Highlights
Question 1
1.1 Explain the principles behind lifecycle costing and briefly state why Coldarin in particular should consider these life cycle principles.
1.2 Produce the budgeted results for PCD and briefly assess the game’s expected performance, taking into account the whole lifecycle of the game.
1.3 Explain why incremental budgeting is a common method of budgeting and outline the main problems with such an approach.
Question 2
2.1. “Environmental management accounting: Innovation or Managerial Fad”? Discuss the role environmental management accounting can play within an organisation in the modern business environment.
2.2 Explain the concept of Total Quality Management and list its fundamental features.
2.3 Pamtasian, a manufacturer of video games, is in the process of developing a new game called ‘The Sims’ and has undertaken market research to find out about customers’ views on the value of the product and also to obtain a comparison with competitor’s products. The results of this research have been used to establish a target selling price of £60 and an estimated life time volume of 300,000 games.
Cost estimates have also been prepared based on the proposed product specification:
Direct materials 5.21 Direct labour 3.23 Direct machining costs 0.12 Ordering costs 1.23 Quality assurance 3.60 Design 19.80 Marketing costs 8.15 Distribution costs 3.25 Warranty costs 1.30
The target profit margin is 20% of the proposed selling price.
Calculate the target cost of The Sims and discuss the implications of the result.
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