 38,000
Direct materials:
Purchases
180,000kgs for N126,000
Issued to production 154,000kgs
Direct labour 78,000hours worked for N136,500.
There was not work-in-progress at the beginning or end
of the period.
As a student of Management and Business Studies, you
are required to calculate the following variances:
(i)
Direct
Material Cost
(ii)
Direct
Material Price based on issue to production.
(iii)
Direct
Material Usage
(iv)
Direct
wage Cost
(v)
Direct
Wage Rate
(vi)
Direct
Labour Efficiency
13. Below is
the budget of maintenance department of Jejelaye Nigeria Limited which is
currently
working at 80% capacity.
N`000
Variable
Costs:
Direct
Labour 60,000
Direct
Materials 48,000
Other direct
expenses 56,000
Mixed Costs:
Indirect
labour 30,000
Maintenance 24,000
Other
supplies 32,000
Discretionary fixed costs:
Training
cost 15,000
Committed
fixed costs:
Depreciation 15,000
280,000
In addition to the above information, you are to
note the following:
Indirect labour 60%
fixed
Maintenance Expenses 50%
fixed
Other supplies 40%
variable
You are required to prepare a flexible budget at
60%, 70% and 100% capacities.
(b) Write
short note on the following:
(i) Budget Committee
(ii) Zero Based Budget
(iii) Flexible Budget
14, Brits Nigeria Limited manufactures local bread,
using two chemical pounds Mang and Dang. The standard materials usage and cost
of unit of bread are as follows:
N
Mang 6kg @ N3 per kg 18
Dang 12kg @ N4 per kg 48
66
At particular period, 100 units of bread were
produced from 700kg of Mang and 1,140kg of Dang.
Required:
Calculate the materials usage, mix and yield
variances.
15. Bamishaye
Nigeria Limited produces and sells Red Soft Drinks. The standard direct
cost per crate is as follows:
Material:
100 litres of concentrated juice at N2.00 per litre.
200 litres of carbonated water at N2.50 per litre
10 labour hours at N9.00 per hour.
The budgeted monthly production and sales is 500
crates and the selling price is N1,000 per crate.
The following details relate to October 2025, when
510 crates of Red Soft Drinks were produced and sold:
N
Sales 506,500
Materials used:
Concentrated juice- 51,600 litres 102,500
Carbonated water- 101,500 litres 258,800
Labour:
5,000 hours cost 45,750
Required:
(a)
Compute
the price and usage variance for each material.
(b)
Calculate
the wage rate and efficiency variances.
(c)
Comment
briefly upon the information revealed by each of the variances you have
computed.
16. Aseye Limited Operate a standard absorption
costing system to control the manufacturing cost of single product. The
following standards have been set.
N/Unit
Direct Materials 2kg @ N6/kg 12
Direct Labour 1 hour @ N7/hr 7
Variable overhead 1 hour@ N9/hr 9
Total production cost 28
The fixed overhead standard cost per unit is based
on a budgeted monthly production of 4,000 units actual results for most recent
month were:
Production 4,300
units
Direct material cost N56,000
for 9,000kg
Direct labour cost N32,800
for 4,600hrs
Variable overhead N35,000
Only 4,000 hrs were worked
No material inventory held
Required: Calculate all relevant variances
17. The opening balance of Odebeodero Nigeria Limited
on 1 January, 2024was expected to be N360, 000. The Budgeted sales and
purchases were as follows:
Sales
(N) Purchases (N)
November 2023 960,000 -
December 2023 1,080,000 720,000
January 2024 900,000 660,000
February 2024 900,000 540,000
March 2024 960,000 660,000
Notes:
i.
Analysis of record shows that debtors settle
according to the following pattern: 60% within the month of sales, 25% in the
month following and remaining 15% the next month.
ii.
All purchases are on credit and past
experience shows that 90% are settled in the month of purchase and the balance
settled the month after.
iii.
Wages of N180, 000 and overheads of N240, 000
(including N60, 000 depreciation) are settled monthly.
iv.
Taxation of N96, 000 has to be settled in
February and the company will receive insurance claim of N300, 000 in March.
You are required
to prepare a cash budget for January 2024, February 2024 and March 2024.
18. (a) SUN Water Limited has a cash balance of
N200,000 at the beginning of January 2025.
The
sales and purchases for the first 5 months are given below:
Month Sales Purchases
Jan. 200,000 50,000
Feb. 300,000 80,000
Mar. 450,000 120,000
Apr. 600,000 170,000
May 750,000 200,000
(b) 70% of sales are realised in the month following
sales and the remainder in the following 2 months.
(c) Creditors are settled one month in arrears.
(d) Overhead expenses of N40,000 is incurred on
monthly basis.
