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BA2 Sample Questions Answers

Questions 4

Which THREE of the following are characteristics of job costing?

Options:

A.

It is appropriate where homogeneous products are manufactured

B.

It is only appropriate in manufacturing environments

C.

Costs are traced to separately identifiable cost units

D.

It cannot be applied in a public sector or not for profit organization

E.

A separate work in progress account is maintained for each cost unit

F.

It is a specific order costing system

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Questions 5

Refer to the Exhibit.

PD manufactures a product in a process operation. Normal loss is 5% of input and occurs at the end of the process. The following data is available for the month of August:

Scrapped units have no value.

There was no opening or closing work in progress for August.

What is the value of the abnormal gain in August?

Options:

A.

Nil

B.

$1,880

C.

$1,816

D.

$893

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Questions 6

Which of the following is a valid definition of a cash budget?

Options:

A.

A detailed budget of estimated cash inflows and outflows incorporating both revenue and capital items.

B.

A detailed budget of estimated cash inflows only, incorporating receipts from cash sales as well as from credit customers.

C.

A detailed budget of estimated cash inflows and outflows incorporating revenue items only.

D.

A detailed budget of estimated cash outflows only, incorporating both depreciation and capital expenditure.

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Questions 7

During the completion of Job A, £1,000 worth of material was transferred to it from Job B which had finished ahead of schedule.

How will this be inputted into the Job B account?

Options:

A.

Job A, £1,000 credit

B.

Job A, £1,000 debit

C.

Job B, £1,000 debit

D.

Job B, £1,000 credit

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Questions 8

Refer to the exhibit.

Patchit Limited operates a job costing system. They have been asked to quote for a rush job that will require to be done in overtime hours. It is estimated that the job will incur the following costs:

Production overheads are absorbed on a direct labour hour basis. Budgeted direct labour hours for the year were 50,000 and budgeted direct labour cost was $300,000.

If production overheads had been based on a percentage of direct labour cost, the revised production costs for the job would be:

Options:

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Questions 9

The production manager of your company has asked you to explain the methods of overhead analysis used, in particular the meaning of reciprocal servicing.

Reciprocal servicing is:

Options:

A.

where one service department provides service to another and the second department reciprocates by not charging for its services

B.

where two or more service departments provide service to production departments but not to each other

C.

where two or more service departments provide service to production departments and to each other

D.

where only one service department exists which provides service to all production departments

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Questions 10

In an integrated cost and financial accounting system, the accounting entries for charging gross direct wages to production would be:

Options:

A.

Debit: Wages control accountCredit: Bank account

B.

Debit: Work in progress control accountCredit: Production overhead control account

C.

Debit: Production overhead control accountCredit: Wages control account

D.

Debit: Work in progress control accountCredit: Wages control account

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Questions 11

Refer to the exhibit.

The profit/volume graph below has been prepared for a product for which the following data are available for a period:

Selling price - $28 per unit

Variable cost - $23 per unit

Fixed cost - $4 per unit

Forecast sales volume is 1,000 units each period.

The value of P in units is:

Options:

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Questions 12

Place the following budgets in the order that they would be prepared. Assume that sales volume is the principal budget factor:

(a) Production

(b) Materials usage

(c) Sales

(d) Materials purchases

Options:

A.

(a), (c), (b), (d)

B.

(a), (c), (d), (b)

C.

(c), (a), (b), (d)

D.

(c), (a), (d), (b)

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Questions 13

Refer to the exhibit.

The following data relate to two activity levels of an enquiry-handling centre:

The amount of fixed overheads is:

Options:

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Questions 14

Refer to the exhibit.

Data for October's budget for product Quest for the month of October are given below:

Each unit of Quest requires 6kg of raw materials. Strict quality control procedures are applied to the manufacturing process and normal rejection levels are 5% of finished units.

The raw materials purchases budget for the month of October is:

Options:

A.

2,134,737 kg

B.

2,136,000 kg

C.

2,129,400 kg

D.

2,130,600 kg

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Questions 15

The management accountant has completed the appraisal of an investment in new office equipment.

It has now been discovered that the cost of capital used in the appraisal should have been higher.

What will be the effect on the calculated net present value (NPV) and the payback period?

Options:

A.

NPV increase; payback period increase

B.

NPV decrease; payback period decrease

C.

NPV decrease; payback period stay the same

D.

NPV decrease; payback period increase

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Questions 16

Refer to the exhibit.

The following data refers to a manufacturing process for the month of July:

The work in progress is completed as follows:

(a) 100% for material

(b) 80% for labour

(c) 60% for overhead

The value of the work in progress is:

Options:

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Questions 17

Refer to the Exhibit.

The following forecast cash flows relate to a proposed investment in new delivery vehicles at a total cost of $75,000.

The internal rate of return (IRR) of the proposed investment is (to two decimal places)

Options:

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Questions 18

CL produces a household detergent in a single process. Information for this process for last month is as follows:

(a) Materials input – 11,000 Litres at £2.00 per litre.

