kap 2f 5102 ts 4102 (free-acca-study-material.blogspot.com)

ACCA

PaperF2

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FIA

DiplomainAccountingand

Business

ManagementAccounting(MA/FMA)

StudyNotes

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British library cataloguinginpublication data

AcataloguerecordforthisbookisavailablefromtheBritishLibrary.

Publishedby:KaplanPublishingUKUnit2TheBusinessCentreMollyMillarsLaneWokinghamBerkshireRG412QZ

KaplanFinancialLimited,2013

ThetextinthismaterialandothersmadeavailablebyanyKaplanGroupcompanydoesnotamounttoadviceonaparticularmatterandshouldnotbetakenassuch. Norelianceshouldbeplacedonthecontentasthebasisforanyinvestmentorotherdecisionorinconnectionwithanyadvicegiventothirdparties. Pleaseconsultyourappropriateprofessionaladviserasnecessary. KaplanPublishingLimited andallotherKaplanGroupcompaniesexpresslydisclaimallliabilitytoanypersoninrespectofanylossesorotherclaims,whetherdirect,indirect,incidental,consequentialorotherwisearisinginrelationtotheuseofsuchmaterials.

PrintedandboundinGreatBritain.

Acknowledgements

WearegratefultotheAssociationofCharteredCertifiedAccountantsandtheCharteredInstituteofManagementAccountantsforpermissiontoreproducepastexaminationquestions. TheanswershavebeenpreparedbyKaplanPublishing.

Allrightsreserved.Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,ortransmitted,inanyformorbyanymeans,electronic,mechanical,photocopying,recordingorotherwise,withoutthepriorwrittenpermissionofKaplanPublishing.

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Contents

Page

Chapter 1 Thenatureandpurposeofmanagementaccounting

1

Chapter 2 Sourcesofdata 21

Chapter 3 Presentinginformation 35

Chapter 4 Typesofcostandcostbehaviour 53

Chapter 5 Accountingforinventory 81

Chapter 6 Accountingforlabour 117

Chapter 7 Accountingforoverheads 137

Chapter 8 Marginalandabsorptioncosting 163

Chapter 9 Job,batchandprocesscosting 179

Chapter 10 Serviceandoperationcosting 213

Chapter 11 Alternativecostingprinciples 225

Chapter 12 Forecastingtechniques 241

Chapter 13 Budgeting 281

Chapter 14 Capitalbudgeting 323

Chapter 15 Standardcosting 357

Chapter 16 Performancemeasurementtechniques 399

Chapter 17 Performancemeasurementinspecificsituations 429

Chapter 18 Spreadsheets 455

Chapter 19 Questions 465

Chapter 20 Answers 505

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PaperIntroduction

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How to Use the Materials TheseKaplanPublishinglearningmaterialshavebeencarefullydesignedtomakeyourlearningexperienceaseasyaspossibleandtogiveyouthebestchancesofsuccessinyourexaminations.

Theproductrangecontainsanumberoffeaturestohelpyouinthestudyprocess.Theyinclude:

Thesectionsonthestudyguide,thesyllabusobjectives,theexaminationandstudyskillsshouldallbereadbeforeyoucommenceyourstudies.Theyaredesignedtofamiliariseyouwiththenatureandcontentoftheexaminationandgiveyoutipsonhowtobesttoapproachyourlearning.

Thecomplete text or essential textcomprisesthemainlearningmaterialsandgivesguidanceastotheimportanceoftopicsandwhereotherrelatedresourcescanbefound.Eachchapterincludes:

(1) Detailedstudyguideandsyllabusobjectives(2) Descriptionoftheexamination(3) Studyskillsandrevisionguidance(4) Completetextoressentialtext(5) Questionpractice

Thelearning objectivescontainedineachchapter,whichhavebeencarefullymappedtotheexaminingbody'sownsyllabuslearningobjectivesoroutcomes.Youshouldusethesetocheckyouhaveaclearunderstandingofallthetopicsonwhichyoumightbeassessedintheexamination.

Thechapter diagramprovidesavisualreferenceforthecontentinthechapter,givinganoverviewofthetopicsandhowtheylinktogether.

Thecontentforeachtopicareacommenceswithabriefexplanationordefinitiontoputthetopicintocontextbeforecoveringthetopicindetail.Youshouldfollowyourstudyingofthecontentwithareviewoftheillustration/s.Theseareworkedexampleswhichwillhelpyoutounderstandbetterhowtoapplythecontentforthetopic.

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Test your understandingsectionsprovideanopportunitytoassessyourunderstandingofthekeytopicsbyapplyingwhatyouhavelearnedtoshortquestions.Answerscanbefoundatthebackofeachchapter.

Summary diagramscompleteeachchaptertoshowtheimportantlinksbetweentopicsandtheoverallcontentofthepaper.Thesediagramsshouldbeusedtocheckthatyouhavecoveredandunderstoodthecoretopicsbeforemovingon.

Question practiceisprovidedatthebackofeachchapter.AQuestion Bankisalsoincludedatthebackofthebook.AppropriatequestionpracticeisfundamentaltoincreaseyourchancesofpassingtheExam,youmustmakesurethatyouhavepractisedthesequestionsbeforeenteringtheExamhall.

Icon Explanations

Definition Keydefinitionsthatyouwillneedtolearnfromthecorecontent.

Key PointIdentifiestopicsthatarekeytosuccessandareoftenexamined.

Expandable TextExpandabletextprovidesyouwithadditionalinformationaboutatopicareaandmayhelpyougainabetterunderstandingofthecorecontent.Essentialtextuserscanaccessthisadditionalcontentonline(readitwhereyouneedfurtherguidanceorskipoverwhenyouarehappywiththetopic)

IllustrationWorkedexampleshelpyouunderstandthecorecontentbetter.

Test Your UnderstandingExercisesforyoutocompletetoensurethatyouhaveunderstoodthetopicsjustlearned.

Tricky topicWhenreviewingtheseareascareshouldbetakenandallillustrationsandtestyourunderstandingexercisesshouldbecompletedtoensurethatthetopicisunderstood.

Online subscribers

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Online subscribers Paper introduction Paper background Syllabus objectives The examination Examination format Paperbased examination tips Computerbased examination (CBE) tips Study skills and revision guidance Preparing to study Effective studying Three ways of taking notes Revison Further reading

YoucanfindfurtherreadingandtechnicalarticlesunderthestudentsectionofACCA'swebsite.

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ThenatureandpurposeofmanagementaccountingChapter learning objectives

Uponcompletionofthischapteryouwillbeableto:

distinguishbetweendataandinformation identifyandexplaintheattributesofgoodinformation outlinethemanagerialprocessesofplanning,decisionmaking

andcontrol explainthedifferencebetweenstrategic,tacticalandoperational

planning distinguishbetweencost,profit,investmentandrevenuecentres describethedifferingneedsforinformationofcost,profit,

investmentandrevenuecentresmanagers describethepurposeandroleofcostandmanagement

accountingwithinanorganisationsmanagementinformationsystem

compareandcontrastfinancialaccountingwithcostandmanagementaccounting

explainthelimitationsofmanagementinformationinprovidingguidanceformanagerialdecisionmaking.

1

chapter

1To Download More Visit : free-acca-study-material.blogspot.com


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1The nature of good information Data and information

Datameansfacts.Dataconsistsofnumbers,letters,symbols,rawfacts,eventsandtransactionswhichhavebeenrecordedbutnotyetprocessedintoaformsuitableforuse.

Informationisdatawhichhasbeenprocessedinsuchawaythatitismeaningfultothepersonwhoreceivesit(formakingdecisions).

Thetermsdataandinformationareoftenusedinterchangeablyineverydaylanguage.Makesurethatyoucandistinguishbetweenthetwo.

Asdataisconvertedintoinformation,someofthedetailofthedataiseliminatedandreplacedbysummarieswhichareeasiertounderstand.

The nature and purpose of management accounting

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What,ifany,isthedifferencebetweendataandinformation?

A TheyarethesameB Datacanonlybefigures,whereasinformationcanbefactsor

figuresC InformationresultsfromsortingandanalysingdataD Dataresultsfromobtainingmanyindividualpiecesofinformation

Attributes of good information

Informationisprovidedtomanagementtoassistthemwithplanning,controllingoperationsandmakingdecisions.Managementdecisionsarelikelytobebetterwhentheyareprovidedwithbetterqualityinformation.

TheattributesofgoodinformationcanbeidentifiedbytheACCURATEacronymasshownbelow:

A Accurate

C Complete

Thedegreeofaccuracydependsonthereasonwhytheinformationisneeded.

Forexample,reportsmayshowfigurestothenearestdollar,ornearestthousanddollarsforareportontheperformanceofdifferentdivisions.

Alternatively,whencalculatingthecostofaunitofoutput,managersmaywantthecosttobeaccuratetothenearestcent.

Managersshouldbegivenalltheinformationtheyneed,butinformationshouldnotbeexcessive

Forexample,acompletecontrolreportonvariancesshouldincludeallstandardandactualcostsnecessarytounderstandthevariancecalculations.

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CCosteffective

UUnderstandable

RRelevant

AAccessible

TTimely

EEasy to use!

Thevalueofinformationshouldexceedthecostofproducingit. Managementinformationisvaluable,becauseitassistsdecision

making. Ifadecisionbackedbyinformationisdifferentfromwhatitwouldhave

beenwithouttheinformation,thevalueofinformationequatestotheamountofmoneysavedasaresult.