(e) The
company plans to purchase a new generator costing N70,000 in April 2025
(f) Wages of
N50, 000 are incurred on monthly basis.
Required:
Prepare cash budget for January to April 2025.
19. Moribatise Ajepeaiye, an able Electrical
Engineer, was informed that he was going to be promoted to Assistant Plant
Manager.
Moribatise was elated but uneasy. In particular, his
knowledge of Accounting was sparse. He had taken one course in Financial
Accounting but had not been exposed to the Management Accounting that his
superiors found helpful.
Moribatise planned to enrol in Management Accounting
course at Southwestern University Nigeria at Ogun state as soon as possible.
Meanwhile, he asked Mosorire Moyege, an Assistant
Financial Controller to state ten of the principle distinctions between
Financial Accounting and Management Accounting using some concrete factors.
As an Assistant Financial Controller, prepare a
written response to Moribatise Ajepeaiye.
19. To produce
one unit of Product Z requires 3 kg of
raw material.
Expected production: 6,000 units
Opening materials inventory: 2,000 kg
Desired closing inventory: 3,000 kg
Required: Prepare the direct materials
purchase budget.
20. XYZ Ltd provides the following information for March:
Opening
cash balance: N50,000
Cash
receipts: N120,000
Cash
payments: N140,000
Required:
Prepare the cash budget for March.
21. A company has the following cost structure at 60% capacity (producing 6,000 units):
Fixed
cost: N200,000
Variable
cost per unit: N10
Required:
Prepare the flexible budget for 80%
capacity (8,000 units).
22. Actual cost: N500,000
Budgeted cost: N450,000
Required:
Compute the variance and state whether it is favourable or unfavourable.
23. Discuss the role of responsibility accounting in effective budgetary
control.
24. .(a) What do you
understand by cash budget?
(b) Enumerate four benefits to be derived from the
preparation of detailed cash budget.
(c) Sogbae Nigeria Limited wishes to
arrange for overdraft facilities with its banker during the period of April
2025 to June 2025 when it will be manufacturing mostly for stock.
|
Month/Year
|
Sales
|
Purchases
|
Wages
|
|
|
N
|
N
|
N
|
|
February 2025
|
180,000
|
124,000
|
12,000
|
|
March 2025
|
192,000
|
144,000
|
14,000
|
|
April 2025
|
108,000
|
243,000
|
11,000
|
|
May 2025
|
174,000
|
246,000
|
10,000
|
|
June 2025
|
126,000
|
268,000
|
15,000
|
50% of the credit sales are realized in the month
following the sales and the remaining sales in the second month.
Creditors are paid in the following month of
purchase.
Cash in hand on April 1, 2025 estimated at N25,000.
Required:
Prepare a cash budget for the above period
indicating the extent of bank facilities the company will require at the end of
each month.
25. The following
information relates to Feyikogbon Nigeria Limited:
|
Month
|
Wages
|
Material
|
Overhead
|
Sales
|
|
N
|
N
|
N
|
N
|
|
February
|
6,000
|
20,000
|
10,000
|
30,000
|
|
March
|
8,000
|
20,000
|
12,000
|
40,000
|
|
April
|
10,000
|
25,000
|
16,000
|
60,000
|
|
May
|
9,000
|
35,000
|
14,000
|
50,000
|
|
June
|
12,000
|
30,000
|
18,000
|
70,000
|
|
July
|
10,000
|
25,000
|
16,000
|
60,000
|
|
August
|
9,000
|
25,000
|
14,000
|
50,000
|
Additional Information:
i.
It
is expected that cash balance on 1st May 2025 will be N22,000
ii.
The
wages may be assumed to pay within the month they are incurred.
iii.
It
is company policy to pay suppliers for material three months after receipt.
iv.
Credit
customers are expected to pay two months after delivery.
v.
There
is one month delay in paying the overhead expenses.
vi.
It
is intended to repay a loan of N25,000 on 30th June 2025
Required: Prepared a cash budget for the month of
June 2025 to August 2025.
26. (a) Management
Accounting is a branch of accounting that focuses on providing financial and
operational information to managers and internal stakeholders to support
decision making, planning and control within an organisations.
Outline five each distinctions and similarities
between management accounting and financial accounting.
(b) Asiwaju Nigeria Limited proposed the budget for
the production of 100,000 units of the commodities manufactured by the company
for the costing period.
Cost Per Unit
N
Direct Material 2.52
Direct Labour 0.75
Direct Expenses 0.10
Factory Overhead ( 60% Fixed) 2.50
Admin. Overhead
(80% Fixed ) 0.40
Selling and Distribution (50% Fixed) 0.20
The actual production during the costing period was
60,000 units.