(b) Conversion costs - £23,000

(c) Output during the month – 8,000 litres.

(d) There were 2,000 units of closing work in progress which was complete as to materials and 35% complete as to conversion.

(e) Normal loss for the month was 5% of input and all losses have a scrap value of 50p per litre.

(f) There is no opening work in progress.

What was the value of normal loss during the month? Give your answer to one decimal place.

Options:

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Questions 19

Refer to the exhibit.

Data from the management accounting reports for the DD Division of a company for the latest period are as follows.

The value added for the DD Division for the latest period was

Options:

A.

$130,600

B.

$246,150

C.

$253,600

D.

$394,750

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Questions 20

Refer to the exhibit.

Which is the correct journal entry required to record an adverse labour rate variance in an integrated accounting system?

The correct journal entry required to record an adverse labour rate variance in an integrated accounting system is:

Options:

A.

A

B.

B

C.

C

D.

D

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Questions 21

Refer to the exhibit.

RX Ltd expects to have limited machine time for July, which will result in the following production levels:

It is anticipated that there will be 1,500 units of opening inventory and the company wishes to hold a minimum of 500 units of closing inventory at the end of July.

How many units will be available for sale during July?

Options:

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Questions 22

Refer to the exhibit.

The standard variable cost per unit of Product W is $26. The budgeted sales of Product W in April was 3,300 units. The company recorded the following variances for the month of April:

During April 3,600 units of Product W were actually sold.

The budgeted contribution for Product W in April was to the nearest $000:

Options:

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Questions 23

CL produces a household detergent in a single process. Information for this process for last month is as follows:

(a) Materials input - 11,000 Litres at £2.00 per litre.

(b) Conversion costs - £23,000

(c) Output during the month - 8,000 litres.

(d) There were 2,000 units of closing work in progress which was complete as to materials and 35% complete as to conversion.

(e) Normal loss for the month was 5% of input and all losses have a scrap value of 50p per litre.

(f) There is no opening work in progress.

The value of finished output during the month (to the nearest £) was:

Options:

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Questions 24

A standard hour is:

Options:

A.

A measure of time

B.

A measure of output

C.

The standard time taken to produce one unit

D.

The actual time taken to produce one unit

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Questions 25

Johnson & Smith is a huge corporation with many different departments covering hundreds of activities. They had switched to this new budgeting technique as it seemed as though it would help them allocate their

limited funds better.

It was successful to some extent as each manager was required to look at every cost his department accrued. They would then be responsible for coming up with new ways of performing these activities.

It became obvious that certain managers were unable to handle these paperwork intensive demands and so the company will be reverting back to a system that focuses primarily on cost drivers next year.

What budgeting technique will they be using next year?

Options:

A.

Activity Based Budgeting

B.

Zero Based Budgeting

C.

Incremental Budgeting

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Questions 26

During Period 8, 120kgs of material 'X' was purchased for a total cost of £1,920. This resulted in a materials price variance of £240 adverse.

What was the standard price per kg of Material 'X'?

Options:

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Questions 27

Put simply, the role of the management accountant it to_______.

Options:

A.

assess internal information and analyse how it can be used to improve performance in the future.

B.

assess internal information to ensure the company is complying with financial and accountancy regulations.

C.

record and organises last year's transactions and produce financial statements for shareholders.

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Questions 28

Refer to the exhibit.

The management accountant has completed the appraisal of a project which is forecast to generate the following cash flows.

It has now been discovered that the cash inflow in year 3 has been overestimated.

What will be the effect on the calculated net present value (NPV) and the payback period?

Options:

A.

NPV increase; payback period increase

B.

NPV decrease; payback period increase

C.

NPV decrease; payback period stay the same

D.

NPV decrease; payback period decrease

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Questions 29

Which THREE of the following costs would normally be classified as semi-variable?

Options:

A.

Wages of a waitress paid a fixed rate per hour

B.

Salary of a sales executive paid a basic salary and a bonus based on sales level

C.

Advertising costs

D.

Cost of renting a photocopier which is a fixed rental fee plus a charge per copy made

E.

Telephone costs

F.

Royalties paid per unit produced

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Questions 30

Refer to the exhibit.

Which is the correct journal entry required to record a favourable material usage variance in an integrated accounting system?

The correct journal entry required to record a favourable material usage variance in an integrated accounting system is:

Options:

A.

A

B.

B

C.

C

D.

D

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Questions 31

Overhead apportionment is best described as:

Options:

A.

The identification of costs specifically attributable to a particular cost centre

B.

The process of sharing costs amongst two or more cost centers

C.

The charging of overheads to cost units produced

D.

The identification of overhead cost variances

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Questions 32

Prime cost is:

Options:

A.

Total product cost minus overheads

B.

The material cost of the product

C.

The cost of operating a cost centre

D.

All costs incurred in making a product

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Questions 33

According to CIMA’s Code of Ethics, CIMA members should not allow bias, conflict of interest of the influence of other people to override their professional judgement.