Useoftechnicallanguageorjargonmustbelimited. Accountantsmustalwaysbecarefulaboutthewayinwhichtheypresentfinancialinformationtononfinancialmanagers.

Theinformationcontainedwithinareportshouldberelevanttoitspurpose.

Redundantpartsshouldberemoved.Forexample,thesalesteammayneedtoknowthetotalcostofproducingaunittocalculatethesellingpricebutwillnotneedtoknowthebreakdownintomaterial,labourandoverheadcosts.

Informationshouldbeaccessibleviatheappropriatechannelsofcommunication(verbally,viaareport,amemo,anemailetc.)

Inthecontextofresponsibilityaccounting,informationaboutcostsandrevenuesshouldbereportedtothemanagerwhoisinapositiontocontrolthem.

Informationshouldbeprovidedtoamanagerintimefordecisionstobemadebasedonthatinformation.


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2The managerial processes of decision making and control

Themainfunctionsthatmanagementareinvolvedwithareplanning,decisionmakingandcontrol.

Planning

Planninginvolvesestablishingtheobjectivesofanorganisationandformulatingrelevantstrategiesthatcanbeusedtoachievethoseobjectives.Inordertomakeplans,ithelpstoknowwhathashappenedinthepastsothatdecisionsaboutwhatisachievableinthefuturecanbemade.Forexample,ifamanagerisplanningfuturesalesvolumes,heorsheneedstoknowwhatsalesvolumeshavebeeninthepast.

Planningcanbeeithershortterm(tacticalplanning)orlongterm(strategicplanning).

Planningislookedatinmoredetailinthenextsectionofthischapter.

Decision making

Decisionmakinginvolvesconsideringinformationthathasbeenprovidedandmakinganinformeddecision.

Inmostsituations,decisionmakinginvolvesmakingachoicebetweentwoormorealternatives.Managersneedreliableinformationtocomparethedifferentcoursesofactionavailableandunderstandwhattheconsequencesmightbeofchoosingeachofthem.

Thefirstpartofthedecisionmakingprocessisplanning,thesecondpartiscontrol.

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The difference between information and data



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Control

Informationrelatingtotheactualresultsofanorganisationisreportedtomanagers.

Managersusetheinformationrelatingtoactualresultstotakecontrolmeasuresandtoreassessandamendtheiroriginalbudgetsorplans.

Internallysourcedinformation,producedlargelyforcontrolpurposes,iscalledfeedback.

Thefeedbackloopisdemonstratedinthefollowingillustration.


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Illustration 1 The managerial processes of planning, decision



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Here,managementprepareaplan,whichisputintoactionbythemanagerswithcontrolovertheinputresources(labour,money,materials,equipmentandsoon).Outputfromoperationsismeasuredandreported(fedback)tomanagement,andactualresultsarecomparedagainsttheplanincontrolreports.Managerstakecorrectiveactionwhereappropriate,especiallyinthecaseofexceptionallybadorgoodperformance.Feedbackcanalsobeusedtoreviseplansorpreparetheplanforthenextperiod.

Required:

Completethetableidentifyingeachfunctionaseitherplanning,decisionmakingorcontrol.

Planning Control Decision making

Preparationoftheannualbudgetforacostcentre

Revisebudgetsfornextperiodforacostcentre

Implementdecisionsbasedoninformationprovided

Setorganisationsobjectivesfornextperiod

Compareactualandexpectedresultsforaperiod

3Mission statements

Beforeanyplanningcantakeplacethemissionofthebusinessneedstobeestablished.

Themissionstatementisastatementinwritingthatdescribestheoverallaimsofanorganisation,thatis,whatitistryingtoaccomplish. Inotherwordsitsetsoutthewholepurposeofthebusiness.

Therearefourkeyelementstoamissionstatement:

Purpose whydoesthebusinessexistandwhodoesitexistfor? Strategywhatdoesthebusinessprovideandhowisitprovided?

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Themissionshouldexpresswhatthebusinesswantstoachieveoverallandtheaimsandobjectivesmanagersproduceshouldallworktowardsachievingthis.

Policies and culturehowdoesthebusinessexpectitsstafftoact/behave?

ValuesWhatarethecoreprinciplesofthebusiness?

4Levels of planning

Duringtheplanningprocessthemissionstatementofabusinessisusedtoproduceeffectiveaimsandobjectivesforemployeesandthecompanyasawhole. AimsandobjectivesshouldbeSMART:

ByfollowingtheSMARThierarchyabusinessshouldbeabletoproduceplansthatleadtogoal congruencethroughoutthedepartments,centresand/orregionaloffices(thewholebusiness).

Therearethreedifferentlevelsofplanning(knownasplanninghorizons).Thesethreelevelsdifferaccordingtotheirtimespanandtheseniorityofthemanagerresponsibleforthetasksinvolved.

Strategic planning

'Strategicplanning'canalsobeknownas'longtermplanning'or'corporateplanning'. Itconsiders:

Specificaretheobjectiveswelldefinedandunderstandable? Measurable canachievementoftheobjectivesbemeasuredsothat

completioncanbeconfirmed? Attainable sometimereferredtoasachievable. Cantheobjectives

setbeachievedwiththeresourcesandskillsavailable? Relevantaretheobjectivesrelevantforthepeopleinvolvedandtothe

missionofthebusiness? Timed aredeadlinesbeingsetfortheobjectivesthatareachievable?

Aretherearestagereviewsplannedtomonitorprogresstowardstheobjective?

thelongerterm(fiveyearsplus) thewholeorganisation


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Characteristics of mission statements

Examples of mission statements



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Seniormanagersformulatelongtermobjectives(goals)andplans(strategies)foranorganisationasawhole.Theseobjectivesandplansshouldallbeaimingtoachievingthecompaniesmission.

Tactical planning

Tacticalplanningtakesthestrategicplanandbreaksitdownintomanageablechunksi.e.shortertermplansforindividualareasofthebusinesstoenablethestrategicplantobeachieved.

Seniorandmiddlemanagersmakeshorttomediumtermplansforthenextyear.

Operational planning

Operationalplanninginvolvesmakingdaytodaydecisionsaboutwhattodonextandhowtodealwithproblemsastheyarise.

Allmanagersareinvolvedindaytodaydecisions.

Asimplehierarchyofmanagementtaskscanbepresentedasfollows:

5Cost centres, profit centres, investment centres and revenue centres Responsibility accounting

Responsibility accountingisbasedonidentifyingindividualpartsofabusinesswhicharetheresponsibilityofasinglemanager.

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Aresponsibility centreisanindividualpartofabusinesswhosemanagerhaspersonalresponsibilityforitsperformance.Themainresponsibilitycentresare:

costcentre revenuecentre profitcentre investmentcentre.

Cost centres

Acost centreisaproductionorservicelocation,function,activityoritemofequipmentwhosecostsareidentifiedandrecorded.

Forapaintmanufacturercostcentresmightbe:mixingdepartmentpackagingdepartmentadministrationorsellingandmarketingdepartments.

Foranaccountancyfirm,thecostcentresmightbe:audittaxationaccountancywordprocessingadministrationcanteen.Alternatively,theymightbethevariousgeographicallocations,e.g.theLondonoffice,theCardiffoffice,thePlymouthoffice.

Costcentremanagersneedtohaveinformationaboutcoststhatareincurredandchargedtotheircostcentres.

Theperformanceofacostcentremanagerisjudgedontheextenttowhichcosttargetshavebeenachieved.

Revenue centres

Arevenue centreisapartoftheorganisationthatearnssalesrevenue.Itissimilartoacostcentre,butonlyaccountableforrevenues,andnotcosts.

Revenuecentresaregenerallyassociatedwithsellingactivities,forexample,aregionalsalesmanagersmayhaveresponsibilityfortheregionalsalesrevenuesgenerated.

Eachregionalmanagerwouldprobablyhavesalestargetstoreachandwouldbeheldresponsibleforreachingthesetargets.

Salesrevenuesearnedmustbeabletobetracedbacktoindividual(regional)revenuecentressothattheperformanceofindividualrevenuecentremanagerscanbeassessed.


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Profit centres

Aprofit centreisapartofthebusinessforwhichboththecostsincurredandtherevenuesearnedareidentified.

Profitcentresareoftenfoundinlargeorganisationswithadivisionalisedstructure,andeachdivisionistreatedasaprofitcentre.

Withineachprofitcentre,therecouldbeseveralcostscentresandrevenuecentres.

Theperformanceofaprofitcentremanagerismeasuredintermsoftheprofitmadebythecentre.

Themanagermustthereforeberesponsibleforbothcostsandrevenuesandinapositiontoplanandcontrolboth.

Dataandinformationrelatingtobothcostsandrevenuesmustbecollectedandallocatedtotherelevantprofitcentres.

Investment centres

Managersofinvestmentcentresareresponsibleforinvestmentdecisionsaswellasdecisionsaffectingcostsandrevenues.

Investmentcentremanagersarethereforeaccountablefortheperformanceofcapitalemployedaswellasprofits(costsandrevenues).

Theperformanceofinvestmentcentresismeasuredintermsoftheprofitearnedrelativetothecapitalinvested(employed).Thisisknownasthereturnoncapitalemployed(ROCE)

ROCE=Profit/Capitalemployed. Thiscalculationwillbemetinmoredetailinalaterchapter.

6Financial, cost and management accounting Financial accounting

Financialaccountinginvolvesrecordingthefinancialtransactionsofanorganisationandsummarisingtheminperiodicfinancialstatementsforexternaluserswhowishtoanalyseandinterpretthefinancialpositionoftheorganisation.