Required:
Compute the Reverse Flexible Budgeted Cost Per Unit
and show all workings.
27. Oluwalogbon
Nigeria Limited is considering investing in a project costing N500,000. The
project is expected to have a life of 5 years with a salvage value of N15,000.
An analysis of future cash flows from the project is
given as follows:
|
Year
|
Cash Revenue
|
Cash Operating Expenses
|
|
N
|
N
|
|
1
|
300,000
|
150,000
|
|
2
|
400,000
|
220,000
|
|
3
|
450,000
|
250,000
|
|
4
|
500,000
|
280,000
|
|
5
|
525,000
|
300,000
|
Assume the company`s cost of capital is 14%, you are
required to calculate the following:
(a)
The
Pay Back Period (PBP) of the project
(b)
Net
Present Value (NPV)
(c)
Internal
Rate of Return (IRR)
Will
you advise the company to embark of the project? Give reasons
28.
Product Zee passes
through two processes to completion. The costs of production were as follows:
|
Element of cost
|
A
|
B
|
Total
|
|
N
|
N
|
N
|
|
Direct Material
|
2,000
|
3,020
|
5,020
|
|
Direct Labour
|
3,000
|
4,000
|
7,000
|
|
Direct Expenses
|
500
|
226
|
726
|
|
Production Overhead
|
|
3,500
|
1,000 units at N5 each
were issued to process A.
Output of each processes
were:
Process A 920
Process B 870
Normal loss per process
was estimated as:
Process A 10%
Process B 5%
The loss in each process
represented scrap which could be sold as:
Process A N3 per unit
Process B N5 per unit
Production overhead is
absorbed by each process on the basis of 50% cost of direct labour.
The output of each
process passes directly to the next process.
You are required to
compute:
a.
Process A Account
b.
Process B Account
c.
Abnormal Gain or Loss Account
29. SUN has just developed a new micro computer in
the rapidly expanding home market. As a Management accountant, you are consulted
as to the viability of marketing the computer.
In conjunction with the Manager of Research and
Development, the Production Manager, the Buyer and the Sales Manager, you have
been able to ascertain the following estimates.
|
Month
|
Sales Level Unit
|
Profit/(Loss)
|
|
|
N
|
|
January
|
12,000
|
(30,000)
|
|
February
|
15,000
|
150,000
|
|
March
|
18,000
|
330,000
|
The selling Price will be N150.
Required:
a.
Calculate
the variable cost and fixed cost using high and low method.
b.
Cost
Function
c.
Calculate
the break-even point in:
i.
Unit
ii.
Naira
30. Foyegbe
Nigeria Limited has provided below its operating and maintenance costs for the
last four months:
Months/year Production
(Units) Cost (N)
June 2025 12,000 194,000
July 2025 4,000 220,000
August 2025 15,000 222,000
September 2025 16,000 230,000
You are required to use High and Low Method to
calculate:
i.
Variable
cost per unit and the fixed cost for the period.
ii.
Express
the company`s operating and maintenance costs in linear equation form:
Y
= a + bx
iii.
What
is the expected costs for the last three months of 2025 when the planned
activity
level were:
October
2023 17,200
November
2023 25,500
December
2023 37,400
31. Aiyefele Nigeria Limited manufactures the
following, with the standard labour hours.
Products:
A 20
minutes
B 45
minutes
C 30
minutes
D 25
minutes
The following information was further provides:
Product Budgeted
output (units) Actual output
(units)
A 45,000 48,000
B 70,000 62,000
C 53,000 58,000
D 64,000 53,000
Actual hours recorded was 100,000 direct labour
hours.
Required to complete:
(i) Activity ratio (ii)
Efficiency ratio (iii) Capacity ratio
32. The corporate planning manager of Motungbede
Limited is in the process of preparing the 2023 plan for his organisation, just
having obtained the requisite import licence.
The following data have been gathered:
|
Finished Goods:
|
|
|
|
|
Products
|
Opening Stock
|
Closing Stock
|
Sales
|
|
|
SsA
|
8,000
|
6,000
|
30,000
|
|
|
B
|
18,000
|
10,000
|
20,000
|
|
|
Labour Requirement:
|
|
|
|
|
Products
|
Hours per unit
|
Rate per unit
|
|
|
|
A
|
5
|
3.20
|
|
|
|
B
|
3
|
6.00
|
|
|
|
Materials:
|
|
|
|
|
Usage in production
|
|
|
|
Type
|
Price
|
|
A
|
B
|
|
1
|
3.00
|
|
3
|
1
|
|
2
|
2.00
|
|
4
|
-
|
|
3
|
2.50
|
|
-
|
6
|
|
4
|
4.00
|
|
5
|
-
|
|
5
|
1.00
|
|
-
|
7
|
|
|
|
|
|
|
|
|
|
Production overhead is applied at the rate of X N3
per direct labour hour.