This is an example of:

Options:

A.

objectivity.

B.

professional behaviour.

C.

integrity.

D.

professional competence and due care.

Questions 34

Based upon extensive historical evidence, a company’s daily sales volume is known to be normally distributed with a mean of 1,728 units and a standard deviation of 273 units.

What is the probability that, on any one day, the sales volume will be at least 1,300 units?

Options:

A.

5.82%

B.

73.89%

C.

44.18%

D.

94.18%

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Questions 35

The concept of the time value of money:

Options:

A.

recognises the fact that a cash flow received today will always be worth more than a larger cash flow received in the future.

B.

is used for making short term decisions.

C.

determines the higher interest rates that must be paid on longer term loans.

D.

recognises the fact that earlier cash flows are worth more because they can be reinvested.

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Questions 36

The following data relate to the latest period.

A statement is to be prepared that reconciles the difference between the flexible budget profit and the actual profit.

Which TWO of the following will appear on this statement? (Choose two.)

Options:

A.

A favourable labour rate variance.

B.

A favourable sales volume contribution variance.

C.

An adverse sales price variance.

D.

An adverse labour efficiency variance.

E.

An adverse material price variance.

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Questions 37

A company operates an integrated standard cost accounting system. The standard price of raw material A is $20 per litre. At the start of period 1, the inventory of 500 litres of raw material A was valued at $20 per litre. During period 1, 100 litres of raw material A were purchased at an actual price of $21 per litre. During period 2, 550 litres of raw material A were issued to Job 789.

In respect of the above events, which TWO of the following statements are correct? (Choose two.)

Options:

A.

The raw material inventory at the end of period 1 should include 100 litres valued at $21 per litre.

B.

An adverse material price variance should be recorded in the statement of profit or loss for period 1.

C.

The raw material inventory at the end of period 2 should be valued at $20 per litre.

D.

An adverse material price variance should be recorded in the statement of profit or loss for period 2.

E.

The first 500 litres of raw material A issued should be debited to the Job 789 account at $20 per litre, and the remaining 50 litres at $21 per litre.

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Questions 38

The following data are available for a company that produces and sells a single product.

The company’s opening finished goods inventory was 2,500 units.

The fixed overhead absorption rate is $8.00 per unit.

The profit calculated using marginal costing is $16,000.

The profit calculated using absorption costing and valuing its inventory at standard cost is $22,400.

The company’s closing finished goods inventory is:

Options:

A.

3,300 units

B.

1,700 units

C.

3,900 units

D.

8,900 units

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Questions 39

In a manufacturing company which produces a range of products, the wages of a machine operator in the factory would be classified as a:

Options:

A.

Direct labor cost

B.

Indirect labor cost

C.

Direct expense

D.

Indirect expense

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Questions 40

Refer to the exhibit.

Budgeted data for the manufacture of Product X is given below:

Each unit of Product X requires 6 labor hours. It is expected that idle time will account for 5% of labor hours. Products are quality checked and normal rejection rate is 10% of completed units.

The budgeted direct labor hours required for Product X is:

Options:

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Questions 41

Refer to the exhibit.

The indirect costs of a hospital's Radiology Department consists mainly of equipment related costs. Details of the budget for Period 4 are:

The most appropriate overhead absorption rate is:

Options:

A.

£6 per machine hour

B.

10% of machine value

C.

400% of radiologists' wages

D.

£3 per staff hour

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Questions 42

Refer to the exhibit.

The following budget details are available for Superkite Limited which manufacture a single product:

The raw materials purchases budget is

Options:

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Questions 43

Refer to the Exhibit.

AM Ltd. makes and sells a single product for which the standard cost information is as follows:

  • Budgeted production for the period is 30000 units.
  • The actual results for the period were as follows:

What is the variable overhead expenditure variance?

Options:

A.

13,161 adverse

B.

13,161 favourable

C.

13,600 adverse

D.

13,600 favourable

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Questions 44

Which of the following is the LEAST appropriate basis on which to apportion the insurance costs of plant and machinery:

Options:

A.

Machine hours

B.

Net book value

C.

Original cost

D.

Replacement cost

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Questions 45

The materials price variance will be adverse when:

Options:

A.

The actual cost of the materials is more than the standard material cost for the output produced

B.

The actual cost of the materials purchased is more than the standard cost of the materials purchased

C.

The materials usage variance is favourable

D.

The price of materials has fallen

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Questions 46

Within the relevant range, a variable cost is a cost which:

Options:

A.

cannot be forecast with any degree of accuracy because of its variability.

B.

varies in total in proportion to the level of activity.

C.

varies per unit in proportion to the level of activity.

D.

varies in total in proportion to the level of inflation.

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Questions 47

Refer to the exhibit.

The prime cost of product 'Z' is as follows:

Overheads are absorbed at £4.00 per labor hour in Department 1 and £6.00 per labor hour in Department 2.

The production cost of Product Z, to the nearest £, will be:

Give your answer to 2 decimal places.

