A.Which of the following are required to determine the breakeven sales value in a multiproduct manufacturing environment?
(i) individual product gross contribution to sales ratios;
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(ii) the general fixed cost;
(iii) the product-specific fixed cost;
(iv) the product mix ratio;
(v) the method of apportionment of general fixed costs.
(A) (i), (ii), (iii) and (iv) only.
(B) (i), (iii) and (iv) only.
(C) (i), (ii) and (iv) only.
(D) All of them.
B. Z plc provides a single service to its customers. An analysis of its budget for the year ending 31 December 2002 shows that in period 4, when the budgeted activity was 5,220 service units with a sales value of £42 each, the margin of safety was 19.575 per cent.
The budgeted contribution to sales ratio of the service is 40 per cent.
Budgeted fixed costs in period 4 were nearest to
Q61A. RT plc sells three products.
Product R has a contribution to sales ratio of 30 per cent.
Product S has a contribution to sales ratio of 20 per cent.
Product T has a contribution to sales ratio of 25 per cent.
Monthly fixed costs are £100,000.
If the products are sold in the ratio:
R: 2 S: 5 T: 3,
the monthly breakeven sales revenue, to the nearest £1, is
(D) impossible to calculate without further information.
B. The new manufacturing environment is characterised by more flexibility, a readiness to
meet customers’ requirements, smaller batches, continuous improvements and an emphasis
on quality. In such circumstances, traditional management accounting performance measures
are, at best, irrelevant and, at worst, misleading.
(a) Discuss the above statement, citing specific examples to support or refute the views expressed.
(b) Explain in what ways management accountants can adapt the services they provide to the new environment
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