You are required to prepare:
(a)
Production
budget
(b)
Direct
materials purchase budget
(c)
Direct
labour budget
(d)
The
cost of finished goods
(e)
If
a profit of 1/3 of the selling price is desired, for how much
should each unit be sold?
33. (a) What do you understand by Cost-Volume-Profit
Analysis Technique?
(b) List five
each usefulness and assumptions of Cost-Volume-Profit Analysis
Technique.
(c) The
following information has been summarised from the records of Alajeju
Limited.
Period
1 Period 2
N N
Sales 30,000 38,000
Profit 800 2,300
You are required to calculate using any assumption reasonable thought:
(i)
The
Profit/ Volume Ratio
(ii)
The
Loss when sales are 24,000
(iii)
The
Profit when sales are 60,000
(iv)
The
sales required to earn a profit of N4,000
(v)
The
Break-Even Point
(vi)
The
Margin of safety for period 1 and period 2.
34. Wise-Up Communications Limited which
manufactures the “Campus” Radio Receiver commenced trading on June 29th, 2023.
The company`s budget for each four-week period is as follows:
N N
Sales (20,000 receivers) 400,000
Manufacturing costs of goods sold:
Variable Cost 240,000
Fixed Overhead 60,000 (300,000)
Gross Profit 100,000
Selling and distribution cost (fixed) (20,000)
Net Profit 80,000
The following date relates to the first two trading
periods:
Period
1 Period 2
Production 24,000 18,000
Sales 18,000 21,000
Required:
Prepare operating statement for each of the two
periods on each of the following bases:
(a)
Where
fixed manufacturing overhead is absorbed into product cost at the budgeted rate
and selling and distribution costs are treated as period costs.
(b)
Where
all fixed costs are treated as period costs. You may assume that the selling
price, fixed costs and unit variable costs for the two periods are in line with
budget.
35. Ojutonsoro recently convinced her friends and
relatives to grant her a loan of N75,000 which she intends to invest in a
farming project. She estimates that the project will yield the following
returns annually for next ten consecutive years.
Year Cash
flows (N)
1-3 10,000
4 15,000
5-8 5,000
9-10 13,000
If the cost of capital is 12%, calculate and show
all workings:
(a) Net Present Value (NPV)
(b) Internal Rate of Return (IRR)
36. Aiyegbajeje recently convinced his friends and
relatives to grant her a loan of N12,000 which she intends to invest in a
farming project. She estimates that the project will yield the following
returns annually for next ten consecutive years.
Year Cash
flows (N)
1-6 4,500
7 3,000
8-10 2,500
If the cost of capital is 5%, calculate and show all
workings:
(a) Net Present Value (NPV)
(b) Internal Rate of Return (IRR)
TOPIC 2: THE
BEHAVIOURAL ASPECT OF BUDGETING AND
BUDGETARY CONTROL
37. Explain the behavioural aspects of budgeting and why they are important
in organizational performance.
38. Discuss four behavioural problems that may arise from budgeting and
budgetary control.
39. Explain the concept of participative budgeting and outline three
advantages and two disadvantages.
40. Write short notes on:
(a) Goal congruence
(b) Budget pressure
(c) Communication in budgeting
(d) Performance evaluation
41. Using behavioural theories, explain how budgeting can be used to improve
employee performance.
42. ABC Ltd
sets its budget targets without consulting departmental managers. As a result,
most managers complain that targets are unrealistic, leading to poor
performance and tension during performance reviews.
Required:
Explain four behavioural issues arising from the above situation and provide
solutions.
43. A
department manager deliberately inflates cost estimates during budget
preparation to make performance appear favourable.
Required:
(a) Identify this behaviour.
(b) Explain two reasons why it occurs.
(c) Suggest two ways management can reduce this behaviour.
44. Explain how poor communication can affect the effectiveness
of budgeting and budgetary control.
45. Distinguish
between positive behavioural
consequences and negative
behavioural consequences of budgeting.
46. XYZ
Manufacturing introduced a tight budget system to improve efficiency. However,
within six months, employee morale dropped, conflict increased between
departments, and reports were manipulated.
Required:
Evaluate the behavioural implications and suggest recommendations for
improvement.
TOPIC 3: STRATEGIC PERFORMANCE
MANAGEMENT IN EVALUATING
AND IMPROVING ORGANISATIONAL
PERFORMANCE
47. Define
Strategic Performance Management and explain its role in evaluating
organisational performance.