Options:

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Questions 48

A company is appraising two projects. Both projects are for five years. Details of the two projects are as follows.

Based on the above information, which of the following statements is correct?

Options:

A.

An annuity could be used to calculate the net present value of the projects.

B.

The annuity factor for project A would be lower than the annuity factor for the project B.

C.

A perpetuity could be used to calculate the net present value of the projects.

D.

The annuity factor for project A would double the annuity factor for project B.

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Questions 49

A company that uses standard costing wishes to reconcile the difference between the profit for a period calculated using absorption costing with that calculated using marginal costing.

Which TWO of the following will NOT help with this reconciliation? (Choose two.)

Options:

A.

The actual fixed production overheads.

B.

The closing inventory.

C.

The opening inventory.

D.

The under or over absorbed fixed production overheads.

E.

The fixed production overhead absorption rate.

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Questions 50

Which THREE of the following are parts of the master budget? (Choose three.)

Options:

A.

Finished goods inventory budget.

B.

Budgeted statement of profit or loss.

C.

Cash flow budget.

D.

Sales budget.

E.

Administration overhead budget.

F.

Budgeted statement of financial position.

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Questions 51

The International Federation of Accountants (IFAC) stated that it was important that “accountants in business” should understand what the drivers of stakeholder value are. Which of the following statements is valid?

Options:

A.

Anyone with an interest in an organisation can be considered to be one of its stakeholders.

B.

Stakeholders must be external to the organisation.

C.

Only an organisation’s shareholders and employees can be considered to be its stakeholders.

D.

Only an organisation’s shareholders can be considered to be its stakeholders.

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Questions 52

A company’s management accountant wishes to calculate the present value of the cost of renting a delivery vehicle. There will be five annual rental payments of $5,000, the first of which is due immediately. The company’s discount rate is 12%.

Which TWO of the following are valid ways to calculate the present value of the rental payments? (Choose two.)

Options:

A.

$5,000 + ($5,000 x 3.605)

B.

$5,000 + $5,000/1.12 + $5,000/(1.12)2 + $5,000/(1.12)3 + $5,000/(1.12)4

C.

$5,000/1.12 + $5,000/(1.12)2 + $5,000/(1.12)3 + $5,000/(1.12)4+ $5,000/(1.12)5

D.

$5,000 x 3.605

E.

$5,000 + ($5,000 x 3.037)

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Questions 53

Which of the following statements about CIMA's role in relation to its students is correct?

i. CIMA's professional conduct staff process complaints made against CIMA students

ii. Students are not governed by CIMA's code of ethics until they become registered CIMA members

iii. Students may consult CIMA about situations in their work place that appear to conflict with CIMA's code of ethics

iv. Once students have passed all of the CIMA exams they may use the designatory letters ACMA

Options:

A.

(i), (ii) and (iv)

B.

(i), (iii) and (iv)

C.

(i) and (iii)

D.

(iii) and (iv)

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Questions 54

A company manufactures laptop computers. Which of the following would be classified as direct labor?

Options:

A.

Assembly workers on the production line

B.

The factory accountant

C.

A stores assistant in the factory store

D.

The cook in the factory canteen

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Questions 55

Refer to the exhibit.

A company issued its production budget based on an anticipated output of 800 units. Actual output was 1000 units. The details of the costs are shown below:

The budget expenditure variance was:

Options:

A.

£5,000 adverse

B.

£3,000 adverse

C.

£1,000 favourable

D.

£5,000 favourable

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Questions 56

A company hires a delivery vehicle for $200 per day plus $2 per kilometre travelled. The total hire cost would be described as:

Options:

A.

a fixed cost

B.

a variable cost

C.

a step cost

D.

a semi-variable cost

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Questions 57

The direct labor rate variance is:

Options:

A.

The difference between the actual wages paid and the standard labor cost for the output produced

B.

The difference between the actual wages paid and what should have been paid for the hours worked

C.

The difference between the actual rate of efficiency and the standard rate of efficiency for direct labor

D.

The standard wage rate multiplied by the difference between the actual hours worked and the standard hours needed for the output produced

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Questions 58

In the context of short term decision making, what is a notional cost?

Options:

A.

A cost which cannot be forecast with any degree of certainty

B.

A cost which cannot be measured in financial terms

C.

A cost which reflects the use of resources when no actual cost is incurred

D.

A cost which is already committed and cannot be avoided

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Questions 59

When compiling profit statement using a marginal costing system we must calculate the contribution. Once we have the contribution, we must deduct a specific amount to calculate the profit. Which of these values

should we NOT deduct? (Select ALL that apply.)

Options:

A.

Fixed costs

B.

Selling price

C.

Cost of goods sold

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Questions 60

Refer to the exhibit.

John Brown is a machine operative in a manufacturing company. An analysis of his gross pay for the week is given below:

During the week John was idle for 6 hours due to machine breakdown and maintenance.

The total indirect labour costs included in John's gross pay was:

Options:

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Questions 61

Refer to the exhibit.

The following budget and actual data are available for last period.