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Overview of responsibility centres



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Themaindutiesofthefinancialaccountantinclude:maintainingthebookkeepingsystemofthenominalledger,payablescontrolaccount,receivablescontrolaccountandsoonandtopreparefinancialstatementsasrequiredbylawandaccountingstandards.

Informationproducedbythefinancialaccountingsystemisusuallyinsufficientfortheneedsofmanagementfordecisionmaking.

Cost accounting

Managersusuallywanttoknowaboutthecostsandtheprofitsofindividualproductsandservices. Inordertoobtainthisinformation,detailsareneededforeachcost,revenue,profitandinvestmentcentre.Suchinformationisprovidedbycostaccountingandmanagementaccountingsystems.

Costaccountingisasystemforrecordingdataandproducinginformationaboutcostsfortheproductsproducedbyanorganisationand/ortheservicesitprovides.Itisalsousedtoestablishcostsforparticularactivitiesorresponsibilitycentres.

Costaccountinginvolvesacarefulevaluationoftheresourcesusedwithintheenterprise.

Thetechniquesemployedincostaccountingaredesignedtoprovidefinancialinformationabouttheperformanceoftheenterpriseandpossiblythedirectionthatfutureoperationsshouldtake.

Thetermscostaccountingandmanagementaccountingareoftenusedtomeanthesamething.

Management accounting

Managementaccountinghascostaccountingatitsessentialfoundation.

Differences between management accounting and financial accounting

Thefollowingillustrationcomparesmanagementaccountingwithfinancialaccounting.



Nonfinancial information



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Management accounting

Financial accounting

Information mainly produced for

Internalusee.g.managersandemployees.

Externalusee.g.shareholders,payables,lenders,banks,government.

Purpose of information

Toaidplanning,controllinganddecisionmaking.

Torecordthefinancialperformanceinaperiodandthefinancialpositionattheendofthatperiod.

Legal requirements

None. Limitedcompaniesmustproducefinancialaccounts.

Formats Managementdecideontheinformationtheyrequireandthemostusefulwayofpresentingit.

Formatandcontentoffinancialaccountsintendingtogiveatrueandfairviewshouldfollowaccountingstandardsandcompanylaw.

Nature of information

Financialandnonfinancial.

Mostlyfinancial.

Time period Historicalandforwardlooking.

Mainlyahistoricalrecord.

The role of management accounting within an organisations management information system

Themanagementinformationsystemofanorganisationislikelytobeabletopreparethefollowing:

Managementinformationisgenerallysuppliedtomanagementintheformofreports.Reportsmayberoutinereportspreparedonaregularbasis(e.g.monthly)ortheymaybepreparedforaspecialpurpose(e.g.adhocreport).

annualstatutoryaccounts budgetsandforecasts productprofitabilityreports cashflowreports capitalinvestmentappraisalreports standardcostandvarianceanalysisreports returnstogovernmentdepartments,e.g.SalesTaxreturns.

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Illustration 2 Management versus financial accounting



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Thefollowingassertionsrelatetofinancialaccounting:

Whichofthefollowingstatementsaretrue?

(i) Themainpurposeoffinancialinformationistoprovideatrueandfairviewofthefinancialpositionofanorganisationattheendofanaccountingperiod.

(ii) Financialinformationmaybepresentedinanyformatdeemedsuitablebymanagement.

A Assertions(i)and(ii)arebothcorrect.B Onlyassertion(i)iscorrect.C Onlyassertion(ii)iscorrect.

TheManagementAccountanthascommunicatedadetailedbudgettoensurethatcostsavingstargetsareachievedintheforthcomingperiod.Thisisanexampleof:

(a) OperationalPlanning(b) TacticalPlanning(c) StrategicPlanning

7The limitations of management information

Thereareanumberofrespectsinwhichmanagementaccountinginformationmayfailtomeetitsobjectiveofassistingmanagementinthedecisionmakingprocess.

Thesecanbesummarisedasfollows:

failuretomeettherequirementsofusefulinformation theproblemofrelevantcostsandrevenues nonfinancialinformation externalinformation.







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Failure to comply with the qualities of useful information

Ifinformationsuppliedtomanagersisdeficientinanyoftheserespectstheninappropriatemanagementdecisionsmaybemade.Considerthefollowing:

Relevant costs and revenues

Notallinformationproducedbyanaccountingsystemisrelevanttothedecisionsmadebymanagement.Inparticular,informationproducedmainlyforfinancialreportingpurposesandthentakenasthebasisformanagementdecisionswilloftenneedsignificantmodificationtobeusefultomanagement.Theprinciplehereisthatthefigurespresentedtoassistinmanagementdecisionmakingarethosethatwillbeaffectedbythedecision,i.e.theyshouldbe:

Accuracyoverestimatingcostsmayresultinadecisionnottoproduceaproductwhichinfactisprofitableontheotherhand,overestimatingthepriceatwhichtheoutputcanbesoldmayresultintheorganisationproducingoutputwhichcannotbesoldprofitably

Timelinessinconnectionwithadecisiontocloseadivisionordepartmentiftheinformationispresentedtomanagementafteradecisionhadbeenmadetolayoffstaffthatcouldhavebeenprofitablyemployedinotherdivisionsoractivities,thecompanyhasincurredunnecessaryredundancycosts,lostpossiblefuturerevenuesanddemotivatedtheremainingemployeeswhentheylearnoftheredundancies.

Understandableexcessivefocusbymanagementaccountantsonmorecomplextechniquesofwhichgeneralmanagementhavelittleornoknowledgeorunderstandingmaymeanthattheaccountantsadvicewillbeignored.Thereissignificantattentionbeinggiventotheroleofthemanagementaccountantasaneducatorwithintheorganisationexplainingtheinformationandtraininggeneralmanagementtohelpthemtounderstandtheinformationbetter.

Futurecostsandrevenuesthataregoingtobeincurredsometimeinthefuture.Costsandrevenuesthathavealreadybeenincurredareknownassunkcostsandarenotrelevanttothedecisiontobemade.

Incremental theextracostorrevenuethatiscreatedasaresultofadecisiontaken

Cash flows actualcashbeingspentorreceivednotmonetaryitemsthatareproducedviaaccountingconventione.g.bookorcarryingvalues,depreciationcharges.

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Nonfinancial information

Managerswillnotalwaysbeguidedbythesortoffinancialandother(hard)informationsuppliedbythemanagementaccountingsystem.Theywillalsolookatqualitative,behavioural,motivational,evenenvironmentalfactors.Thesenonfinancialfactorscanbejustasimportantinrelationtoadecisionasfinancialinformationbuttheyareoftenmoredifficulttoestimateandquantify.

Aprocessingcompanyneedstoincreaseitsoutputinordertotakeadvantageofanincreaseinthetotalmarketforitsproduct. Thecompanyhasidentifiedalternativewaysofachievingthisincreaseinoutput.

Alternative A

Thecheapest(infinancialterms)methodofprovidingadditionalproductioncapacityistoerectanewfactoryextension.However,thereisadangerthattheextensionwillbeseenbythelocalcouncilandbyresidentsasaneyesore.Somelandscapingandredesignworkmaybecarriedoutatextracosttocompanytomaketheextensionmoreenvironmentallyacceptable.

Alternative B

Thisentailskeepingthefactoryatitscurrentsizebutincreasingtheworkinghoursperweekforallproductionstaffby20%.Thelattermaybeacheapersolutioninfinancialtermsbutmayhaveanadverseimpactonstaffmoraleandresultinasignificantincreaseinstaffturnover.

Itisnoteasyforthecompanytobuildthenonfinancialcostsintoit'sdecisionmakingprocessastheyareoftendifficulttoquantify.



Illustration 3 Nonfinancial factors



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External information

Theenvironmentreferstoalloftheexternalfactorswhichaffectacompanyandincludesgovernmentactions,competitoractions,customerdemandsandotherfactorsforexampletheweather.

Conventionalaccountingsystemsfocusentirelyoninternalinformationsuchasproductioncostsandvolumeofoutputproduced.Companiesandorganisationsdonot,ofcourseexistinavacuumtheyliveinanenvironmentinwhichtheyareinfluencedbyanumberofotherorganisationsandforcesarisingfromoutsidetheorganisationitself.Thisleadsintoanareaofstudyoftenreferredtoasenvironmentalanalysis.Wedonotneedtogointothisareaindetailhere,but,aswiththenonfinancialfactorsreferredtoabove,youshouldbeawarethattheenvironment(thisissimplytheexternalcircumstancesinwhichthecompanyoperates)willhaveaninfluenceonacompanysactionswhichshouldbereflectedinitsdecisionmakingprocesses.

Itfollowsfromthisthatanorganisationshouldhaveinformationonitsenvironmentavailabletoitwithinitsaccountinginformationsystemstheorganisationneedsexternalinformationaswellasinternalinformation.

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8Chapter summary





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Test your understanding answers

Answer C

Thetwotermsarefrequentlyusedsynonymouslybutstrictlyspeakingtheymeandifferentthings.Dataisobtainedfromasurveyandisturnedintoinformationbysortingandanalysis.Bothdataandinformationcancompriseeitherfactsorfigures.

Planning Control Decision making

Preparationoftheannualbudgetforacostcentre

Revisebudgetsfornextperiodforacostcentre

Implementdecisionsbasedoninformationprovided

Setorganisationsobjectivesfornextperiod

Compareactualandexpectedresultsforaperiod

Notethatallplanningandcontrolfunctionsarepartofthedecisionmakingprocessandarethereforeidentifiedasbeingboth.Theonlyexceptionisimplementdecisionsbasedoninformationprovidedwhichisnotpartofplanningandcontrol,buttheonedecisionmakingtaskthatthereis.

