Sleepo Ltd Has Been Manufacturing Only One Type of Alarm

question 90

Multiple Choice

Sleepo Ltd has been manufacturing only one type of alarm clock,the PlainSnooze model.The company is considering developing some modifications to make another,more advanced model.Two options are available: the ToughSnooze and the MusicSnooze.Both ToughSnooze and MusicSnooze will start with the same processes as the PlainSnooze model,but with additional advanced functions.ToughSnooze has a voice activated snooze function,as well as an 'indestructible' aluminium casing,created for people who throw their alarm clocks around.The MusicSnooze also has a voice activated snooze function,but instead of the tough aluminium casing,it has a 'music choice' function.In choosing between making the ToughSnooze or the MusicSnooze,which of the following costs are relevant?
I The cost of building the PlainSnooze model
Ii) The cost of building a voice activated snooze function.iii The cost of building an "indestructible" aluminium cover.iv The cost of building "music choice" function.

• A) i,ii,iii and iv
• B) ii and iii
• C) ii,iii and iv
• D) iii and iv

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Definitions:

Exploration Rights

Permissions or licenses granted to a company or individual to search for minerals, oil, or gas in a specified area.

Cost Model

An accounting method used to value an asset based on its historical cost minus any accumulated depreciation.

Revaluation Model

An accounting method that allows for the upward adjustment in the carrying value of a fixed asset to reflect its current market value.

AASB 6 Scope

Refers to the coverage or applicability boundaries of the AASB (Australian Accounting Standards Board) 6, which deals with the exploration for and evaluation of mineral resources.