ACCA F5 ContentsIntroduction pageHelping you to pass - the ONLY F5 Study Text reviewed by the examiner!vStudying F5viiThe exam paperixSyllabus and Study GuidexPart A Specialist cost and management accounting techniquesI 1 Costing3II 2a Activity based costing21III 2b Target costing31 IV 2c Life cycle costing39 V 2d Throughput accounting49VI 2e Environmental accounting61Part B Decision-making techniques3 Cost volume profit (CVP) analysis714 Limiting factor analysis935 Pricing decisions1196 Short-term decisions1537 Risk and uncertainty169Part C Budgeting8 Budgetary control1999 Budgetary systems21310 Quantitative analysis in budgeting233Part D Standard costing and variance analysis11 Budgeting and standard costing25112 Variance analysis27113 Behavioural aspects of standard costing293Part E Performance management systems, measurement and control14 Performance management information systems31315 Sources of management information and management reports33116 Performance measurement34917 Divisional performance measures37718 Further performance management399Exam question bank415 Exam answer bank431Index475Quick Quiz3.Cost volume profit (CVP) analysis1 Fill in the blanks.Breakeven point =Contribution per mix Contribution per mix2 C/S ratio = P/V ratio x 100. True or false?3 Fill in the blanks.4. Mark the following on the breakeven chart below Profit Sales revenue Total costs Margin of safety Variable costs Fixed costs Breakeven point5Mark the following on the P/V chart below.Breakeven point ContributionFixed costs Profit6Which of the following is not a major assumption of breakeven analysis?A It can only apply to one product or a constant mix.B Fixed costs are the same in total and unit variable costs are the same at all levels of output.C Sales prices vary in line with levels of activity.D Production level is equal to sales level.7Choose the appropriate words from those highlighted and fill in the blanks.When showing multiple products individually on a P/V chart, the products are shown from left to right/right to left, in order of increasing/decreasing size of C/S ratio. The line joining the two ends of the dotted line (which shows ) indicates 8.Choose the appropriate words from those highlighted.The assumption in breakeven analysis that variable cost is the same per unit at all levels of output is a great simplification. The variable cost per unit will decrease where (1) economies/diseconomies of scale are made at higher volumes of output, but will also eventually rise where (2) economies/diseconomies of scale begin to appear at even (3) higher/lower volumes of output.Answers2. False. The C/S ratio is another name for the P/V ratio.4. 6 C. Sales prices are constant at all levels of activity.7 When showing multiple products individually on a P/V chart, the products are shown from left to right, in order of decreasing size of C/S ratio. The line joining the two ends of the dotted line (which shows the cumulative profit/loss and the cumulative sales) indicates the average profit which will be earned from sales of the products in the mix.8 (1) economies(2) diseconomies(3) higher4Limiting factor analysis1 Fill in the blanks.The shadow price of a scarce resource indicates the amount by which contribution would if an organisation were deprived of one unit of the resource. The shadow priceonly applies while the extra unit of resource can be obtained at its cost.2 Put the following steps in the graphical approach to linear programming in the correct order.Draw a graph of the constraintsEstablish constraintsDefine variablesConstruct objective functionEstablish the feasible regionDetermine optimal product mix3 In what circumstances does slack arise?A At the optimal solution, when the resource used equals the resource available B At the optimal solution, when a minimum quantity of a resource must be used, and more than that quantity is usedC At the optimal solution, when the resource used is less than the resource availableD At the optimal solution, when a minimum quantity of resource is usedAnswers1 fallnormal variable2 Define variables Draw a graph of the constraintsEstablish constraints Establish the feasible regionConstruct objective function Determine optimal product mix3. C. If a resource has a maximum availability and its not binding at the optimal solution, there will be slack5 Pricing decisions1 Fill in the blanks.Demand is said to be elastic when achange in price produces achange in quantity demanded. PED isthan 1.Demand is said to be inelastic when a change in price produces achange in quantity demanded. PED isthan 1.