BA2 Sample Questions Answers

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

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

The value of the capital invested in producing and selling product F is $600,000. A return on investment of 14% is required from all products.

Budgeted production and sales of product F for next period are 25,000 units and the standard cost per unit is $33.

In order to achieve the required return on investment the selling price per unit of product F must be

Refer to the exhibit.

A company issued its production budget based on an anticipated output of 2000 units. The actual output for the period was 1500 units. The details of the costs are shown below:

The budget volume variance was:

A profit margin of 20% of sales is the same as a profit on total cost of:

Give your answer to 2 decimal places.

Refer to the exhibit.

In this profit/volume graph, which distance indicates the contribution earned at level of activity L?

Distance a

Distance b

Distance c

Distance d

Refer to the exhibit.

The budgetary control report for the latest period shows the following. Variances in brackets are adverse.

Which THREE of the following statements can definitely be inferred from this control report?

Overtime worked as a result of a rush order at the customers request should be classified as a:

A company produces a single product for which the following cost data are available.

Analysis by the management accountant has shown that 100% of direct material cost and 50% of direct labour cost are variable costs. 50% of production overhead and 100% of selling and distribution overhead are variable costs.

What is the marginal cost per unit?

Which of the following would NOT require taking into account the time value of money?

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:

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

What is the value of the finished goods?

Refer to the exhibit.

A company has the following budgeted sales for the next 6 month period:

Cash sales are 20% of the total and receive a cash discount of 5%. The remaining 80% of sales are on credit. 60% of credit customers pay within one month, the remaining 40% pay within two months.

The cash receipts for the month of July will be:

Refer to the exhibit.

The following conventional breakeven chart has been drawn for a product. Forecast sales volume for next period is V units.

Which ONE of the following distances on the graph indicates the forecast profit for next period?

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?

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:

The staffing policy for a supermarket is to have one cashier station open for every forecasted 20 customers per hour. Cashiers are hired by the hour as and when required, and do not perform any other duties.

The cost of the cashiers in relation to the number of customers would be classified as which type of cost?

The budget and actual cost statements for the production department for the latest period were as follows.

Notes.

The 10% increase in production was required to meet unexpected additional sales demand.

The production manager is responsible for negotiating the price of materials with suppliers.

The normal working time is 900 hours per period. Any overtime worked above these 900 hours is paid at a premium of 50%.

In preparing the flexible budget for the latest period, which TWO of the following statements are correct? (Choose two.)

The following is an extract from a budgetary control report for the latest period:

The budget variance for prime cost is:

Which of the following is a relevant cost?

A sales manager has analysed a sample of 350 sales transactions from the latest period. The manager wishes to investigate:

how many customers made their purchase online using the internet and how many purchased by telephone.

how many were new customers and how many were placing repeat orders.

The following table shows the results of the analysis.

If the pattern of sales occurs next period, the probability of a particular sale being a repeat order placed online is closest to:

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?

Which of the following statements relating to risk and uncertainty is correct?

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.

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?

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.

A company has spent $5,000 on a report into the viability of using a subcontractor. The report highlighted the following:

A machine purchased six years ago for $30,000 would become surplus to requirements. It has a written-down value of $10,000 but would be resold for $12,000.

A machine operator would be made redundant and would receive a redundancy payment of $40,000.

The administration of the subcontractor arrangement would cost the company $25,000 each year.

Which THREE of the following are relevant for the decision? (Choose three.)

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?

A company uses an integrated accounting system. The following data relate to the latest period.

At the end of the period, the entry in the production overhead control account in respect of under or over absorbed overheads will be:

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

A manufacturing company uses an absorption based costing system. At the start of the period they planned to make 30,000 units at a selling price of £900 per unit

Fixed overheads were expected to be £900,000. The variable cost per unit is £300.

At the end of the period actual overheads were £858,000, and 33,000 units were produced, of which 32,000 were sold.

Which of the following statements are TRUE? Select ALL that apply.

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

Refer to the exhibit.

A company requires 2,000 units each of components X, Y and Z during the next period. All three components are made on the same machine which has a capacity of 26,000 hours for next period. No inventories are held.

Data for the three components are as follows:

In order to minimize cost, how many units of component X should be purchased from the external supplier?

A company operates a flexible budget system. A budget for direct material cost is set at £12500 for 2500 kgs of material.

It is budgeted that all materials will be obtained at a 5% discount when total production is in excess of 2700 kgs.

What variance is reported if actual material usage is 3000 kgs and the actual cost is £13500?

Xter Ltd produces product 'PZ'. The forecast sales for the forthcoming year are 50,000 units.

It is anticipated that there will be 10,000 units of opening inventory at the beginning of the year. However, management wishes to reduce this inventory by 30% by the end of next year.

The production budget for the forthcoming year will be

Refer to the exhibit.

A company issued its production budget based on an anticipated output of 800 units. Actual output was 1,000 units. The details of the costs are shown below:

The total budget variance was:

Refer to the exhibit.

A company has the following budget information for next year:

The raw materials usage budget for the years is:

An increase in variable costs per unit, where selling price and fixed costs remain constant, will result in which of the following:

Refer to the exhibit.

A company issued its production budget based on an anticipated output of 2000 units. The actual output for the period was 1500 units. The details of the costs are shown below:

What was the budget expenditure variance?

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)?

The following costs are incurred by a company which owns a five star hotel. Which THREE of the items would normally be classified as variable costs?

A company operates an absorption costing system. Overheads are absorbed using a pre-determined absorption rate using labour hours.

Actual labour hours were 10% below budget for the period and overheads incurred were 10% above budget for the period. This would result in:

The wages of a machine operator who is paid a guaranteed minimum wage plus a bonus for each unit produced would be described as A.

A company currently allows a discount of 10% to customers who pay at the time of purchase. If 20% of customers pay immediately, the extra sales needed in July to increase the cash receipts in that month by £9,000 are:

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

Which ONE of the following would be the LEAST effective performance indicator for a distribution manager who is responsible for controlling the cost of the transport fleet?

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 applies a 25% mark-up on total cost for all products.

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

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:

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?

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

The standard labour cost for 1 component is $15.00 (5 hours at $3 per hour). Last month, 6,000 hours were worked at a cost of $17,000 to produce 1,100 components. The labour efficiency variance was:

Refer to the exhibit.

A company is considering purchasing a machine that will have a useful life of three years after which time it will be sold. Relevant cash flows relating to the purchase and operation of the machine are as follows.

The annual cost of capital is 14%.

The net present value of the investment in the machine is, to the nearest whole $:

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

Refer to the exhibit.

Each unit of product ‘Smitten’ uses 5 kgs of material 'Z'.

The budgeted details for March are as follows:

It is anticipated that sales of product ‘Smitten’ in March will be 20000 units.

The amount of material 'Z' that needs to be purchased in March is:

In investment appraisal, the internal rate of return is