48. State and
explain four objectives of Strategic Performance Management.
49. Discuss
the Balanced Scorecard as a tool for Strategic Performance Management.
50. Explain
the importance of non-financial performance measures in strategic performance
management.
51. Identify
and explain three challenges of implementing Strategic Performance Management.
52. A division of a company recorded an
operating profit of N900,000 and capital employed of N4,500,000.
Required:
Calculate the Return on Investment (ROI) and interpret the result.
53. A company budgeted to produce 12,000
units at a standard cost of N40 per unit. Actual production was 11,000 units at
an actual cost of N42 per unit.
Required:
Calculate the cost variance and comment on performance.
54. The following data relate to a
company’s customer performance:
Target customer satisfaction score: 90%
Actual customer satisfaction score: 82%
Required:
Calculate the performance gap and state its implication
55, A firm reported
sales revenue of N5,000,000 and operating profit of N750,000.
Required:
Calculate the profit margin and explain its significance in performance
evaluation.
56. A
department has the following Balanced Scorecard results:
Financial
target ROI: 25%, Actual ROI: 20%
Customer
retention target: 85%, Actual: 80%
Required:
Evaluate performance using the Balanced Scorecard approach.
57. Explain
how Strategic Performance Management can be used to improve organisational
performance.
58. A group of companies have
many divisions which are engaged in diverse and highly specialised
manufacturing and trading activities. Some of the divisions which through
served their divisional interest were, however, not in the overall group
interest.
The Group Managing Director now
intends to halt this trend and has requested you as the Financial Controller to
advice on the following areas:
(a) Types of decisions that
should be allowed to be made at the divisional level.
(b) The type of decisions that
should be referred to the Group Office.
59. Foyegbe Nigeria Limited has three divisions
operating in Lagos, Port-Harcourt and Abuja. The following data are in respect
of them:
Lagos Port-Harcourt Abuja
Total Assets (N) 5m 7m 9m
Total Sales (N) 15m 18m 14m
Total Costs (N) 13.5m 16.8m 13m
Cost of Capital (%) 18 16 10
Required:
(a) Calculate the annual returns
on investment.
(b) Calculate the residual income
TOPIC 4: EVALUATE AND APPLY COST
REDUCTION AND CONTROL
TECHNIQUES FOR EFFICIENCY OF
BUSINESS OPERATIONS
60. Define cost control and cost reduction. Distinguish between
them.
61. Explain
five techniques of cost control
used in business operations.
62. Discuss
five cost reduction techniques
that can permanently improve operational efficiency.
64. XYZ Limited
has the following information:
|
Particulars
|
Amount (N)
|
|
Standard
cost of materials/unit
|
50
|
|
Actual
production units
|
1,000
|
|
Actual
cost of materials
|
55,000
|
Calculate
the Material Cost Variance (MCV)
and explain its significance.
65. A company
spends ₦20,000 per month on electricity. A cost reduction program reduces usage
by 12%. Calculate the new monthly cost
and savings achieved.
66. ABC Limited
has the following labor data for February:
Standard
labor hours/unit = 4 hours
Actual
units produced = 500 units
Actual
labor hours used = 2,100 hours
Standard
labor rate = N400/hour
Calculate:
(a) Labor Efficiency Variance (LEV)
(b) Labor Rate Variance (LRV),
assuming actual labor cost = N900,000
67. The
standard cost for 1 unit of Product X:
Direct materials
= N30
Direct
labor = N20
Overhead =
N10
During
March, 500 units were produced. Actual costs:
Materials
= N16,000
Labour = N11,000
Overhead =
N5,500
Calculate:
a) Total Cost Variance
b) Comment on efficiency
68. Explain
how responsibility accounting
supports effective cost control.
69. Describe
five advantages of cost reduction
techniques for business operations.
TOPIC 5: THE USE OF SPREADSHEET APPLICATIONS IN
PERFORMANCE
MANAGEMENT
70.
Explain the role of spreadsheet applications in performance
management.
71. List
and explain any five spreadsheet functions commonly used in performance
management.
72. Discuss
the advantages and limitations of using spreadsheet applications in performance
management.
73. Explain
how spreadsheets can be used for:
(a) Budgeting and variance analysis
(b) KPI calculation and trend analysis
74. A
company has the following budgeted and actual expenses:
|
Department
|
Budget (N)
|
Actual (N)
|
|
Sales
|
500,000
|
480,000
|
|
Production
|
300,000
|
350,000
|
|
HR
|
200,000
|
210,000
|
Required:
(a) Calculate the variance (N) for each department.
(b) Calculate the variance % for each department.
(c) Identify departments over and under budget.
