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Subject P2: Advanced Management Accounting

2.3 Business Process Re-engineering (BPR) can be defined as the fundamental
rethinking and radical redesign of business processes.

Which of the following are typical advantages of BPR?

(i) A reduction in the complexity of the organization by eliminating
unnecessary activities.

(ii) Making small incremental improvements in existing practices.

(iii) A one-off reduction in costs.

(iv) Refocusing on the strategic direction of the business by looking at how we
do things and how improvements could be made.

A (i) and (ii)

B (ii) and (iii)

C (iii) and (iv)

D (i) and (iv)

2.4 An accountant working in a throughput environment intends to calculate the
throughout accounting ratio for the production department which makes a single
product. The product requires the input of materials, labour and variable
overheads.

The selling price per unit is $30 and the throughput per unit is $12.

The machine which accounts for the bottleneck in the production process runs
for 5,600 hours and can process 700 units in the period. The production
department costs $3,920 per period to run.

Which two of the following statements are true?

(i) The total variable cost per unit is $18

(ii) The return per factory hour is $0.67

(iii) The cost per factory hour is $0.7

(iv) The throughput accounting ratio is greater than 1

(v) The aim of management should be to minimise the throughput accounting
ratio

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