I N T E R A C T I V E T E X T CAT INTERMEDIATE PAPER 4 ACCOUNTING FOR COSTS BPP is the official provider of training materials for the ACCA's CAT qualification. This Interactive Text forms part of a suite of learning tools, which also includes CD-ROMs for tuition and computer based assessment, and the innovative, internet-based Learn Online. This text has been specifically written to the current syllabus and Teaching Guide. • Clear language and presentation • Plenty of questions, examples and quizzes to demonstrate and practise techniques • A question and answer bank prepared by BPP Learning Media authors FOR EXAMS IN DECEMBER 2008 AND JUNE 2009 ii First edition 2003 Sixth edition June 2008 ISBN 9780 7517 4823 9 (Previous ISBN 9780 7517 3571 0) British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Published by BPP Learning Media Ltd BPP House, Aldine Place London W12 8AA www.bpp.com/learningmedia Printed in Great Britain by WM Print 45-47 Frederick Street Walsall West Midlands WS2 9NE Your learning materials, published by BPP Learning Media Ltd, are printed on paper sourced from sustainable, managed forests. All our rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of BPP Learning Media Ltd. We are grateful to the Association of Chartered Certified Accountants for permission to reproduce past examination questions. The suggested solutions in the exam answer bank have been prepared by BPP Learning Media Ltd, unless where otherwise stated. © BPP Learning Media Ltd 2008 Contents iii Contents Page Introduction How to use this Interactive Text v Approach to examining the syllabus vi Analysis of past papers vi The computer based examination vii Tackling multiple choice questions viii Part A Introduction to accounting for costs 1 Management information 3 2 The role of information technology 23 3 Cost classification 33 4 Cost behaviour 47 Part B Elements of cost 5 Materials 61 6 Labour 89 7 Expenses 111 8 Overheads and absorption costing 123 9 Marginal costing and absorption costing 143 10 Cost bookkeeping 157 Part C Product and service costs 11 Job, batch and service costing 179 12 Process costing 195 Part D Decision making 13 Cost-volume-profit (CVP) analysis 231 14 Decision making 249 15 Capital investment appraisal 265 Appendix: Mathematical tables 289 Exam question bank 293 Exam answer bank 305 List of key terms and index 321 Review form and free prize draw