Question Tag: Cost-benefit analysis

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PSAF – Nov 2014 – L2 – Q7 – Public Sector Reforms

Advising on investment projects based on expected returns and understanding cost-benefit analysis features in public project appraisal.

Question

a. Mr. Make-No-Mistake has N200,000 which he decides to invest if he can secure an assurance that the investment will earn at least 10% p.a. He is considering three projects:

Project A: Will earn N218,000 at the end of the 1st year.
Project B: Will earn N250,000 at the end of the 2nd year.
Project C: Will earn N140,000 at the end of 1st year and another N100,000 at the end of 2nd year.

If none of the projects is undertaken, Mr. Make-No-Mistake will invest his N200,000 in something else that will earn him 10% p.a.

You are required to assess and advise Mr. Make-No-Mistake on which of the projects he should undertake. (12 Marks)

b. Identify THREE main features of Cost-Benefit Analysis in public project appraisal. (3 Marks)

Answer

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Tags: Cost-benefit analysis, Investment Assessment, Project evaluation, Public Project Appraisal
Level: Level 2

Topic: Public Sector Reforms

PM – Nov 2015 – L2 – Q3 – Costing Systems and Techniques

Prepare profit or loss statement for each product W, X, Y, and Z, and evaluate impact of discontinuing additional processing.

Question

Casko Limited manufactures four products from a single chemical process and a single
raw material. The production director is considering proposals to discontinue certain
production process and has provided the following information:
(i) The cost of raw materials for the year just ended was N1,320,000.
(ii) The initial processing costs amounted to N2,564,600.
(iii) All the four products W, X, Y and Z are produced simultaneously at a single split-off point.
(iv) Product Y is sold immediately without further processing.
(v) The other three products are subjected to further processing before being sold.
(vi) It is the company‟s policy to apportion the cost prior to split-off point on a suitable
sales value basis.
(vii) The output, sales and the additional processing costs for the past year were as
follows:

Product	Output (units)	Sales (N)	Additional Processing Costs (N)
W	400,000	3,840,000	800,000
X	89,230	1,160,000	640,000
Y	5,000	160,000	–
Z	9,000	1,200,000	40,000

The proposal being considered by the management is to sell the products to other
processors immediately after the split-off point without any of the present additional
processing. The additional processing costs of products W,X and Z would either no
longer be incurred or be charged to an alternative profitable use. The prices per unit to
be obtained from the other processors would be: W: N6.40, X: N8, Y: N32, and Z: N100.

You are required to prepare a statement of:
a. i. The profit or loss on each of the four products. (10 Marks)
ii. The change in the profit or loss given in your solution to
(i) above, if the proposals being considered were adopted. (8 Marks)
b. Identify TWO long-run pricing decision approaches that are relevant
to a price setting firm. (2 Marks)

Answer

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Tags: Cost-benefit analysis, Joint Cost Allocation, Long-Run Pricing, Profit and Loss
Level: Level 2

Topic: Costing Systems and Techniques
Series: NOV 2015

PSAF – May 2022 – L2 – SA – Q7 – Public Sector Reforms,

Discuss reasons for divergence between private and public appraisal of projects and explain key differences in cost-benefit and cost-effectiveness analysis.

Question

Investment appraisal is a process of finding out the least possible costs of an investment and the maximum economic benefits, which may accrue from the commitment of resources.

Required:
a. Highlight FOUR reasons for divergence between private and public appraisal of a project. (4 Marks)
b. How does cost-benefit analysis (CBA) differ from cost-effectiveness analysis (CEA)? (5 Marks)
c. Identify THREE procedures and THREE limitations of cost-effectiveness analysis. (6 Marks)

Answer

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Tags: Cost-benefit analysis, Private Appraisal, Project evaluation, Public Appraisal, Public Investment
Level: Level 2

Topic: Public Sector Reforms
Series: MAY 2022

PSAF – Nov 2016 – L2 – Q6a – Public Sector Financial Statements

This question distinguishes between Cost Benefit Analysis (CBA) and Cost Effectiveness Analysis (CEA).

Question

Distinguish carefully between Cost Benefit Analysis (CBA) and Cost Effectiveness Analysis (CEA).

Answer

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Tags: Cost Effectiveness Analysis, Cost-benefit analysis, Financial management
Level: Level 2

Topic: Public Sector Financial Statements
Series: NOV 2016

PSAF – Nov 2020 – L2 – Q5b – Performance Measurement in the Public Sector

Explain the steps for conducting Cost Benefit Analysis and Cost Effectiveness Analysis in public sector investment appraisal.

