Explain in brief the following terminologies as used in performance evaluation, highlighting their managerial objectives and the performance measurement indexes:                                                                                                                                    (6 marks)
i) Cost centre

ii) Revenue/profit centre

iii) Investment centre 

While managers can use different leadership styles, they all share the task of utilizing information to make decisions that achieve organizational goals. Accounting information for decision making will differ in terms of its details depending on the user.
Required:
Explain THREE qualities of Management Accounting information.                                                                                (3 marks)

Kwame after his National Service and with no hope of securing a job in the formal sector has decided to run a taxi service. The following forecast has been made for the operation of a service between Abisim and Sunyani.
i)     Revenue totaling GH¢300 a week for 52 weeks in a year. This is net of fuel and other variable costs.
ii)    Tyres; four pieces for a year at GH¢120 per unit.
iii)   Maintenance and servicing; GH¢120 per month.
iv)   Salaries GH¢3,000 per year
v)    Insurance GH¢350 per year

The net cash flow will increase at 5% per annum for the next five years due to inflation. The cost of the vehicle is estimated at GH¢28,000. The project appears quite profitable based on the NPV criteria using the Government policy rate of 26%. However the banks are offering rates far higher than the policy rate.

Required:
You are to calculate the break-even rate for the project.                                                                                                   (10 marks)

Budgetary control is one of the important tools used by management, yet most organisations are unable to derive its full benefits.
Required:
Identify and explain FOUR reasons that may account for unsuccessful implementation of a budgetary control system. (8 marks)

DDB limited has decided to set up a factory to process groundnuts into oil. The feasibility studies cost them GH¢35,000. The consultants have advised that the initial outlay will be GH¢250,000, however, they were unable to estimate the cash inflow due to the uncertain economic environment.
Required:
Using NPV as an appraisal technique you are required to calculate;
i) The constant cash inflow needed to break even if the cost of capital is 15% and the project is to last for 10 years.      (4 marks)

ii) By how much should the cash inflow increase to break even if cost of capital is increased to 20%.                            (4 marks)

iii) If the cash inflow is GH¢45,000, for how long should the project run to break even if the cost of capital is 15%.     (4 marks)

Jungle Twist Ltd manufactures quality blocks for the housing industry in Ghana. It operates a standard marginal costing system. The following standard costs, volume and revenue data for the quarter ending 31 October, 2015 are provided:

Standard cost card:
Selling price            GH¢18 per block
Costs:
Direct material       P             3 kg at GH¢2.60 per kg
.                               Q             2 kg at GH¢2.50 per kg
Direct labour                         2 hours at GH¢0.60 per hour

Budgeted sales for the quarter: 62,500 blocks
Variable overheads are absorbed at the rate of GH¢0.50 per direct labour hour.
Fixed production overheard for the quarter are estimated to be GH¢78,500
The following actual results were recorded for the quarter just ended 31 October, 2015:
Production                               : 60,000 blocks
Sales                                        : 58,000 blocks
Price                                        : GH¢17.00 per block
Direct material        P               150,000 kg were bought and used at GH¢360,000
.                                Q              109,000 kg were bought and used at GH¢327,000
Direct labour                            108,000 hours were worked for at a cost of GH¢90,400
Variable overheads                   GH¢82,000
Fixed production overheads     GH¢80,000

Required:
Calculate the following variances for the quarter just ended 30 September, 2015 the:
i) Sales volume and sales price variances;                                                                                     (3 marks)

ii) Price and usage variances for each material;                                                                             (3 marks)

iii) Mix and yield variance for each material;                                                                                (3 marks)

iv) Labour rate, labour efficiency and idle time variances; and                                                     (3 marks)

v) Variable overheads expenditure and variable overheads efficiency variances.                          (3 marks)

Describe the balanced score card approach to performance measurement.                                                                       (5 marks)

Explain the following concepts and describe their application in responsibility accounting:
i) The controllability principle                                                                          (2.5 marks)

ii) Budgetary slacks                                                                                           (2.5 marks)

The use of relevant information is key to managerial successes. Describe relevant costs to your newly appointed Managing Director who will be negotiating a new contract.                                                                                                               (3 marks)

Pinto company Limited processes materials into finished products. After process one, two main products PEF and CEF are turned out. The production processes allow for 10% normal loss at process one and 5% for each product if it is to be processed further. The scrap at process one can be sold for GH¢6.60 per unit. The standard prices of the products are as follows; PEF to be sold at split off point GH¢17 per unit but can be sold for GH¢28 per unit after further processing. A unit of CEF can also be sold for GH¢16 at split off point or GH¢ 25 after further processing. Further processing costs are; PEF; direct materials GH¢4 per unit and conversion GH¢3.50 per unit. The materials and conversion costs per unit for CEF are GH¢5 and GH¢4 respectively.
In the month of August 2016 6,000 units were processed through process one at the following costs; direct materials GH¢40,000, conversion GH¢32,000. The output at the end of process one were 3,000 units for PEF and 2,000 units for CEF.

Required:
Advise management which of the products should be processed further and which should be sold at split off point if volume is used to share common cost.                                                                                                                                              (12 marks)