75. An employee’s productivity is measured as
units produced per hour worked. Data for two employees is given:
|
Employee
|
Hours Worked
|
Units Produced
|
|
A
|
40
|
200
|
|
B
|
35
|
175
|
Required:
(a) Calculate productivity (Units/Hour) for each employee.
(b) Identify the most productive employee.
76. The monthly sales for a company for Q1 are:
|
Month
|
Sales (N)
|
|
Jan
|
100,000
|
|
Feb
|
120,000
|
|
Mar
|
90,000
|
Required:
(a) Calculate the percentage change in sales month-to-month.
(b) Suggest a suitable chart type to visualize sales trend in Excel.
TOPIC 6: THE UNDERLYING CONCEPTS
IN PERFORMANCE MANAGEMENT
77. Define performance management and
explain its main objectives
78. List
and explain any five underlying
concepts of performance management.
79. Explain
the difference between financial and
non-financial performance metrics, giving examples.
80. Describe
the performance management cycle.
81. A
company’s sales revenue increased from N12,000,000 last year to N14,400,000
this year. Calculate the sales growth
percentage.
82. A company has the following KPIs for its
balanced scorecard:
Financial:
85%
Customer:
75%
Internal
Processes: 70%
Learning
& Growth: 80%
Calculate
the overall BSC score.
83. A company has the following KPIs for its
balanced scorecard:
Financial:
85%
Customer:
75%
Internal
Processes: 70%
Learning
& Growth: 80%
Calculate
the overall BSC score.
84. An employee is rated on 5 parameters as
follows (scale 1–5):
|
Parameter
|
Score
|
|
Quality
of Work
|
5
|
|
Timeliness
|
4
|
|
Initiative
|
3
|
|
Teamwork
|
4
|
|
Attendance
|
5
|
Calculate
the average performance score
and interpret it if: 4–5 = Excellent, 3 = Good, 2 = Fair, 1 = Poor.
85. A company invested N8,000,000 in a new project
and earned a net profit of N1,600,000. Calculate the Return on Investment (ROI).
86. A
manufacturing company produced 2,000 units last month. After implementing
performance improvement strategies, output increased to 2,200 units. Calculate
the improvement rate (%).
87. A
manufacturing company produced 2,000 units last month. After implementing
performance improvement strategies, output increased to 2,200 units. Calculate
the improvement rate (%).
88. The
industry average net profit margin is 18%, but a company achieved only 15%.
Calculate the performance gap
and explain its significance.
89. A company
uses KPIs to monitor departmental performance:
|
Department
|
KPI
Target (%)
|
Actual
Performance (%)
|
|
Sales
|
90
|
85
|
|
Production
|
95
|
100
|
|
Customer
Service
|
80
|
75
|
|
HR
|
85
|
80
|
Tasks:
(a) Calculate the performance variance
for each department.
(b) Identify which department exceeded
its target.
TOPIC 7: PREPARE COST INFORMATION
FOR DECISION MAKING, USING
RELEVANT COSTS
90. Define relevant costs and irrelevant costs. Explain the
characteristics of relevant costs.
91. Explain three types of business decisions
where relevant cost information is required.
92.
Discuss the difference between relevant costs and sunk
costs, giving examples.
93. XYZ Limited
can make 500 units of a product in-house or purchase from a supplier.
|
Cost
Component
|
Per
Unit (N)
|
|
Direct
Materials
|
40
|
|
Direct
Labor
|
30
|
|
Variable
Overhead
|
10
|
|
Fixed
Overhead (unavoidable)
|
20
|
Supplier
price = N85 per unit.
Required: Using relevant costs, decide whether XYZ Limited should make or buy the product.
94. A company receives a special
order for 200 units at N90/unit.
Variable
cost/unit = N60
Fixed
cost/unit = N30 (already incurred)
The
company has sufficient capacity.
Required: Should the company accept the
order?
95. ABC Limited is considering discontinuing Product Y.
|
Particulars
|
Amount
(N)
|
|
Revenue
|
80,000
|
|
Variable
costs
|
50,000
|
|
Traceable
fixed costs
|
20,000
|
|
Allocated
overhead
|
10,000
|
Required: Should Product Y be discontinued?
96. DEF Limited
can replace an old machine with a new one.
|
Particulars
|
Old
Machine (N)
|
New
Machine (N)
|
|
Annual
operating cost
|
50,000
|
30,000
|
|
Purchase
cost
|
Already
paid
|
100,000
|
|
Expected
life
|
5
years
|
5
years
|
Required: Should DEF Limited replace the old
machine?
97.
Explain opportunity
cost and how it is used in decision making.
98. State the steps needed to be observed whenever
marginal costing technique is to be used in making decision.
