Page 16 - CIMA MCS Workbook February 2019 - Day 1 Tasks
P. 16
Chapter 4
ADVANCED MANAGEMENT
ACCOUNTING (P2) FAMILIARISATION
1. RESPONSIBILITY CENTRES
Crowncare has a number of different practices, each with its own Head of Practice.
EXERCISE 1:
a) Explain the differences between cost centres, profit centres and investment centres and on
what bases the managers of these centres could be evaluated. Explain what types of decision the
Heads of Practice would be able to make for each of these types of centre.
b) Using the information from the pre‐seen, discuss the likely centre status of Crowncare’s
practices.
2. TARGET COSTING
Crowncare’s profit margins have decreased slightly over the past year.
EXERCISE 2:
Explain the concept of target costing and discuss how target costing could be used to maintain
profit margins and the difficulties that Crowncare would encounter in trying to implement it.
KAPLAN PUBLISHING 13