The sales price variance for last period was

Options:

A.

$3,704 adverse

B.

$10,156 favourable

C.

$13,356 favourable

D.

$13,860 favourable

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Questions 62

JB has fixed costs of $120,000 per annum. It manufactures a single product which it sells for $12 per unit. It has a profit/volume ratio of 60%.

JB’s break-even point is

Options:

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Questions 63

Refer to the exhibit.

The budget for WP for the month of September contained the following data:

During the month the actual number of units produced was 1,860. The management accounts showed a direct material price variance of $1,200F and direct material usage variance of $180A. The direct materials purchased were 1,200 kg.

The actual quantity of material used in the month was

Options:

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Questions 64

The following list contains many different types of costs for a business. However, only four of them would be considered costs centres. Which four?

Options:

A.

Function

B.

Activity

C.

Service location

D.

Equipment

E.

Staff

F.

Operations

G.

Material

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Questions 65

Refer to the exhibit.

SP, a manufacturing company, uses a standard costing system. The standard variable production overhead cost is based on the following budgeted figures for the year:

During the month of September, 5,300 actual hours were worked and 5,600 standard hours of output were produced. Total variable production overhead costs in September were $8,600.

What was the variable overhead efficiency variance in September?

Options:

A.

$450 adverse

B.

$650 favorable

C.

$650 adverse

D.

$450 favorable

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Questions 66

It is company policy that the closing inventory of finished goods must be equal to 10% of the following month's budgeted sales. The budget sales for November and December are 8,000 and 9,000 units respectively.

The budgeted production for November will be:

Options:

A.

900 units

B.

1,700 units

C.

8,100 units

D.

8,900 units

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Questions 67

The principal budget factor can be defined as:

Options:

A.

The factor which has the highest value in the budget

B.

The factor which limits the activities of the organisation

C.

The factor which is most likely to result in an adverse variance

D.

The factor which is least likely to change in the future

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Questions 68

Within a relevant range of output, the variable cost per unit of output will:

Options:

A.

Increase as output increases

B.

Reduce as output increases

C.

Remain constant as output increases

D.

Be impossible to tell without further information

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Questions 69

A company’s cash budgetary plans show that there will be surplus cash for three months of the forthcoming year.

Which THREE of the following would be appropriate management actions in this situation?

Options:

A.

Offer a longer credit period to new customers to boost sales

B.

Purchase new non-current assets to increase efficiency

C.

Reduce the finished goods inventory to save storage costs

D.

Pay suppliers early to obtain prompt payment discounts

E.

Repay a long-term loan to reduce interest costs

F.

Invest in a short-term deposit account

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Questions 70

Each unit of product GM requires 4 labour hours to be produced. 25% of the units will be completed during overtime hours.

Sales of 24,000 units are planned and finished goods inventory is budgeted to rise by 2,000 units.

If the wage rate is £6 per hour and the overtime premium is 50%, what is the budgeted labour cost?

Options:

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Questions 71

The accounting treatment for overheads over absorbed is to:

Options:

A.

Debit the income statement for the period

B.

Increase the cost per unit for the period

C.

Credit the income statement for the period

D.

Decrease the cost per unit for the period

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Questions 72

A budget that is continuously updated by adding a further accounting period when the earliest period has expired is known as:

Options:

A.

An incremental budget

B.

A participative budget

C.

A rolling budget

D.

A zero base budget

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Questions 73

In an integrated cost and financial accounting system, the accounting entries for the payment of net wages to indirect production workers would be:

Options:

A.

Debit: Bank accountCredit: Wages control account

B.

Debit: Work in progress control accountCredit: Bank account

C.

Debit: Wages control accountCredit: Bank account

D.

Debit: Production overhead control accountCredit: Bank account

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Questions 74

Which one of the following is an example of operational management information?

Options:

A.

The annual cash budget

B.

An investment appraisal report

C.

A production schedule for tomorrow

D.

A flexible budget control report for last month

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Questions 75

Refer to the exhibit.

X Enterprises runs a private nursing home for the elderly. The company are concerned that bed occupancy rates have been falling over the past 2 years with a consequential effect on profit. They have drawn up a budget for next year as follows:

The nursing home currently charges $90 per patient day.

The nursing home operates at 7,500 patient days per year. In an effort to increase occupancy rates the company are proposing to reduce the current price by 10% and increase spending on advertising by $10,000 each year. What effect will this have on the margin of safety?

Options:

A.

Reduce the margin of safety by 1,178 days

B.

Reduce the margin of safety by 622 days

C.

Increase the margin of safety by 1,178 days

D.

Increase the margin of safety by 622 days

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Questions 76

Which one of the following is NOT one of the five stated fundamental principles of CIMA's code of ethics?

Options:

A.

Integrity

B.

Objectivity

C.

Punctuality

D.

Confidentiality

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Questions 77

Fixed costs can best be described as:

Options:

A.

Costs which are difficult to budget accurately

B.

Costs which remain constant, within a relevant range, when activity levels change

C.