99. Efunwontan Nigeria Limited manufactures two
products B and T, the selling prices of which are N48 and N72 respectively.
Standard cost data are as follows:
Product B Product T
Per Article: N N
Direct Material 10 12
Direct Wages (N4 per hour):
Department 1 8 12
Department 2 4 8
Department 3 12 -
Department 4 - 16
Variable Overhead 2 6
Per annum fixed overhead N50,000
Efunwontan Nigeria Limited operates a 40-hour week
for 50 weeks each year.
Currently the employees in each department are:
Department 1 15
Department 2 8
Department 3 9
Department 4 12
You are required to state if one product only were
to be made:
(a) Which
product would give maximum profit and the problems that you envisage could
arise.
(b) Which product should be made and the amount of
profit per annum resulting assuming that product B and T use the same direct
material and that there is a shortage of the material with supply limited at
current price to maximum of N200,000 per annum.
(c) Which product should be made and the amount of
profit per annum resulting assuming that there is a shortage of persons
possessing the skills required in department 2, with the result that the number
of employees there cannot be increased.
(d) How many employees with evidence do we have in
Efunwontan Nigeria Limited?
TOPIC 8: EVALUATE DIVISIONAL
PERFORMANCES AND DISCUSS DIFFERENT
TRANSFER PRICING TECHNIQUES
100.
Define divisional performance evaluation and explain its
importance in a decentralized organization.
101. Explain any three methods used
to evaluate divisional performance.
102. Define transfer pricing and discuss two
advantages and two disadvantages of using transfer pricing techniques.
103. Discuss the different transfer
pricing techniques commonly used by organizations.
104. A
company has the following data for its two divisions:
|
Division
|
Operating Profit (N)
|
Capital Employed (N)
|
|
A
|
500,000
|
2,500,000
|
|
B
|
400,000
|
1,000,000
|
Required:
(a) Calculate the ROI for each division.
(b) Calculate the RI for each division if the minimum required rate of return
is 15%.
105. Division X manufactures a component
at a production cost of N30/unit. The selling division wants a 20% markup.
Division Y requires 500 units. Calculate:
(a)
Cost-based transfer price per unit
(b) Total transfer price for 500 units
106. The monthly sales and operating profits for a division are:
|
Month
|
Sales (N)
|
Operating Profit (N)
|
|
Jan
|
100,000
|
20,000
|
|
Feb
|
120,000
|
25,000
|
|
Mar
|
90,000
|
15,000
|
Required:
(a) Calculate the Profit Margin for each month
(b) Suggest a suitable chart type in Excel to visualize the trend
107. (a) What do you understand by Transfer Pricing?
(b) Transfer pricing system may be based upon the
following:
i. Cost
based transfer pricing
ii. Market based transfer pricing
iii.
Negotiated based transfer pricing
iv. Arbitrary transfer pricing
As a student of Southwestern University Nigeria,
State two each merits and demerits of transfer pricing enumerated above.
TOPIC 9: VARIOUS PRICING
STRATEGIES AND CALCULATE PRODUCT PRICES
USING THESE STRATEGIES;
108.
Define pricing
strategy and explain its importance in business.
109. List
and briefly explain four types of
pricing strategies.
110. Explain the difference between premium pricing and penetration pricing.
111. What is psychological pricing, and why is it used?
112. A company produces a product at
a cost of N600 and wants to earn a 25% profit margin. Calculate the selling price using cost-based pricing.
113. A competitor sells a similar
product for N1,000. If a company wants to undercut the competitor by 10%, calculate the product price.
114. If the perceived customer value
of a product is N2,000 and the company wants a 15% profit margin, calculate the
selling price using value-based pricing.
115. Two
products are being bundled for sale. Product A costs N500, Product B costs N300,
and the company wants to offer a 10%
bundle discount. Calculate the bundle price.
116. A company launches a new
product with a skimming pricing
strategy at N3,000. After 3 months, it lowers the price by 20%.
Calculate the new price.
117. A product is priced at N1,500.
Using psychological pricing, the
company wants to set it just below the nearest thousand. Calculate the psychologically adjusted price.
118. A
company wants to use premium pricing.
If the industry standard price is N800 and the company wants a 25% premium,
calculate the selling price.
119. A
hotel uses dynamic pricing. The
base price is N5,000. During peak season, it increases prices by 15%, and
during off-season, it decreases by 10%. Calculate:
(a) Peak season price
(b) Off-season price
120. A
company wants to calculate the selling prices for a product using different
strategies. Cost Price = N600, Competitor Price = N700, Perceived Value = N800,
Markup = 20%, Premium = 15%, Bundle Discount = 10% with another product costing
N400.