Question

Investment appraisal is a technique aimed at finding out the least possible costs of an investment and the maximum economic benefits, which may accrue from the commitment of resources into it. Cost Benefit Analysis and Cost Effectiveness Analysis are among the techniques used for investment appraisal in the public sector.

Required:
Explain the five steps to be followed in conducting Cost Benefit Analysis and Cost Effectiveness Analysis. (10 Marks)

Answer

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Tags: Cost Effectiveness Analysis, Cost-benefit analysis, Investment Appraisal, Public Sector Finance
Level: Level 2

Topic: Performance Measurement in the Public Sector
Series: NOV 2020

PSAF – MAY 2019 – L2 – Q5 – Performance Measurement in the Public Sector

Explain cost-benefit analysis, its evaluation methods, and justify its preference as a public project appraisal technique.

Question

The cost-benefit analysis (CBA) has been described as the most popular technique for investment project appraisal in the public sector, especially in the developing world.

Required:

a. Describe the term cost-benefit analysis (CBA). (5 Marks)

b. Identify and explain the two methods usually adopted in the evaluation of projects under CBA. (4 Marks)

c. Justify the preference for CBA as a public project appraisal technique. (6 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: CBA Justification, Cost-benefit analysis, Evaluation Methods, Project Appraisal, public sector investment
Level: Level 2

Topic: Performance Measurement in the Public Sector
Series: MAY 2019

CSEG – Nov 2018 – L2 – Q2a – Business ethics

Discuss the ethical principles that would be breached if you agree to the IT Director's request in the cost-benefit analysis.

Question

The IT Director of Uswatu Ltd (Uswatu) has asked you to undertake a cost-benefit analysis of a proposed new IT system. The IT Director will use this analysis to convince the Board of Directors of Uswatu that they should invest in the new system. As part of your analysis, you found that the new system will not run properly on Uswatu’s existing computers. This means that Uswatu would have to replace most of their existing Desktop computers and servers, leading to an excess of costs over benefits.

The IT Director has suggested that you downplay the cost of replacing the IT infrastructure as he was sure that he ‘could find a work-around’ that would allow the existing computers to use the new software, though he was currently uncertain how this would be accomplished.

The IT Director has told you that he ‘expects’ the cost-benefit analysis to show a favourable result for the new system and has indicated that your future promotion prospects may depend on this.

Required:

Explain the IFAC’s fundamental ethical principles that you would be breaching if you agree to do the IT Director’s request. (10 marks)

Answer

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Tags: Cost-benefit analysis, Ethical Principles, IT System, Professional Integrity
Level: Level 2

Topic: Business ethics
Series: NOV 2018

FM – MAY 2019 – L2 – Q4a – Management of receivables and payables

Analyze the impact of using a factor on annual profits for Lisa-Joys Company, considering savings on bad debts, administration costs, and interest.

Question

Question:
Lisa-Joys Company has annual credit sales of GH¢1,000,000. Credit customers take 45 days to pay. Bad debts are 2% of sales. The company finances its trade receivables with a bank overdraft, on which interest is payable at an annual rate of 15%.

A factor has offered to take over administration of the receivables ledger and collections for a fee of 2.5% of the credit sales. This will be a non-recourse factoring service. It has also guaranteed to reduce the payment period to 30 days. It will provide finance for 80% of the trade receivables, at an interest cost of 8% per year.

Lisa-Joys Company estimates that by using the factor, it will save administration costs of GH¢8,000 per year.

Required:
What would be the effect on annual profits if Lisa-Joys Company decides to use the factor’s services? (Assume a 365-day year). (9 marks)

Answer

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Tags: Cost-benefit analysis, Factoring, Trade receivables, Working Capital
Level: Level 2

Topic: Management of receivables and payables
Series: MAY 2019

PSAF – Nov 2014 – L2 – Q7 – Public Sector Reforms

Advising on investment projects based on expected returns and understanding cost-benefit analysis features in public project appraisal.

Question

a. Mr. Make-No-Mistake has N200,000 which he decides to invest if he can secure an assurance that the investment will earn at least 10% p.a. He is considering three projects:

Project A: Will earn N218,000 at the end of the 1st year.
Project B: Will earn N250,000 at the end of the 2nd year.
Project C: Will earn N140,000 at the end of 1st year and another N100,000 at the end of 2nd year.

If none of the projects is undertaken, Mr. Make-No-Mistake will invest his N200,000 in something else that will earn him 10% p.a.