Answer B

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Answer B

Themanagementaccountantisprovidinganewbudgetfortheforthcomingperiodi.e.aseniormanagermakingashorttermplan.






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SourcesofdataChapter learning objectives


describesourcesofinformationfromwithinandoutsidetheorganisation(includinggovernmentstatistics,financialpress,professionalortradeassociations,quotationsandpricelist)

explaintheusesandlimitationsofpublishedinformation/data(includinginformationfromtheinternet)

describetheimpactofgeneraleconomicenvironmentoncosts/revenue

explainsamplingtechniques(random,systematic,stratified,multistage,clusterandquota)

chooseanappropriatesamplingmethodinaspecificsituation

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1Internal sources of information

Internalinformationmaycomefromvarioussources.

Accounting system

Theaccountingsystemwillcollectdatafromsourcedocumentssuchasinvoices,timesheetsandjournalentries.Thedatawillbesortedandanalysedbythecodingsystembytypeofexpense,department,managerandjob.Reportsofdirectandindirectcostscomparedtobudgetsmaybeproducedatregularintervalstohelpmanagersplanandcontrolcosts.Adhocreportsmaybeproducedtohelpmanagersmakespecificdecisions.

Considertheexampleslistedbelow:

Salesanalysedbyproductwillhelpmanagementtoassessthepatternsofdemandforeachproduct.

Thissameinformationwillhelpplanproductionandinventorylevels. Inturn,productioninformationwillenabletheorganisationtoplanits

requirementsforrawmaterials,labourandmachinehours. Informationonmaterial,labourandothercostswillallowthe

organisationtosetestimatedcostsforitsproducts.Thiswillbethebasisforabudgetarycontrolandstandardcostingsystem,asweshallseeinalaterchapter.

Inthecontextoflongterm,strategicdecisionmaking,thesalesanalysisgivenabovemayhelpmanagementtoassessfutureproductstrategiesexpandoutputofthoseforwhichdemandisincreasing,reduceoutputofthoseforwhichdemandisfalling.

Anagedreceivablesreportwouldprovidethebasisfordebtcollectiondecisionstakenbyacreditcontrolmanager.

Figuresforwastageratesorproductrejectratesmayallowmanagementtoreachdecisionsontheproductqualityaspectoftheorganisationsoperations.

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Payroll system

Thepayrollsystemmayprovideinformationconcerningdetailedlabourcosts.Hourspaidmaybeanalysedintoproductiveworkandnonproductivetimesuchastraining,sickleave,holidayandidletime.Labourturnoverbydepartmentormanagermaybeanalysedandmayhelpmanagementtoassesstheemploymentandmotivationpolicies

Strategic planning system

Thestrategicplanningsystemmayprovideinformationrelatingtotheorganisationsobjectivesandtargets.Assumptionsrelatingtotheexternalenvironmentmaybedetailed.Detailsoftheorganisationscapitalinvestmentprogrammeandproductlaunchprogrammemayalsoberecordedhere.Someofthisinformationwillbecommerciallysensitiveandonlyaccessedbyseniormanagersintheorganisation.

Benefits and limitations of internal sources

Benefits Limitations Readilyavailabledata

Datacaneasilybesortedandanalysed

Reportscaneasilybeproducedwhenrequired

Datarelatestotheorganisationconcerned

Datamayneedtobefurtheranalysedtobeofusetomanagementaccountants

2External sources of information

Businessesarefindingitincreasinglydifficulttosucceediftheyignoretheexternalenvironmentwhichwillinfluencetheiractivities.Theprocessknownasenvironmentalscanningorenvironmentalmonitoringisbecominganincreasinglyimportantpartoftheroleofthemanagementaccountant.Thesetermsareusedtodescribetheprocesswherebydataiscollectedfromoutside,aswellasfrominsidetheorganisationandusedinthedecisionmakingprocess.

Themainsourcesofexternalinformationwhichweshallconsiderhereare:

governmentsources businesscontactscustomersandsuppliers tradeassociationsandtradejournals thefinancialandbusinesspressandothermedia.

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Government sources

Thereisawealthofpublishedstatisticaldatacoveringmanyaspectsofthenationseconomy:population,manpower,trade,agriculture,pricelevels,capitalissuesandsimilarmatters.Most,butnotallofthisisproducedbynationalgovernments.

Theprimarypurposeofthisdataistoprovideinformationforeconomicplanningatthenationallevel.Thedataservesthesecondarypurposeofprovidingindustrywithusefulbackgroundinformationfordecidingonfuturepoliciessuchasraisingnewfinanceorrecruitingspecialisedlabour.Thedataisonlypublishedingeneralterms(e.g.foraparticularindustryorgeographicalarea).

Thefollowinglistshowssome(therearemanyothers)ofthemainsourcesofthistypeofinformationintheUK.Othercountrieswillusuallyhavesimilarinformationavailable.Copiesaregenerallyavailableinreferencelibrariesandongovernmentwebsites.

AlltheabovepublicationsrelatetotheUK.PublicationsconcernedwithstatisticsrelatingtotheEuropeanUnionincludeEuropeanEconomyAnnualStatisticalYearbook,Eurostat(monthly)andOECDMainEconomicIndicators(monthly).InformationontheWorldEconomyisavailablefromtheUnitedNations(DemographicYearbookandStatisticalYearbook),theInternationalLabourOrganisation(YearbookofLabourStatistics)andUNESCO(StatisticalYearbook).

Title Frequency of publication

Main topics covered

EmploymentGazette Monthly Earnings,basicwagerates,unemployment,indicesofwholesaleandretailprices.

BritishBusiness Weekly Wholesaleandretailprices,productionforspecificsectorsofindustry,capitalexpenditure

NationalIncomeandExpenditureBlueBook

Annually Personalincomeandexpenditure,grossnationalproduct.

FinancialStatistics Monthly Moneysupply,interestrates,hirepurchaseliabilities,buildingsocieties

PriceIndexnumbersforCurrentCostAccounting

Annually,butupdatedbymonthlysupplement

Retailpriceindex,alsoindustryspecificandassetspecificpriceindices.

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Business contacts

Governmentproducedinformationwillbebroadlybasedandgeneral,dealingwiththeeconomyasawholeorparticularsectorsorindustries.Anorganisationmaybelookingforinformationmorefocusedonitsownposition.Itsdaytodaybusinesscontacts,customersandsuppliers,canbeausefulsourceofthisinformationandoftenitisavailablefree.

Customerscanprovideinformationonsuchmattersas:

Suppliersmaybeabletoprovideinformationon:

Trade associations and trade journals

Mostmajorindustrieshavetheirowntradeassociation.Theroleoftheseorganisationsincludes:

TherefollowsaverybrieflistofjustasmallselectionoftradeassociationsoperatingintheUKitistakenfromanalphabeticallistingofassociationsandshowsthefirstfewstartingwiththeletterA.Therearehundredsmore!

theproductspecificationwhichtheyrequire theirqualityrequirements requirementsfordeliveryperiods preferenceforpackaginganddistributionmethods feedbackontheaboveandongeneralaspectsofcustomerservice.

quantitydiscountsandvolumerebateswhichmayhelptheorganisationtodecideonordersize

availabilityofproductsandservices alternativeproductsorserviceswhichmaybeavailableormaybecome

available technicalspecificationsoftheirproduct.

representingtheirmemberfirmsinlegalandotherdisputes providingqualityassuranceschemesforcustomersofmember

organisations layingdowncodesofpracticetobefollowedbytheirmember

organisations publishingtradejournalsandotherinformationusefulforthe

managementanddevelopmentoftheirbusinesses.

AgriculturalIndustriesConfederation AirportOperatorsAssociation

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Manyoftheseorganisationspublishtheirownindustryortradejournalswhichwillcontainusefulnewsandotherinformationfororganisationsoperatinginthatindustry.Tradejournalsarealsopublishedbymanypublishingorganisations.IntheUKoneofthebestknownofthesejournalsisTheGroceraimedatthefoodanddrinkretailsector.Again,manyothersexist.

The financial press, business press and other media

IntheUK,TheFinancialTimes,theGuardian,TheTimesandtheDailyTelegraphtogetherwithsomeregionalnewspapersprovidestatisticsandfinancialreviewsaswellasbusinessandeconomicnewsandcommentary.Theseinclude:

Suchinformationisnowalsowidelyavailableviaelectronicmedia.Digitaltelevisionservicesavailableonsatelliteorcablesystemscarryspecialistbusinessandfinancialchannelsandprogrammes(suchasBloombergTV)whichgivebothnationalandworldwidecoverage.Thereisalsotheinternetasawidelyavailablesourceofuptodatefinancialinformation.

Benefits and limitations of external sources

Internalinformationisproducedbythecompanyitselfsotheusersareawareofanylimitationsinitsqualityorreliability.Externalinformationisnotunderthecontroloftheorganisationtheusersmaynotbeawareofanylimitationsinitsquality.

AssociationforPaymentClearingServicesAPCS AssociationforRoadTrafficSafety&Management AssociationofArtandAntiqueDealers AssociationofBritishFireTradesLtd.

theFTSE100Indexthestockmarketindexoftheleading100leadingcompaniesbasedontradeablesharevalue

theFTActuariesAllshareIndexanindexofallsharepricesquotedonthestockexchange.