Tasks:
(a) Cost-based price
(b) Competitor-based price (10% below competitor)
(c) Value-based price (20% margin)
(d) Premium price (15% above competitor)
(e) Bundle price
121. Ninalowo Nigeria
Limited has budget to make 50,000 units of its product time. The variable cost
of a Tin is N5 and annual fixed cost are expected to be N150,000.
The Financial Director of Ninalowo Nigeria Limited has suggested that a
profit margin of 25% on full cost should be charged for every product sold. The
Marketing Director has challenged the wisdow of the suggestion and has produced
the following estimates of sales demand for units:
Price per unit Demand
(units)
9 42,000
10 38,000
11 35,000
12 32,000
13 27,000
Required:
(a) What will be the profit for the year if cost
plus price were charged with a 25% profit mark up?
(b) What would be the profit for the year if a
profit maximizing price were charged?
Assume in both (a) and (b) above that 50,000 units
were produced regardless of sales volume.
TOPIC 10: ETHICAL PRINCIPLES RELATING TO PERFORMANCE
MANAGEMENT; AND
122. Explain
the importance of ethical principles in performance management. Include at
least four points in your answer.
123. List
and explain five core ethical principles that should guide performance
management.
124. Discuss
three common ethical challenges in performance management.
125. Explain
how ethical principles impact performance evaluation and employee morale.
126. A manager inflates performance scores for certain employees
to hide poor results. Identify the ethical principles violated and explain the
consequences.
127. An
organization evaluates employees based on the following criteria:
|
Criteria
|
Weight
(%)
|
|
Productivity
|
40
|
|
Quality
of Work
|
30
|
|
Attendance
& Punctuality
|
20
|
|
Teamwork
& Communication
|
10
|
|
Total
|
100
|
An
employee receives the following ratings (1–5 scale):
|
Criteria
|
Rating
|
|
Productivity
|
4
|
|
Quality
of Work
|
5
|
|
Attendance
& Punctuality
|
3
|
|
Teamwork
& Communication
|
4
|
a. Calculate the weighted performance
score.
b. If the company follows
ethical principles, explain whether the score fairly reflects performance.
128. Scenario: Two employees, A and B, are assessed using the same
criteria below:
|
Criteria
|
Weight (%)
|
Employee A Rating
|
Employee B Rating
|
|
Productivity
|
50
|
5
|
3
|
|
Quality
of Work
|
30
|
4
|
5
|
|
Attendance
& Punctuality
|
20
|
3
|
4
|
a. Calculate the total weighted scores
for both employees.
b. Discuss which employee
performed better ethically, considering the ratings are truthful and unbiased
129. Scenario:
A manager wants to reward employees above 80% performance score. Using Question
6 results:
a. Identify if the employee qualifies
for a reward.
b. Explain an ethical approach
the manager should take when rewarding employees.
TOPIC 11:
EVALUATE TOPICAL ISSUES IN PERFORMANCE MANAGEMENT
130. Define
performance management and explain its key objectives in modern organizations.
131. Discuss
three topical issues in
performance management and their implications for organizations.
132. Explain the difference between
financial and non-financial performance measures.
133. List four challenges organizations face in
implementing effective performance management systems.
134. A
company set a monthly revenue target of N60,000,000. The actual revenue achieved
was N54,000,000. Calculate the financial
performance score.
135. A
sales team had a target of 250 units per month but sold only 200 units.
Calculate the KPI achievement
percentage.
136. An
employee is expected to handle 150 tasks per month. Actual tasks completed =
120. Calculate employee efficiency.
137. A
company invested N100,000,000 in a project. The net profit generated is N15,000,000.
Calculate the Return on Investment
(ROI).
138. A
department has 50 employees. During the year, 5 employees left the
organization. Calculate the employee
turnover rate.
139. A production unit produced 600 units
using 120 hours of labor. Calculate labour
productivity (units per hour).
140. XYZ
Company uses a balanced scorecard approach with the following targets for the
month:
|
Metric
|
Target
|
Actual
|
|
Revenue
(N)
|
80,000,000
|
70,000,000
|
|
Units
Sold
|
1,000
|
900
|
|
Customer
Satisfaction (%)
|
90
|
85
|
|
Employee
Training Hours
|
200
|
180
|
Required:
(a) Calculate the performance score for each metric.
(b) Provide an interpretation for the results.
141. Write
short note briefly on the following cost management techniques in advanced
manufacturing industries:
(a) Cost Reduction
(b) Life Cycle Costing
(c) Target Costing
(d) Benchmarking
(e) Activity Based Management
(f) Just In Time System
(g) Business Process Re-Engineering
(h)
Management Audit
(i) Advanced Manufactured Technology
(j) Balanced Scorecard
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