Cost Accounting: Principles, Techniques, and Investment Appraisal Decisions

Cost Accounting

Contents
Part 1 – Cost accounting principles, concepts and techniques (Solution to MCQs).......................3
Part 2 – Cost accounting techniques................................................................................................4
a) Calculate the payback for both the Edinburgh and Newcastle upon Tyne contracts..............4
b) Critically evaluate the payback technique...............................................................................5
c. Characteristics of investment appraisal decisions and the advantages and disadvantages of
the IRR.........................................................................................................................................5
REFERENCES................................................................................................................................8

Part 1 – Cost accounting principles, concepts and techniques (Solution to
MCQs)
1. d) overstate the predetermined overhead rate.
2. d) None of the above
3. b) Under absorbed by £5,442
4. b) Materials 400, Conversion 200
5. a) direct costs
6. d) Preparation of plans for the future direction of a business
7. d) £168,750
8. d) The Internal Rate of Return is the discount rate at which the net present value is zero
9. a) The business is paying a higher hourly rate than standard
10. b) Providing internal information for use by management
11. b) £188,160
12. b) An accounts department
13. d) £7,210
14. b) Financial and non-financial data.
15. a) £0.08
16. c) £24,000
17. d) Fixed costs.
18. d) £143,750
19. a) The procedures used to calculate unit costs in manufacturing industries are not applicable
to service industries.
20. c) £223,107
21. b) Variable cost.
22. d) £497.45
23. b) £112,378
24. a) £600 Adverse
25. d) Direct materials.
26. d) £1,438,332