Benefits Limitations Wideexpanseofexternalsources

ofinformation Easilyaccessibleespeciallyusing

theinternet Moregeneralinformationavailable Cansourcespecificinformation

needs

Datamaynotbeaccurate Findingrelevantinformation

canbetimeconsuming

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3General economic environment

Thegeneraleconomicenvironmentwillhaveanimpactonthecostsandrevenuesofabusiness.

Iftheeconomy is strongthenattitudesaremoreconfidentaboutthefuture.Therewillbemoredisposableincomesomoremoneywillbeavailabletospend.

Abusinesswillbeabletoincreaseprices,ifdesired,tofollowthisupwardtrend.Thismeansthatrevenuesofabusinesswillincrease. Supplierstothebusinessmayalsoincreasetheirpricessocostscouldincrease.

Theincreaseddisposableincomewillalsocauseconsumerstopurchaseordemandmoreproducts.Astheseproductsbecomescarce,thepricechargedbysupplierswillrise.

Iftheeconomy is weakthenattitudeswillbelessconfidentaboutthefuture. Thisdoesnotmeanthatcostsandrevenueswillbothdrop.

Therewillbelessdisposableincomeavailablesorevenueswilldecline. Itmaynotbepossibleforsupplierstodroptheirpricessocostsmaycontinuetobehigh.

4Sampling techniques

Thepurposeofsamplingistogainasmuchinformationaspossibleaboutthepopulationbyobservingonlyasmallproportionofthatpopulationi.e.byobservingasample.

Thetermpopulationisusedtomeanalltheitemsunderconsiderationinaparticularenquiry.

Asampleisagroupofitemsdrawnfromthatpopulation.Thepopulationmayconsistofitemssuchasmetalbars,invoices,packetsoftea,etcitneednotbepeople.

Forexample:

inordertoascertainwhichtelevisionprogrammesaremostpopular,asampleofthetotalviewingpublicisinterviewedand,basedontheirreplies,theprogrammescanbelistedinorderofpopularitywithallviewers.

duringthequalitycontrolproceduresinamanufacturingbusiness,asampleoftheproductistakenfortesting.

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Therearethreemainreasonswhysamplingisnecessary:

Thecharacteristicsofapopulationcanbeascertainedbyinvestigatingonlyasampleofthatpopulationprovidedthatthefollowingtworulesareobserved:

Thereareseveralmethodsofobtainingasampleandtheseareconsideredinturn.

Random Sampling

Asimplerandomsampleisdefinedasasampletakeninsuchawaythateverymemberofthepopulationhasanequalchanceofbeingselected.Thenormalwayofachievingthisisbynumberingeachiteminthepopulation.

If10%ofapopulationof200istherequiredsamplesizethen20numbersfromatableofrandomnumberscanbetakenandthecorrespondingitemsareextractedfromthepopulationtoformthesamplee.g.inselectingasampleofinvoicesforanaudit.Sincetheinvoicesarealreadynumbered,thismethodcanbeappliedwiththeminimumofdifficulty.

Thismethodhasobviouslimitationswheneitherthepopulationisextremelylargeor,infact,notknown.Thefollowingmethodsaremoreapplicableinthesecases.

Systematic sampling

Ifthepopulationisknowntocontain50,000itemsandasampleofsize500isrequired,then1inevery100itemsisselected.Thefirstitemisdeterminedbychoosingrandomlyanumberbetween1and100e.g.67,thentheseconditemwillbethe167th,thethirdwillbethe267th...uptothe49,967thitem.

(1) Thewholepopulationmaynotbeknown.(2) Evenifthepopulationisknowntheprocessoftestingeveryitemcanbe

extremelycostlyintimeandmoney,forexample,gaininginformationaboutthepopularityofTVprogramsbyinterviewingeveryviewer.

(3) Theitemsbeingtestedmaybecompletelydestroyedintheprocess,forexampleinordertocheckthelifetimeofanelectriclightbulbitisnecessarytoleavethebulbburninguntilitbreaksandisofnofurtheruse.

(1) Thesamplemustbeofacertainsize.Ingeneraltermsthelargerthesamplethemorereliabletheresultswillbe.

(2) Thesamplemustbechoseninsuchawaythatitisrepresentativeofthepopulation.

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Strictlyspeaking,systematicsampling(alsocalledquasirandom)isnottrulyrandomasonlythefirstitemisselectedrandomly.However,itgivesaverycloseapproximationtorandomsamplinganditisverywidelyused.

Thereisdangerofbiasifthepopulationhasarepetitivestructure.Forexample,ifastreethasfivetypesofhousearrangedintheorder,ABCDEABCDE...etc,aninterviewervisitingeveryfifthhomewouldonlyvisitonetypeofhouse.

Stratified sampling

Ifthepopulationunderconsiderationcontainsseveralwelldefinedgroups(calledstrataorlayers),e.g.menandwomen,smokersandnonsmokers,differentsizesofmetalbars,etc,thenarandomsampleistakenfromeachgroup.Thisisdoneinsuchawaythatthenumberineachsampleisproportionaltothesizeofthatgroupinthepopulationandisknownassamplingwithprobabilityproportionaltosize(pps).

Forexample,inselectingasampleofpeopleinordertodiscovertheirleisurehabits,agecouldbeanimportantfactor.Soif20%ofthepopulationareover60yearsofage65%between18and60and15%areunder18,thenasampleof200peopleshouldcontain40whoareover60yearsold,130peoplebetween18and60and30under18yearsofage,i.e.thesubsampleshouldhavesizesintheratio20:65:15.

Thismethodensuresthatarepresentativecrosssectionofthestratainthepopulationisobtained,whichmaynotbethecasewithasimplerandomsampleofthewholepopulation.

Thismethodisoftenusedbyauditorstochooseasampletoconfirmreceivablesbalances.Inthiscaseagreaterproportionoflargerbalanceswillbeselected.

Multistage sampling

Thismethodisoftenappliedifthepopulationisparticularlylarge.Theprocessinvolvedherewouldbeasfollows:

Step 1Thecountryisdividedintoareas(counties)andarandomsampleofareasistaken.

Step 2EachareachoseninStep1isthensubdividedintotownsandcitiesorboroughsandarandomsampleoftheseistaken.

Step 3EachtownorcitychoseninStep2isfurtherdividedintoroadsandarandomsampleofroadsisthentaken.

Step 4FromeachroadchoseninStep3arandomsampleofhousesistakenandtheoccupiersinterviewed.

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Thismethodisused,forexample,inselectingasampleforanationalopinionpollofthetypecarriedoutpriortoageneralelection.

Cluster sampling

Thismethodissimilartothepreviousoneinthatthecountryissplitintoareasandarandomsampletaken.Furthersubdivisionscanbemadeuntiltherequirednumberofsmallareashavebeendetermined.Theneveryhouseineachareawillbevisitedinsteadofjustarandomsampleofhouses.Inmanywaysthisisasimplerandlesscostlyprocedureasnotimeiswastedfindingparticularhousesandtheamountoftravellingbyinterviewersismuchreduced.

Quota sampling

Withquotasamplingtheinterviewerwillbegivenalistcomprisingthedifferenttypesofpeopletobequestionedandthenumberorquotaofeachtypee.g.20males,aged20to30years,manualworkers15females,25to35,notworking10males,55to60,professionalmen,etc.Theinterviewercanuseanymethodtoobtainsuchpeopleuntilthevariousquotasarefilled.Thisisverysimilartostratifiedsampling,butnoattemptismadetoselectrespondentsbyaproperrandommethod,consequentlythesamplemaybeverybiased.

Sampling methods compared

Theobjectiveofasampleistocollectdatauponwhichanopinioncanbeformed,andaconclusiondrawninrespectofthepopulationofwhichthesampleisrepresentative.

Ideallythesamplewouldbechosenatrandom,andwouldbelargeenoughsoastoberepresentativeofthepopulation.Unfortunatelybothoftheseaspectsintroducecostswhichareoftenunacceptablyhigh.

Alternativestothetrulyrandomsamplingmethodhavebeenoutlinedabove.Theyareallconcernedwithminimisingcostswhilstmaintainingtherepresentativenatureofthesamplecomparedtothepopulation.

Inordertousethesealternativesitisoftennecessarytohavesomeknowledgeofthepopulation.Systematicsamplingshouldnotbeusedifthepopulationfollowsarepetitivepattern.Quotasamplingmustbeusedwithcaution.Thedatacollectormayintroducebiasbecausetheychoosehowtofillthequota.

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Theessenceofsystematicsamplingisthat:

A eachelementofthepopulationhasanequalchanceofbeingchosen

B membersofvariousstrataareselectedbytheinterviewersuptopredeterminedlimits

C everynthmemberofthepopulationisselectedD everyelementofonedefinablesubsectionofthepopulationis

selected

Asampleistakenbydividingthepopulationintodifferentagebandsandthensamplingrandomlyfromthebands,inproportiontotheirsize.Whatissuchasamplecalled?

A SimplerandomB StratifiedrandomC QuotaD Cluster

Inasurveyontheopinionsofemployeesinalargecompanyheadquarters,oneofthefollowingisaclustersample.Whichisit?

A Staffarerandomlyselectedfromeachdepartmentinproportiontodepartmentalsize

B Staffareselectedfromthelistofemployees,takingeverynthnameC Asample,whichisasrepresentativeaspossibleofthecomposition

ofthestaffintermsofgender,ageanddepartment,istakenbystoppingappropriatestaffinthecorridorsandcanteen

D Onedepartmentisselectedandallthestaffinthatdepartmentaresurveyed

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Associatewitheachofthefollowingsamplingmethods(A)(F)themostappropriateexamplefromthelist,(P)(U),givenbelow.