Costs which never change

D.

Costs which are uncontrollable

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Questions 78

Refer to the exhibit.

DS is manufacturing company that uses an integrated accounting system. The following payroll data is available for the month of August:

The Employers' National Insurance for the period was $13,790. An analysis of the wages is as follows:

Which of the following factors affect the budgeted cash flow:

(a) Funds from the issue of share capital

(b) Bank Interest on a long term loan

(c) Depreciation on fixed assets

(d) Bad debt write off

Options:

A.

Factors (a), (b), (c) and (d)

B.

Factors (a) and (b) only

C.

Factor (a) only

D.

Factors (b), (c) and (d) only

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Questions 79

A company uses an integrated accounting system.

The accounting entries for the sale of goods on credit would bE.

Options:

A.

Debit: Receivables control accountCredit: Sales account

B.

Debit: Sales accountCredit: Finished Goods Control account

C.

Debit: Receivables control accountCredit: Cost of sales account

D.

Debit: Sales accountCredit: Receivables control account

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Questions 80

Refer to the exhibit.

The following information relates to Job 123:

The selling price to the customer for Job 123 is:

Options:

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Questions 81

The variable overhead efficiency variance is:

Options:

A.

The same as the direct labour efficiency variance

B.

The difference between the actual hours worked and the standard hours produced, multiplied by the variable overhead absorption rate

C.

The difference between the actual variable overheads incurred and those absorbed

D.

The actual hours worked multiplied by the variable overhead absorption rate

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Questions 82

Which one of the following is a characteristic of strategic financial information?

Options:

A.

Detailed and accurate

B.

Provided mainly to junior managers

C.

Provided daily to keep managers informed

D.

Provides information for long term decision making

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Questions 83

Which of the following best describes a step cost?

Options:

A.

A cost which remains constant until activity reaches a critical level; thereafter the cost increases to a higher level and the unit cost remains constant until the next critical activity level is reached.

B.

A cost which increases steadily until activity reaches a critical level; thereafter the cost increases to a higher level and the total cost remains constant until the next critical activity level is reached.

C.

A cost which remains constant until activity reaches a critical level; thereafter the cost increases to a higher level and the total cost remains constant until the next critical activity level is reached.

D.

A cost which increases per unit until activity reaches a critical level; thereafter the cost increases to a higher level and the unit cost remains constant until the next critical activity level is reached.

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Questions 84

Refer to the Exhibit.

PJ Ltd has forecast that the relationship between total overheads and machine hours will be as follows:

If the budget is to be based on 4,000 machine hours, the variable overhead absorption rate will be:

*per machine hour.

Give your answer to 2 decimal places.

Options:

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Questions 85

An increase in the variable cost per unit, will cause the point at which the line plotted on a profit/volume (PV) graph intersects the horizontal axis to:

Options:

A.

Move to the left

B.

Move to the right

C.

Double

D.

Stay where it is

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Questions 86

Eton Ltd. operates a manufacturing process that produces product A. Information for this process last month is as follows:

(a) Opening work in progress - 2,500 kg valued at £2,000 for direct material and £1,500 for labour and overheads.

(b) Materials input - 25,000 kg at £2.10 per kg.

(c) Labour - £10,000

(d) Overheads - £5,000

(e) Output during the month - 20,000 kg.

(f) There were 7,500 units of closing work in progress which was complete as to materials and 30% complete as to conversion.

(g) Normal loss for the month was 3% of input and all losses have a scrap value of £1 per kg.

What was the average cost per kg of finished output during the month?

Options:

A.

£1.73

B.

£2.72

C.

£2.78

D.

£2.80

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Questions 87

If the fixed costs are increased, the point at which the line plotted on a profit/volume (PV) graph cuts the horizontal axis will:

Options:

A.

Double

B.

Move to the left

C.

Stay the same

D.

Move to the right

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Questions 88

Refer to the exhibit.

T operates a process costing system. Data is available for Process A for the month of July.

Inputs for the month:

Normal losses are 15% of input and can be sold for $6 per kg. Actual output was 2,600 kg. There is no opening or closing work in progress for the period.

What is the value of the output from the process in the month?

Options:

A.

$49,291

B.

$46,538

C.

$43,784

D.

$45,120

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Questions 89

A company operates a full cost system of pricing. Production overheads are absorbed using a pre-determined absorption rate of £3.50 per machine hour. The direct production cost of product A is £15 per unit and it utilises 6 machine hours per unit. The mark-up for non-production costs is 10% of total production cost. The company wants to make a 25% return on sales revenue for all products.

The required selling price for Product A, to two decimal places, is:

Options:

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Questions 90

Refer to the Exhibit.

Fabex Ltd manufactures a household detergent called "Clear". The standard data for one of the chemicals used in production (chemical XTC) is as follows:

(a) 50 litres used per 100 litres of 'Clear' produced

(b) Budgeted monthly production is 1000 litres of 'Clear'.

