Financial Performance Management (Online Exam)

FINANCIAL
PERFORMANCE
MANAGEMENT(ONLINE
EXAM)

Table of Contents
Q1a).............................................................................................................................................3
Q1.b) ...........................................................................................................................................3
Q1.c) ...........................................................................................................................................5
Q1.d) Sensitivity Analysis and how managers cope with uncertainties.....................................6
Q2a).............................................................................................................................................6
Q2.b)............................................................................................................................................7
Q3.Zero based Budgeting and Incremental Budget....................................................................7
REFERENCES................................................................................................................................1

Q1a).
Total labour hours for production(Lipstick)=30000*3=90000 hrs
Total labour hours for production(Lip-balm)=35000*2=70000 hrs
Total labour hours for production(Lip gloss)=3000*2=6000 hrs
Total labour hours=90000+70000+6000=166000
Total Overheads=120000+30000+15000+65000=230000
Overhead absorption rate=230000/166000=1.39
Absorption cost per unit
Lip stick Lip balm Lip gloss
Direct material 5 10 10
Direct labour cost 15 10 10
Overhead cost per unit 4.17 2.78 2.78
Total cost per unit 24.17 22.78 22.78
Profit/loss cost per unit(Lip stick)=22-24.17=2.17(loss)
Profit from lip balm=26-22.78=3.22 per unit
Profit from lip gloss=24-22.78=1.22 per unit.
Q1.b)
Activity-based costing
Lip Stick costs
Set up cost=120000*10=1200000
Dividing by ratio, we get=1200000/25=48000
Total Receiving costs=30000
ratio %=10/22*100=45