Examples

A SimplerandomsampleB StratifiedrandomsampleC ClustersampleD SystematicsampleE QuotasampleF Multistagesample

P OnecityischosenatrandomfromallcitiesintheUnitedKingdom,thentheelectoralregisterisusedtoselecta1per1,000sample.

Q Namespickedfromahat.R Every10thpersonischosenrandomlyfromeachwardinahospital.S Onesecondaryschoolinatownisselectedatrandom,thenevery

pupilinthatschoolissurveyed.T Onepersonintenischosenfromanalphabeticallistofemployees.U Peoplearestoppedinthestreetaccordingtoinstructionssuchas

stopequalnumbersofmenandwomen.

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5Chapter summary

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Test your understanding answers

Answer C

Insystematicsampling,populationmembersarelistedandmembersselectedatregularintervalsalongthelist.

Answer B

Insimplerandomsampling,thereisnodivisionofthepopulationintogroups.Inclustersampling,onlyonegroupisselectedandallitsmembersaresurveyed.Quotasamplingandstratifiedrandomsamplingarebothasdescribedinthequestionbutquotasamplingisnotrandom.

Answer D

Aisastratifiedrandomsample,BissystematicandCisaquotasample

Theassociationsareasfollows:

A Mostappropriateexampleis(Q)B Mostappropriateexampleis(R)C Mostappropriateexampleis(S)D Mostappropriateexampleis(T)E Mostappropriateexampleis(U)F Mostappropriateexampleis(P)

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PresentinginformationChapter learning objectives


preparewrittenreportsrepresentingmanagementinformationinsuitableformatsaccordingtopurpose

presentinformationusingtables,chartsandgraphs(barcharts,linegraphs,piechartsandscattergraphs)

constructscatterdiagramsandlinesofbestfit interpretinformation(includingtheabovetables,chartsand

graphs)presentedinmanagementreports.

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1Introduction

Themajorthemeunderlyingmanagementaccountingisinformation.Thepreviouschapterdealtwiththeprocessesinvolvedincollectingthatinformationthiscanbeseenastheinputintothemanagementaccountingprocess.Wenowturnourattentiontotheoutputfromthemanagementaccountingdepartmentthepresentationofinformationtomanagement.

Oneofthedesirablequalitiesofinformationisthatitshouldbeunderstandabletotheuser.Managementaccountantshavebeencriticisedinthepastforpresentinginformationinaformwhichisuncleartothenonexpert.Veryoften,graphicalmethodsofpresentationareclearertotheuserthanwrittenornumericalpresentation.

2Writing reports

Theinformationgivenbelowonwritingreportscanbeapplied,innotonlyabusinessenvironment,butalsoinanexaminationenvironment.

The fourstage approach to report writing

Whenproducingwrittenreports,themanagementaccountantneedstocarryoutfoursteps.

Prepare

determinethetypeofdocumentrequired:detailedreport,shortmemo,discussionnotes,etc.

establishtheuseroftheinformation:thetypeoflanguageusedandthelevelofknowledgeassumedwillbelargelydeterminedbytheenduser.

findoutwhatthereportwillbeusedforthereportwilloftenbeaimedatprovidinginformationtohelpmanagementmakeadecision.

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Plan

Write

Review

The structure of a report

Atypicalreportstructurewillbeasfollows:

Numberedheadingsandcrossreferencingbetweensectionsmakereportseasiertofollow(ornavigate).

Use of English

Englishistechnicallyacomplicatedlanguageifyoutrytowritelengthycomplexsentencesorparagraphs,itmaygowrong.

Thesinglemostimportantpointistomakesurethatthereadercanunderstandwhatyouaresaying.

selecttherelevantdata:summarise,analyse,illustrate(ifappropriate)toturntherawdataintousefulinformation.Thiswillofteninvolvetheuseofmanagementaccountingtechniques.

producealogicalorderforthematerial.

determinethewritingstylethatisappropriate. takecareoverspelling,useoflanguageandarithmeticyourmeaning

mustbeclearandlogical.

rereadwhatyouhavewritten. checkthatitmeetstherequirementsofthedocument. ensurethatitiscompleteandclear.

Title Atthetopofyourreportshowwhothereportisto,whoitisfrom,thedateandaheading.

Introduction showingwhatinformationwasrequested,theworkdoneandwhereresultsandconclusionscanbefound.

Analysis presentingtheinformationrequiredinaseriesofsubsections.

Conclusion including,whereappropriate,recommendations.Neverintroducenewmaterialintoaconclusion.

Appendices containingdetailedcalculations,tablesofunderlyingdata,etc.Ifyouuseappendicesrefertotheminyourreport.

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Somespecificguidelinesare:

avoidexcessivelylongsentences avoidoverlongwords donotusejargon,clichs,metaphorstheaimistocommunicateina

professionalmanner ifacronyms(e.g.ACCA)areusedtheyshouldbeexplainedthefirst

timetheyareintroducedintothereport takecarewithpunctuationandgrammartomakesureyourideasare

communicatedclearly.

3Tables

Tabulationistheprocessofpresentingdataintheformofatableanarrangementofrowsandcolumns.

Thepurposeoftabulationistosummarisetheinformationandpresentitinamoreunderstandableway.

Rules of tabulation

Thefollowingrulesorprinciplesoftabulationshouldbeconsideredwhenpreparingtables:

(a) Title:thetablemusthaveaclearandselfexplanatorytitle.(b) Source:thesourceofthematerialusedindrawingupthetableshould

bestated(usuallybywayofafootnote).(c) Units:theunitsofmeasurementthathavebeenusedmustbestated

e.g.000smeansthattheunitsareinthousands.(d) Headings:allcolumnandrowheadingsshouldbeclearandconcise.(e) Totals:theseshouldbeshownwhereappropriate,andalsoany

subtotalsthatmaybeapplicabletothecalculations.(f) Percentagesandratios:theseshouldbeshown,ifmeaningful,withan

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Columns and rows

Atableissetupintheformofanumberofcolumnsheadedupacrossthepageandthenanumberofrowsofinformationmovingdownthepage.Atypicaltablewouldbesetupasfollows:

Akeyelementofsettingupagoodtableistodecideupontheoptimalarrangementofcolumnsandrows.Threegeneralrulesapplyhere:

Column1 Column2 Column3Row1 Row2 Row3

(1) Trytoensurethatthetablefitsononepage(2) Thecolumnsshouldbearrangedsothatrelatedinformationisshown

alongsideeachother.(3) Theinformationshownintherowsshouldbearrangedsothatthereisa

logicalprogressionthroughtheinformationandanymeaningfultotalsorsubtotalscanbeclearlymade.

4Graphs and charts

Insomecasesclarityofpresentationcanbeimprovedifdataispresentedpictoriallyintheformofchartsorgraphs.Weshallrefertothesetwotechniquestogetherasdiagrams.Adiagramshouldbeasclearandunambiguousaspossible.Inordertohelptoachievethisaimanumberofrulesshouldbefollowed:

Theseguidelinesaresimilartothosesuggestedabovefortheconstructionoftables.

giveeachdiagramanameoratitle statethesourceofanydatathathasbeenused statetheunitsofmeasurementthathavebeenused giveascalesothatthediagramcanbeproperlyinterpreted ensurethatthepresentationisneat useakeytoexplainthecontents ifaxesareused,theyshouldbeproperlylabelled.

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Thetypesofdiagramswhicharecoveredbyyourexaminationsyllabusare:

Bar charts

Abarchartisawidelyusedmethodofillustratingquantitativedata.Thereareanumberofdifferenttypesofbarchartandtheonestobeconsideredinthischapterare:

Simple bar charts

Asimplebarchartiswhereonlyonevariableonlyisbeingillustrated.Thebarsonasimplebarchartshouldbeofequalwidthsastheheightorlengthofthebarrepresentsthe'value'ofthevariable.

barcharts linegraphs scattergraphs piecharts.

simplebarcharts component(orstacked)barcharts percentagecomponentbarcharts compound(ormultiple)barcharts.

TheproductionofgrainintheUKfortheyears20X1to20X3wasasfollows:

Illustratethisdatausingasimplebarchart.

A bar chart showing the production of grain in the UK from 20X1 to 20X3

Year Production(mtonnes)20X1 15020X2 37520X3 600



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Interpretation

Asimplebarchartshowsnotonlytheactualamountofthedatawhichcanbereadofffromtheverticalaxisbutalsotherelationshipbetweenthedata.

Intheexampletheactualamountofwheatproductioneachyearcanbedeterminedbyreadingofftheamountsontheverticalaxis.Itisalsopossibletoseeataglancethatgrainproductionwasincreasingoverthethreeyearperiod.

Component bar chart

Acomponentbarchartisusedwheneachtotalfigureinthedataismadeupofanumberofdifferentcomponentsanditisimportantthatthesecomponentelementsareshownaswellasthetotalfigure.

Continuingwiththepreviousgrainproductionexamplesupposethatannualproductioncannowbesplitintothatofrye,wheatandbarleyasfollows:

Drawacomponentbarcharttoillustratethisdata.

Production(mtonnes)Year Rye Wheat Barley20X1 20 60 7020X2 25 150 20020X3 40 250 310

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Ithelpstoproducecumulativetotalsforeachtypeofgrainasshownbelow:

Abarforeachyearcannowbedrawnshowingtheamountforeachgrain.

Grain production in the UK, 20X1 to 20X3

Interpretation

Thecomponentbarchartstillshowsthatthevolumeofgrainasawholehasbeenincreasingbysignificantamountsbutitalsoshowsthebreakdownofthisinformationintotypesofgrain.

