Page 15 - CIMA May 18 - MCS Day 1 Tasks

Chapter 4

ADVANCED MANAGEMENT

ACCOUNTING (P2) FAMILIARISATION

1. REPLACEMENT DECISIONS

Menta has a significant capital base of ageing buses and will eventually need to replace the fleet
in order to maintain the required levels of safety and reliability.

EXERCISE 1:

Explain the concept of the use of equivalent annual cost calculations for replacement decisions,
how they could help Menta and the limitations of the technique.

2. PRICING STRATEGIES

Menta operates different types of routes, including inter‐city, city and rural services and tailors its
pricing to the types of routes undertaken.

EXERCISE 2:

Discuss the different types of pricing strategy that Menta uses on its various route types and how
it may gain from these strategies. Link the various strategies to the price elasticity of demand for
the routes involved.

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