The closing inventory of chemical XTC for November valued at standard price was as follows:

Actual results for the period during December were as follows:

(a) 500 litres of chemical XTC was purchased for £1300.

(b) 550 litres of chemical XTC was used.

(c) 900 litres of 'Clear' was produced.

It is company policy to extract the material price variance at the time of purchase.

What is the total direct material price variance (to the nearest whole number)?

Options:

A.

£50 adverse

B.

£50 favourable

C.

£55 adverse

D.

£55 favourable

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Questions 91

In the process account, the accounting treatment of the value of the abnormal gain is:

Options:

A.

Credit Process account Debit Abnormal Gain account

B.

Debit Process account Credit Abnormal Gain account

C.

Credit Process account Debit Normal Loss account

D.

Debit Process account Credit Normal Loss account

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Questions 92

A company manufactures three products using the same direct labour which will be in short supply next month. No inventories are held. Data for the three products are as follows:

The fixed costs are all committed costs and cannot now be altered for the next month.

Place the labels against the correct product to indicate the order of priority for manufacture that will maximise the profit for the next month.

Options:

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Questions 93

A new product requires an investment of $200,000 in machinery and working capital. The total sales volume over the product’s life will be 5,000 units. The forecast costs per unit throughout the product’s life are as follows:

The product is required to earn a return on investment of 35%.

What unit selling price needs to be achieved?

Options:

A.

$54.00

B.

$50.77

C.

$47.00

D.

$44.55

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Questions 94

A company which manufactures and sells one product has fixed costs of $80,000 per period. The selling price per unit of $25 generates a contribution/sales ratio of 40%.

How many units would need to be sold in a period to earn a profit of $10,000?

Options:

A.

9,000

B.

8,000

C.

36,000

D.

32,000

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Questions 95

The year-to-date results at the end of month 9 included sales revenue of $3,600,000 and variable costs of $2,100,000.

During month 10, sales revenue was $450,000 and variable costs were $270,000.

What year-to-date contribution to sales ratio (C/S ratio) would be reported at the end of month 10?

Options:

A.

58,5%

B.

70,9%

C.

41,5%

D.

40,0%

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Questions 96

An organisation’s management report contains the following data:

Which division has the highest operating margin percentage?

Options:

A.

Division A

B.

Division B

C.

Division C

D.

Division D

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Questions 97

A company has two production departments and two service departments (Maintenance and Stores). The overhead costs of each of the departments are as follows.

The following equations represent the reapportionment of each of the service department overheads to the other.

M = 4,700 + 0.1S

S = 5,800 + 0.2M

Where M = total Maintenance overhead after reapportionment from Stores

S = total Stores overhead after reapportionment from Maintenance

60% of the total Maintenance overhead and 50% of the total Stores overhead are to be apportioned to Production Department 1.

The total production overhead for Production Department 1 after reapportionment of the service departments’ overhead costs is closest to:

Options:

A.

$71,672

B.

$75,500

C.

$70,720

D.

$71,821

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Questions 98

A company absorbs production overhead using a direct labour hour rate. Data for the latest period are as follows:

What is the overhead absorption rate per direct labour hour? Give your answer to one decimal place.

Options:

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Questions 99

A company makes and sells a range of products. The standard details per unit for one of these products, product X, are as follows.

To meet sales demand, the company must obtain 2,000 units of product X next month. There is sufficient labour capacity to produce 1,500 of these units in-house during normal time. However, any production above this level would require overtime working which would be paid at a premium of 50%.

The company can buy as many units of product X as it wishes next month from an external supplier at a price of $120 per unit.

What is the total financial benefit to the company of purchasing the appropriate number of units from the external supplier rather than producing them in-house?

Options:

A.

$20,000

B.

$30,000

C.

$27,500

D.

$5,000

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Questions 100

Which type of budget would be the most suitable for a cash budget?

Options:

A.

Fixed budget

B.

Rolling budget

C.

Incremental budget

D.

Flexible budget

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Questions 101

A company is considering investing $57,000 in a machine that will last for five years, after which time it will have no value. The machine will generate additional revenue of $190,000 each year. Annual running costs, including depreciation of $11,400 will amount to $168,400.

Assuming that all cash flows occur evenly, the payback period of the investment in the machine is closest to:

Options:

A.

2 years 8 months

B.

1 year 9 months

C.

1 year 7 months

D.

2 years 6 months

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Questions 102

A company wishes to compare the variability of its monthly sales revenue in country A with that of country B. The two countries use different currencies.

The monthly sales revenue for the last 48 months in country A (which is measured in $) has been analysed as follows.

What is the coefficient of variation of this data?

Give your answer as a percentage to one decimal place.

Options:

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Questions 103

A management accountant has forecast the following cash inflows from four potential projects.

All four projects require the same initial investment and will last for four years. They all result in a positive net present value but only one of the projects can be undertaken.

Which project should be selected?

Options:

A.

Project A

B.

Project B

C.

Project C

D.

Project D

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Questions 104

Which THREE of the following are included in the Global Management Accounting Principles? (Choose three.)