Cumulativeproduction(mtonnes)Year Rye Wheat

+RyeBarley

+Wheat+Rye

20X1 20 80 15020X2 25 175 37520X3 40 290 600

Percentage component bar chart

Apercentagecomponentbarchartisonewheretheactualvaluesofeachcomponentarenotshownbutthepercentageofthetotalforeachcomponentis.Thebarsinthistypeofchartareallthesameheight(representing100%)andaresplitaccordingtotheproportionsofeachcomponentelementrye,wheatandbarleyinourexampleabove.





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Tocreateapercentagecomponentbarchartyouneedtocalculatethepercentageofthetotalthateachvariabletakesup.

Converttheabovefiguresintopercentages:

Showtheseonapercentagecomponentbarchart.

A bar chart showing the percentage of grain produced from 20X1 to 20X3

Interpretation

Fromthepercentagegraphitiscleartoseethateventhoughthetotalamountofgrainproducedisincreasingtheproportionofthedifferenttypesofgrainisremainingfairlyconstant.

Production(mtonnes)Year Rye Wheat Barley20X1 20 60 7020X2 25 150 20020X3 40 250 310

Production%Year Total Rye Wheat Barley20X1 150 13 40 4720X2 375 7 40 5320X3 600 7 42 52

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Compound (multiple) bar charts

Compoundbarchartsaresometimestermedmultiplebarcharts.Acompoundbarchartisonewherethereismorethanonebarforeachsubdivisionofthechart.Forexampleabusinessmakes3productsandwantstoshoweachproductssalesoverthelast4years. Acompoundbarchartcouldbeusedwith3bars(oneforeachproduct)ineachyear.

Anaccountancytuitionproviderusesadeliverycompanytodeliveritsbookandmanualstocustomersandretailers. Usingthefollowinginformationconstructacompoundbarcharttoshowhowthefollowingvariableshavechangedoverthelast3years.

A compound bar chart showing the sales value, the van expenses and the drivers wages for years 1 3

(a) thesalesvalueofthemanualsandtextbookssold(b) thevanexpenses(c) thedriverswages

Year1 Year2 Year3Sales$ 200,000 222,200 272,630Vanexpenses$ 14,000 15,000 18,000Drivers'wages$ 52,000 56,600 68,150



Illustration 3



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Interpretation

Thiscompoundbargraphhasbeenusedtoshowhowthevalueof3differentitemshaschangedovertime. Itisclearfromthegraphthatsaleshavegrownandincomparisonvananddriverexpenseshavestayedalmoststatic.

Line graphs

Inmanyinstancesitwillbefoundthatdatacanbemoreclearlyandunderstandablypresentedintheformofalinegraph,especiallyifweareconsiderthechangeinanitemovertime.

Thingstoconsiderwhenproducingalinegraph:

Independent and dependent variables thedependentvariablemustalwaysbeplottedonthevertical(y)axisandtheindependentvariableonthehorizontal(x)axis. Forexamplesalesoverthelast12months. thesalesvolumewouldbeplottedontheyaxisandthetimeperiods(months)onthexaxis. Thesalesaredependentonthemonthratherthanthesaledeterminingthemonth. Themonthoftheyearisindependentofthesalesvolume.

Scales of the axes thereisnonecessityforthesamescaletobeusedoneachaxis.Eveniftheunitsonthexandyaxisarethesameadifferentscaleisquitepermissible.

Starting point of the axesinmostcasesthescalesonbothaxesshouldstartatzero,howeverifstartingatzeroisnotpracticalthenitispossibletoshowabreakinthescalewithazigzagline.

Multiple line graphs plottingmorethanonesetofvariablesonthesamegraph.Thisisquiteacceptableaslongasthegraphstillremainsclearandinformative.Ifmorethanonelineistoappearonagraphthentheymustalsobedrawntothesamescaleandthedifferentlinesshouldbeclearlyindicatedbyusedashedordottedlinesorcolouredlines.

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Youareanaccountantworkingforagroupofcompanies.Inonesectorofthebusinesstherearetwodivisions,AandB. Someconcernhasbeenexpressedinrecentyearsregardingthegrowthinadministrativecostsinthetwodivisions.

Detailsofadministrativecostsforthepastfiveyearsare:

Drawalinegraphtoshowtheadministrativecostsforbothdivisionsatbothoriginalandadjustedpricesfortheperiodfrom20X1to20X5.

Interpretation

Fromthegraph,itcanbeseenthattheriseinDivisionBcostsissteeperthaninA,inboththeactualandadjustedcosts.

20X1 20X2 20X3 20X4 20X5m m m m m

DivisionA Actual 2.7 3.0 3.4 3.6 4.0Adjustedcost 3.04 3.25 3.62 3.69 4.00DivisionB Actual 1.7 2.1 2.5 3.0 3.6Adjustedcost 1.92 2.27 2.66 3.07 3.60



Illustration 4



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Scatter Diagram

Informationabouttwovariablesthatareconsideredtoberelatedinsomewaycanberepresentedbyusingagraphknownasa'scatterdiagram'orscattergraph,whereeachaxisofthescatterdiagramrepresentsonevariable.

Forexample,thesalesrevenueforaproductcouldbeplottedagainsttime(months)toshowhowthesalesrevenuehasvariedovertheyearorproductioncostscouldbeplottedagainstunitsproducedtoshowhowcostschangeasproductionchanges:

Salesrevenueisdependentonthemonthandproductioncostsaredependentonvolumeproducednotviceversa.

Toproduceascatterdiagramanumberofpairs of dataarerequirede.g.salesrevenueforJanuary,salesrevenueforFebruary,salesrevenueforMarchetc. Thesepairsofdataareplottedonthegraphtoproduceascatteringofpoints.

Thewayinwhichthesepointsarescatteredordispersedindicatesifanyrelationshipislikelytoexistbetweenthevariables.Whenthepointsonascatterdiagramlieinanarrowband,thereisastrongrelationshipbetweenthevariables.Whenthepointsarewidelydispersedthereislesslikelytobearelationshipbetweenthevariables.

Line of best fit or trend line

Scatterdiagramsareoftenusedtoshowhowtwovariablesrelatetoeachotheri.e.isthereatrend. A'lineofbestfit'canbeplottedthroughthepointsonascatterdiagramtodemonstratethetrend.Toplotalineofbestfititisnecessarytotrytoestimatevisuallyalinethroughthepointsthatisthesamedistanceawayfromeachpoint.Somecomputerpackagesthatcanbeusedtoproducegraph,forexampleExcel,haveafacilityincludedtoplotalineofbestfitthroughdatapoints.

ScatterdiagramswithlinesofbestfitcanbeusefulasaforecastingtechniqueandhastheadvantageofrelativesimplicitythisislookedatinmoredetailinaChapter12.

Thexaxis(horizontal)representstheindependentvariablei.e.timeorunitsproduced

Theyaxis(vertical)representsthedependentvariablei.e.salesrevenueorproductioncosts

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Considerthefollowingdatawhichrelatestothetotalcostsincurredatvariousoutputlevelsinafactory:

Ifthedatashownaboveisplottedonascattergraphandalineofbestfitisdrawnonitwouldlooklikethis:

A scatter graph showing the relationship between output and cost

Interpretation

Itiscleartoseefromthelineonthegraphthatthereisapositiverelationshipbetweenoutputinunitsandcosts($). Asoutputincreasesthecostsalsoincrease.

Output Totalcost(units) ($)26 6,56630 6,51033 6,80044 6,98548 7,38050 7,310



Illustration 5



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Pie Charts

Apiechartisacirclebrokendownintosections,eachsectionisrepresentingacomponentofthedata.

Piechartsareusedtoillustratedifferentcomponentsofdataaspartofawhole,similartopercentagecomponentbarcharts.

Constructing a pie chart

360/Totalvalueofdata=Numberofdegreesperitemofdata

Numberofdegreesperunitnumberofitemsineachsetofdata

(1) Calculatethetotalvalueofthenumericaldatathatistoberepresented(2) Calculatethenumberofdegreesperitemofdata:

(3) Calculatethesizeofsectionrequiredtorepresentforeachelementofdata

(4) Drawacircleandsplititintosectionsaccordingly

Supposeafamilysincomein20X0is$1,000permonth,andtheirexpendituresplitsdownasfollows:

$1,000

Amount$

Mortgageandinsurance 300Electricityandgas 50Foodanddrink 200Clothes 40Carandpetrol 150Telephone 10Savings 70Fares 60Miscellaneous 120

1,000

(1) Calculatethetotalvalueofthenumericaldatathatistoberepresented

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360/Totalvalueofdata=Numberofdegreesperitemofdata

360/$1,000=0.36per$

Numberofdegreesperunitnumberofitemsineachsetofdata

Mortgageandinsurance=0.36300=108

Electricityandgas=0.3650=18

Foodanddrink=0.36200=72

etc

A pie chart showing how the family's income is spent

Interpretation

Withoutactuallymeasuringtheanglesorhavingtherawdatainputonthepiechartitisnotpossibletoreadtheactualfigures. Howeveritisveryeasytoseewhatthelargestproportionofthefamiliesincomeisspenton. Overaquarteroftheincomeisspentonthemortgageandinsurance,withfoodanddrinkbeingthenextbiggestsection.

(2) Calculatethenumberofdegreesperitemofdata:

(3) Calculatethesizeofsectionrequiredtorepresentforeachelementofdata

(4) Drawacircleandsplititintosectionsaccordingly





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Interpretation of tables, charts and graphs

Althoughtheinformationpresentedindiagrammaticformshouldbepresentedinawaywhichiseasytounderstand,partoftheroleofthemanagementaccountantmayneverthelessinvolveinterpretingtheinformation,perhapsintheformofabriefreporttomanagement.

