April
1999 QUESTION 4 Total Marks: 20 Marks |
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| (a) | What is the difference between charge-out
and charge-back billing schemes?
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[2] |
| (b) | Briefly describe four desirable features of a
billing scheme.
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[4] |
| (c) | The data processing department at XYZ Associates currently costs $25,000 per month to run, of which $9,000 are overheads. The department is considering the purchase of an expensive new printer, which will cost $1,000 per month for maintenance and depreciation plus $1 per page for consumables such as paper and ink. | |
| (i) Initial estimates indicate that 1,000 pages per month will be printed. What page charge should the department set, in order to cover the costs of the printer and consumables, and also the relevant proportion of running costs of the department itself? Show your working. | [4] | |
| (ii) In fact, the department underestimated the
use of their new printer; it turns out that 1,500 pages per month are printed. What
surplus does this generate for the department?
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[1] | |
| (d) | Describe briefly the purchase, rental and operating lease methods for financing an acquisition. State how each method is recorded in the balance sheet, and for what kinds of situation each is the most appropriate method. | [9] |