Options:

A.

Accountability

B.

Influence

C.

Value

D.

Professional behaviour

E.

Relevance

F.

Integrity

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Questions 105

Which of the following statements regarding variances is valid?

Options:

A.

Using higher quality material than standard could explain an adverse labour efficiency variance.

B.

Improved maintenance of production machinery could explain an adverse material usage variance.

C.

An adverse labour rate variance could explain a favourable labour efficiency variance.

D.

Poor supervision could explain a favourable labour rate variance.

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Questions 106

Which of the following is NOT a valid purpose of budgeting?

Options:

A.

To communicate targets to managers.

B.

To comply with financial reporting requirements.

C.

To coordinate the different activities of an organisation.

D.

To authorise managers to incur expenditure.

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Questions 107

A project is about to be launched. Two of the three possible outcomes and their associated probabilities are as follows:

The remaining possible outcome is a $70,000 gain.

What is the correct calculation of the expected value of the project?

Options:

A.

($30,000 + $70,000 - $25,000) / 3

B.

($30,000 + $70,000 - $25,000) x (0.7 + (1.0 - (0.2 + 0.7)) + 0.2)

C.

($30,000 x 0.7) + ($70,000 x (1.0 - (0.2 + 0.7))) + ($25,000 x 0.2)

D.

($30,000 x 0.7) + ($70,000 x (1.0 - (0.2 + 0.7))) - ($25,000 x 0.2)

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Questions 108

In a company that manufactures many different products on the same production line, which TWO of the following would NOT be classified as indirect production costs? (Choose two.)

Options:

A.

Salary paid to the factory manager.

B.

Factory rent.

C.

Maintenance costs for the company’s only production line.

D.

Commissions paid to the sales team.

E.

Royalties paid to the designers of the products.

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Questions 109

Which of the following would NOT be an appropriate performance measure for a profit centre manager?

Options:

A.

Return on capital employed

B.

Contribution per unit

C.

Sales price variance

D.

Gross margin

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Questions 110

Which TWO of the following are characteristics of Management Accounts? (Choose two.)

Options:

A.

Governed by rules and regulations

B.

Provide information to managers

C.

Provide information needed by shareholders

D.

Internally focused

E.

Statutory requirement

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Questions 111

Assume that a unit of output is the cost object. Which of the following statements is valid?

Options:

A.

Royalties paid on per unit basis are an example of an indirect expense.

B.

Materials consumed in the maintenance of machinery used to manufacture several different products are an example of a direct material cost.

C.

The salaries of supervisors who oversee the manufacture of several different products are an example of a direct labour cost.

D.

Rent paid for a factory in which several different products are produced is an example of an indirect expense.

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Questions 112

A small airport’s management accountant has prepared the following management report on the performance of its four retail outlets.

Which retail outlet has the highest contribution per square metre?

Options:

A.

Outlet A

B.

Outlet B

C.

Outlet C

D.

Outlet D

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Questions 113

Data for the latest period for a company which makes and sells a single product are as follows:

There were no budgeted or actual changes in inventories during the period.

The sales volume contribution variance for the period was:

Options:

A.

$6,220 adverse.

B.

$9,267 adverse.

C.

$16,000 adverse.

D.

$5,666 adverse.

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Questions 114

A confectionery manufacturer is considering adding a new product to the current range. Forecast data for the product are as follows.

Incremental fixed costs attributable to the new product are forecast to be $24,000 each period.

The forecast sales volume of 180 units is insufficient to achieve the target profit of $10,000 each period.

Which of the following statements is correct?

Options:

A.

The margin of safety is negative because the target profit will not be achieved from the forecast sales volume.

B.

If the fixed cost is changed to $20,000 the sales volume required to break even will decrease.

C.

If the forecast sales volume is changed to 190 units the sales volume required to achieve the target profit will decrease.

D.

If the selling price is changed to $510 the sales volume required to achieve the target profit will increase.

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Questions 115

A company has three production departments X, Y and Z, and one service department.

The service department’s overhead has been apportioned to the production departments in the ratio 3:2:5. As a result of this apportionment, $2,070 was given to Department Y.

What is the amount of service department overhead that would have been apportioned to Department Z? Give your answer to the nearest dollar.

Options:

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Questions 116

The following data are available for a delivery company. The table shows the number of tonnes delivered (x) and the associated distribution cist (y) in recent periods.

Further analysis of this data has determined the following:

∑xy = 36,427∑x2 = 1,144

Using least squares regression analysis, calculate the variable cost per tonne delivered. Give your answer to the nearest cent.

Options:

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Questions 117

Data for the latest period for a company which makes and sells a single product are as follows:

There were no budgeted or actual changes in inventories during the period.

The variable overhead expenditure variance for the period was:

Options:

A.

$462 favourable.

B.

$462 adverse.

C.

$2,202 favourable.

D.

$2,202 adverse.

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Exam Code: BA2
Exam Name: Fundamentals of management accounting
Last Update: May 25, 2024
Questions: 392
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