Itwillgenerallybethecasethatthebetterpreparedthediagramis,thelessinterpretationthatwillberequiredtoassistmanagementtounderstandtheinformation.

Yourobjectiveincarryingoutthissortofinterpretationexerciseistobringoutthemeaningintheinformationand,perhaps,tohelpmanagementreachconclusionsbasedontheinformationpresented.Asaresultofyourinterpretation,youmayalsobeabletomakesuitablerecommendationstomanagement.

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5Chapter summary





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TypesofcostandcostbehaviourChapter learning objectives


explainandillustrateproductionandnonproductioncosts describethedifferentelementsofnonproductioncost

administrative,selling,distributionandfinance describethedifferentelementsofproductioncostmaterials,

labourandoverheads explaintheimportanceofthedistinctionbetweenproductionand

nonproductioncostswhenvaluingoutputandinventories explainandillustratewithexamplesclassificationsusedinthe

analysisoftheproduct/servicecostsincludingbyfunction,directandindirect,fixedandvariable,steppedfixedandsemivariablecosts

describeandillustrate,graphically,differenttypesofcostbehaviour

usehigh/lowanalysistoseparatethefixedandvariableelementsoftotalcostsincludingsituationsinvolvingsemivariableandsteppedfixedcostsandchangesinthevariablecostperunit

explaintheadvantagesanddisadvantagesofusinghighlowmethodtoestimatethefixedandvariableelementofcosting

explainthestructureoflinearfunctionsandequations explainandillustratetheconceptsofcostobjects,costunitsand

costcentres explainandillustratetheuseofcodesincategorisingtransaction.

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1Analysing costs

Managementwillrequireavarietyofdifferentcostsummaries,including:

Tobeabletoproducethesesummariesthetypeofcostandthecostbehaviourwillneedtobeanalysed.

Cost objects

costsforaparticularproductcostunitorcostobject costsforuseinthepreparationofexternalfinancialreports costsforaparticulardepartmentcostcentre coststhatmaybeusedfordecisionmaking coststhatareusefulforplanningandcontrol.

Acostobjectisanyactivityforwhichaseparatemeasurementofcostisundertaken.

Examplesofcostobjects:

costofaproduct costofaservice costofrunningadepartment costofrunningaregionaloffice.

Types of cost and cost behaviour




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Cost units

Acostunitisaunitofproductorserviceinrelationtowhichcostsareascertained.

Examplesofcostunits:

Cost centres

aroom(inahotel) alitreofpaint(paintmanufacturers) inpatient(inahospital).

Acostcentreisaproductionorservicelocation,function,activityoritemofequipmentforwhichcostscanbeascertained.

Examplesofcostcentres:

adepartment amachine aproject award(inahospital).

2Classifying costs

Costscanbeclassifiedinanumberofdifferentways.

Elementcostsareclassifiedasmaterials,labourorexpenses. Functioncostsareclassifiedasbeingproductionornonproduction

costs. Naturecostsareclassifiedasbeingdirectorindirect. Behaviourcostsareclassifiedasbeingfixed,variable,semi

variableorsteppedfixed.

3Classification by element

Thecostelementsthatyouneedtoknowaboutarematerials,labourandexpenses. Toclassifybyelementyouneedtodecideifacostisamaterialcost,alabourcostorcostrelatingtosomethingelseanexpense.

Materialsallcostsofmaterialspurchasedforproductionornonproductionactivities.Forexample,rawmaterials,components,cleaningmaterials,maintenancematerialsandstationery.

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Labourallstaffcostsrelatingtoemployeesonthepayrolloftheorganisation.

Expensesallothercostswhicharenotmaterialsorlabour.Thisincludesallboughtinservices,forexample,rent,telephone,subcontractorsandcostssuchasthedepreciationofequipment.

4Classification by function Production costs

Productioncostsarethecostswhichareincurredwhenrawmaterialsareconvertedintofinishedgoodsandpartfinishedgoods(workinprogress).

Productioncosts,suchasdirectmaterials,directlabour,directexpensesandproductionoverheads,areusedtovalue inventory.

Nonproduction costs

Nonproductioncostsarecoststhatarenotdirectlyassociatedwiththeproductionofthebusinessesoutput.

Nonproductioncosts,suchasadministrativecosts,sellingcostsandfinancecosts,arechargedtotheincomestatementasexpensesfortheperiodinwhichtheyareincurred. Nonproductioncostsarenotusedtovalueinventory.



Examples of production costs

Examples of nonproduction costs



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Cost Classification

Overallsformachineworkers

Costofprintercartridgesingeneraloffice

Salaryoffactorysupervisor

Salaryofpayrollsupervisor

Rentofwarehouseforstoringgoodsreadyforsale

Loaninterest

Salaryoffactorysecurityguard

Earlysettlementdiscountsforcustomerswhopayearly

SalaryoftheChairmansPA

Roadtaxlicencefordeliveryvehicles

Bankoverdraftfee

Salesmen'scommissions

Completethefollowingtablebyclassifyingeachexpensecorrectly.

Classifications

(1) =Production(2) =Selling(3) =Distribution(4) =Administrative(5) =Finance

ILCBhasthefollowinginformationrelatingtooneofitsproducts:

Directmaterialcostperunit$1 Directlabourcostperunit$3 Variableproductioncostperunit$3 Sellingcosts$10perunit

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Required

Whatisthetotalcostofthebudgetedmonthlyproduction?

Fixedproductionoverhead$30,000permonth Budgetedproduction15,000unitspermonth Budgetedsales12,000unitspermonth

5Classification by nature Direct costs

Directcostsarecostswhichcanbedirectlyidentifiedwithaspecificcostunitorcostcentre.Therearethreemaintypesofdirectcost:

directmaterialsforexample,clothformakingshirts directlabourforexample,thewagesoftheworkersstitchingthecloth

tomaketheshirts directexpensesforexample,theroyaltiespaidtoadesigner.

Thetotalofdirectcostsisknownastheprime cost.

Indirect costs

Indirectcostsarecostswhichcannotbedirectlyidentifiedwithaspecificcostunitorcostcentre.Examplesofindirectcostsincludethefollowing:

Thetotalofindirectcostsisknownasoverheads.

indirectmaterialstheseincludematerialsthatcannotbetracedtoanindividualitemforexamplecleaningfluidsforcleaningthemachinery

indirectlabourforexample,thecostofasupervisorwhosupervisestheshirtmakers

indirectexpensesforexample,thecostofrentingthefactorywheretheshirtsaremanufactured.





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Identifywhetherthefollowingcostsarematerials,labourorexpensesandwhethertheyaredirectorindirect.

Cost Materials, labour or expense

Direct or indirect?

Thehireoftoolsorequipment

Rentofafactory

Packingmaterials,e.g.cartonsandboxes

Supervisorssalaries

Oilforlubricatingmachines

Wagesoffactoryworkersinvolvedinproduction

Depreciationofequipment

(a) Whichofthefollowingwouldbeclassedasindirectlabour?

A AssemblyworkersB AstoresassistantinafactorystoreroomC PlasterersinabuildingcompanyD Anauditclerkinanaccountancyfirm

(b) Directcostsare:A costswhichcanbeidentifiedwithacostcentrebutnotasingle

costunitB costswhichcanbeidentifiedwithasinglecostunitorcost

centreC costswhichcanbeattributedtoanaccountingperiodD noneoftheabove.

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6Classification by behaviour

Costsmaybeclassifiedaccordingtothewaythattheybehaveinrelationtochangesinlevelsofactivity.Costbehaviourclassifiescostsasoneofthefollowing:

Variable costs

variablecost fixedcost steppedfixedcost semivariablecost.

Variablecostsarecoststhatvaryindirectionproportionwiththelevelofactivity.Asactivitylevelsincreasethentotalvariablecostswillalsoincrease.

Variablecostscanbeshowngraphicallyasfollows:

Notethatastotalcostsincreasewithactivitylevels,thecostperunitofvariablecostsremainsconstant.

Examplesofvariablecostsincludedirectcostssuchasrawmaterialsanddirectlabour.





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Fixed costs

Afixedcostisacostwhichisincurredforanaccountingperiod,andwhich,withincertainactivitylevelsremainsconstant.

Fixedcostscanbeshowngraphicallyasfollows:

Notethatthetotalcostremainsconstantoveragivenlevelofactivitybutthatthecostperunitfallsasthelevelofactivityincreases.

Examplesoffixedcosts: rent businessrates executivesalaries.

Stepped fixed costs

Thisisatypeoffixedcostthatisonlyfixedwithincertainlevelsofactivity.Oncetheupperlimitofanactivitylevelisreachedthenanewhigherleveloffixedcostbecomesrelevant.

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Numerical example of fixed costs

Numerical example of variable costs



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Steppedfixedcostscanbeshowngraphicallyasfollows:

Examplesofsteppedfixedcosts: warehousingcosts(asmorespaceisrequired,morewarehouses

mustbepurchasedorrented) supervisorswages(asthenumberofemployeesincreases,more

supervisorsarerequired).

Semivariable costs

Semivariablecostscontainbothfixedandvariablecostelementsandarethereforepartlyaffectedbychangesinthelevelofactivity.

Semivariablecostscanbeshowngraphicallyasf

kap 2f 5102 ts 4102 (free-acca-study-material.blogspot.com)

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