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The following information for advertising and sales has been established over the past six months：

Month Sales revenue Advertising expenditure

$'000 $'000

1 155 3

2 125 2.5

3 200 6

4 175 5.5

5 150 .5

6 225 6.5

Using the high-low method which of the following is the correct equation for linking advertising and sales from the above data?

A

Sales revenue = 62,500 + (25 x advertising expenditure)

B

Advertising expenditure = - 2,500 + (0.04 x sales revenue)

C

Sales revenue = 95,000 + (20 x advertising expenditure)

D

Advertising expenditure = - 4,750 + (0.05 x sales revenue)

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Chapter5Costbehaviour

Independent variable x = advertising expenditure

Dependent variable y = sales revenue

Highest x = month 6 = $6,500

Highest y = month 6 = $225,000

Lowest x = month 2 = $2,500

Lowest y = month 2 = $125,000

Using the high-low method：

Advertising expenditure Sales revenue

$ $

Highest 6,500 225,000

Lowest 2,500 125,000

4,000 100,000

Sales revenue generated for every $1 spent on advertising =$100,000/$4,000 = $25 per $1 spent.

... If $6,500 is spent on advertising, expected sales revenue = $6,500 x $25 = $162,500

... Sales revenue expected without any expenditure on advertising = $225,000 - $162,500 = $62,500

... Sales revenue = 62,500 = (25 x advertising expenditure)

多做几道

Which of the following statements about management accounting information is/are true?

(i) They must be stated in purely monetary terms.

(ii) Limited companies must, by law, prepare management accounts.

(iii) They serve as a future planning tool and are not used as an historical record.

A

(i), (ii) and (iii)

B

(i) and (ii)

C

(ii) only

D

None of the statements is true

Which of the following statements is/are correct?

(i) A management control system is a term used to describe the hardware and software used to drive a database system which produces information outputs that are easily assimilated by management.

(ii) An objective is a course of action that an organisation might pursue in order to achieve its strategy.

(iii) Information is data that has been processed into a form meaningful to the recipient.

A

(i), (ii) and (iii)

B

(i) and (iii)

C

(ii) and (iii)

D

(iii) only

Good information should have certain qualities. Which of the following are qualities of good information?(i) Complete(ii) Extensive(iii) Relevant(iv) Accurate

A

(i), (ii) and (iii)

B

(i), (iii) and (iv)

C

(ii) and (iv)

D

All of them

Monthly variance reports are an example of which one of the following types of management information?

A

Tactical

B

Strategic

C

Non-financial

D

Operational

Which of the following statements is/are correct?

(i) Information for decision-making should incorporate uncertainty in some way

(ii) The data used to prepare financial accounts and management accounts are the

A

(i) is true and (ii) is false

B

(ii) is true and (i) is false

C

Both are true

D

Both are false

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