You are required to assess and advise Mr. Make-No-Mistake on which of the projects he should undertake. (12 Marks)

b. Identify THREE main features of Cost-Benefit Analysis in public project appraisal. (3 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost-benefit analysis, Investment Assessment, Project evaluation, Public Project Appraisal
Level: Level 2

Topic: Public Sector Reforms

PM – Nov 2015 – L2 – Q3 – Costing Systems and Techniques

Prepare profit or loss statement for each product W, X, Y, and Z, and evaluate impact of discontinuing additional processing.

Question

Product	Output (units)	Sales (N)	Additional Processing Costs (N)
W	400,000	3,840,000	800,000
X	89,230	1,160,000	640,000
Y	5,000	160,000	–
Z	9,000	1,200,000	40,000

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost-benefit analysis, Joint Cost Allocation, Long-Run Pricing, Profit and Loss
Level: Level 2

Topic: Costing Systems and Techniques
Series: NOV 2015

PSAF – May 2022 – L2 – SA – Q7 – Public Sector Reforms,

Discuss reasons for divergence between private and public appraisal of projects and explain key differences in cost-benefit and cost-effectiveness analysis.

Question

Investment appraisal is a process of finding out the least possible costs of an investment and the maximum economic benefits, which may accrue from the commitment of resources.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost-benefit analysis, Private Appraisal, Project evaluation, Public Appraisal, Public Investment
Level: Level 2

Topic: Public Sector Reforms
Series: MAY 2022

PSAF – Nov 2016 – L2 – Q6a – Public Sector Financial Statements

This question distinguishes between Cost Benefit Analysis (CBA) and Cost Effectiveness Analysis (CEA).

Question

Distinguish carefully between Cost Benefit Analysis (CBA) and Cost Effectiveness Analysis (CEA).

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost Effectiveness Analysis, Cost-benefit analysis, Financial management
Level: Level 2

Topic: Public Sector Financial Statements
Series: NOV 2016

PSAF – Nov 2020 – L2 – Q5b – Performance Measurement in the Public Sector

Explain the steps for conducting Cost Benefit Analysis and Cost Effectiveness Analysis in public sector investment appraisal.

Question

Required:
Explain the five steps to be followed in conducting Cost Benefit Analysis and Cost Effectiveness Analysis. (10 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost Effectiveness Analysis, Cost-benefit analysis, Investment Appraisal, Public Sector Finance
Level: Level 2

Topic: Performance Measurement in the Public Sector
Series: NOV 2020

PSAF – MAY 2019 – L2 – Q5 – Performance Measurement in the Public Sector

Explain cost-benefit analysis, its evaluation methods, and justify its preference as a public project appraisal technique.

Question

The cost-benefit analysis (CBA) has been described as the most popular technique for investment project appraisal in the public sector, especially in the developing world.

Required:

a. Describe the term cost-benefit analysis (CBA). (5 Marks)

b. Identify and explain the two methods usually adopted in the evaluation of projects under CBA. (4 Marks)

c. Justify the preference for CBA as a public project appraisal technique. (6 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: CBA Justification, Cost-benefit analysis, Evaluation Methods, Project Appraisal, public sector investment
Level: Level 2

Topic: Performance Measurement in the Public Sector
Series: MAY 2019

CSEG – Nov 2018 – L2 – Q2a – Business ethics

Discuss the ethical principles that would be breached if you agree to the IT Director's request in the cost-benefit analysis.

Question

The IT Director has told you that he ‘expects’ the cost-benefit analysis to show a favourable result for the new system and has indicated that your future promotion prospects may depend on this.

Required:

Explain the IFAC’s fundamental ethical principles that you would be breaching if you agree to do the IT Director’s request. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost-benefit analysis, Ethical Principles, IT System, Professional Integrity
Level: Level 2

Topic: Business ethics
Series: NOV 2018

FM – MAY 2019 – L2 – Q4a – Management of receivables and payables

Analyze the impact of using a factor on annual profits for Lisa-Joys Company, considering savings on bad debts, administration costs, and interest.

Question

Lisa-Joys Company estimates that by using the factor, it will save administration costs of GH¢8,000 per year.

Required:
What would be the effect on annual profits if Lisa-Joys Company decides to use the factor’s services? (Assume a 365-day year). (9 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost-benefit analysis, Factoring, Trade receivables, Working Capital
Level: Level 2

Topic: Management of receivables and payables
Series: MAY 2019

Question Tag: Cost-benefit analysis

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PSAF – Nov 2014 – L2 – Q7 – Public Sector Reforms

Advising on investment projects based on expected returns and understanding cost-benefit analysis features in public project appraisal.

