Management Acct Guidelines

Paper 08 – Management Accounting Performance Management (IMPM) Post Exam Guide November 2003 Exam

General Comments Performance on this paper continues to be poor. Too many candidates do not demonstrate a good understanding of more than one or two areas of the syllabus. As a result many candidates can prepare answers to one or two questions that are of pass standard, but are then unable to prepare pass standard answers to the remaining questions. In this examination performance on question one (multiple choice) was poorer than at past diets. This could be indicative of students not studying the entire syllabus as indicated above.

The Chartered Institute of Management Accountants

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Paper 08 – Management Accounting Performance Management (IMPM) Post Exam Guide November 2003 Exam

Question 1.1 N plc is forecasting its power costs for Period 12 using the following past data values: Number of machine hours Period 8 Period 9 Period 10 4,260 3,657 4,689 Cost £ 8,944 7,961 9,643

If price levels are expected to remain unchanged in Period 12, the expected power cost of 4,500 machine hours is closest to A B C D £7,309 £7,334 £9,309 £9,334 The answer is D Workings High Low Difference Variable cost Fixed cost: Total cost at high activity level Variable cost at high activity level: Difference 4,500 machine hours should cost: Hours 4,689 3,657 1,032 = £ 1,032

1,682

£9,643 £7,961 £1,682 = £1·63 per hour £9,643 £7,643 £2,000 = £9,335

4,689 x £1·63 £(4,500 x 1·63) + £2,000

The Chartered Institute of Management Accountants

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Paper 08 – Management Accounting Performance Management (IMPM) Post Exam Guide November 2003 Exam

Question 1.2 A company is calculating the relevant cost of the material to be used on a particular contract. The contract requires 4,200 kgs of material H and this can be bought for $6·30 per kg. The company bought 10,000 kgs of material H some time ago when it paid $4·50 per kg. Currently 3,700 kgs of this remains in...