1.Ans: Khata
2.Ans: October production = 8,000 + (7,000 × 10%) – (8,000 × 10%) = 7,900:
November production = 7,000 + (1 1,000 × 10%) – (7,000 × 10%) = 7,400;
October production resin needs = 7,900 × 7 = 55,300 ounces
November production resin needs = 7.400 × 7 = 51,800 ounces
October resin purchases = 55,300 + (51,800 × 25%) – (55,300 × 25%)
= 54,425 ounces
6.ans: The controller faces a difficult challenge. The controller has two decisions, which are to invest
$50,000 to implement ABC system or to invest $50,000 in improving things such as shelf or shop layout.
The benefits of a better accounting system show up in improved decisions by managers. The ABC system
helps the manager to identify the product cost which will influence the pricing and product mix
decisions and help the management to reduce the cost and to sell the products at the lower price than
the competitors that will be a benefit for the customers while investing $50,000 in shelf or shop layout
will not be a benefit for the customers.