You're reporting an error for "PSAF – Nov 2014 – L2 – Q7 – Public Sector Reforms"

PM – Nov 2015 – L2 – Q3 – Costing Systems and Techniques

Prepare profit or loss statement for each product W, X, Y, and Z, and evaluate impact of discontinuing additional processing.

You're reporting an error for "PM – Nov 2015 – L2 – Q3 – Costing Systems and Techniques"

PSAF – May 2022 – L2 – SA – Q7 – Public Sector Reforms,

Discuss reasons for divergence between private and public appraisal of projects and explain key differences in cost-benefit and cost-effectiveness analysis.

You're reporting an error for "PSAF – May 2022 – L2 – SA – Q7 – Public Sector Reforms,"

PSAF – Nov 2016 – L2 – Q6a – Public Sector Financial Statements

This question distinguishes between Cost Benefit Analysis (CBA) and Cost Effectiveness Analysis (CEA).

You're reporting an error for "PSAF – Nov 2016 – L2 – Q6a – Public Sector Financial Statements"

PSAF – Nov 2020 – L2 – Q5b – Performance Measurement in the Public Sector

Explain the steps for conducting Cost Benefit Analysis and Cost Effectiveness Analysis in public sector investment appraisal.

You're reporting an error for "PSAF – Nov 2020 – L2 – Q5b – Performance Measurement in the Public Sector"

PSAF – MAY 2019 – L2 – Q5 – Performance Measurement in the Public Sector

Explain cost-benefit analysis, its evaluation methods, and justify its preference as a public project appraisal technique.

You're reporting an error for "PSAF – MAY 2019 – L2 – Q5 – Performance Measurement in the Public Sector"

CSEG – Nov 2018 – L2 – Q2a – Business ethics

Discuss the ethical principles that would be breached if you agree to the IT Director's request in the cost-benefit analysis.

You're reporting an error for "CSEG – Nov 2018 – L2 – Q2a – Business ethics"

FM – MAY 2019 – L2 – Q4a – Management of receivables and payables

Analyze the impact of using a factor on annual profits for Lisa-Joys Company, considering savings on bad debts, administration costs, and interest.

You're reporting an error for "FM – MAY 2019 – L2 – Q4a – Management of receivables and payables"

PSAF – Nov 2014 – L2 – Q7 – Public Sector Reforms

Advising on investment projects based on expected returns and understanding cost-benefit analysis features in public project appraisal.

You're reporting an error for "PSAF – Nov 2014 – L2 – Q7 – Public Sector Reforms"

PM – Nov 2015 – L2 – Q3 – Costing Systems and Techniques

Prepare profit or loss statement for each product W, X, Y, and Z, and evaluate impact of discontinuing additional processing.

You're reporting an error for "PM – Nov 2015 – L2 – Q3 – Costing Systems and Techniques"

PSAF – May 2022 – L2 – SA – Q7 – Public Sector Reforms,

Discuss reasons for divergence between private and public appraisal of projects and explain key differences in cost-benefit and cost-effectiveness analysis.

You're reporting an error for "PSAF – May 2022 – L2 – SA – Q7 – Public Sector Reforms,"

PSAF – Nov 2016 – L2 – Q6a – Public Sector Financial Statements

This question distinguishes between Cost Benefit Analysis (CBA) and Cost Effectiveness Analysis (CEA).

You're reporting an error for "PSAF – Nov 2016 – L2 – Q6a – Public Sector Financial Statements"

PSAF – Nov 2020 – L2 – Q5b – Performance Measurement in the Public Sector

Explain the steps for conducting Cost Benefit Analysis and Cost Effectiveness Analysis in public sector investment appraisal.

You're reporting an error for "PSAF – Nov 2020 – L2 – Q5b – Performance Measurement in the Public Sector"

PSAF – MAY 2019 – L2 – Q5 – Performance Measurement in the Public Sector

Explain cost-benefit analysis, its evaluation methods, and justify its preference as a public project appraisal technique.

You're reporting an error for "PSAF – MAY 2019 – L2 – Q5 – Performance Measurement in the Public Sector"

CSEG – Nov 2018 – L2 – Q2a – Business ethics

Discuss the ethical principles that would be breached if you agree to the IT Director's request in the cost-benefit analysis.

You're reporting an error for "CSEG – Nov 2018 – L2 – Q2a – Business ethics"

FM – MAY 2019 – L2 – Q4a – Management of receivables and payables

Analyze the impact of using a factor on annual profits for Lisa-Joys Company, considering savings on bad debts, administration costs, and interest.

You're reporting an error for "FM – MAY 2019 – L2 – Q4a – Management of receivables and payables"

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