Acca f2 revision kit bpp free download pdf

What is the level of fixed costs? The following shows the total overhead costs for given levels of a company's total output.

Number of ice-creams sold April May June July Mint choc chip Chocolate Strawberry Blueberry 75 90 90 5. What type of chart is it? April 1, May No. A Sales of mint choc chip rose steadily over the four months B Total sales fell in the month of July C In June, the gap between sales of strawberry and sales of chocolate reduced D Sales of blueberry rose in May and July 2 marks 5. The four critical control levels are as follows. Job time is recorded on the following documents: …………..

Continuous inventory taking involves counting and checking a number of inventory items on a regular basis so that each item is checked at least once a year. Job time is recorded on the following documents. If the free inventory is 13, units, what is the physical inventory? A 1, B 3, C 24, D 29, 2 marks The following information relates to questions 6. A domestic appliance retailer with multiple outlets sells a popular toaster known as the Autocrisp , for which the following information is available: Average sales 75 per day Maximum sales 95 per day Minimum sales 50 per day Lead time days Reorder quantity 1, 6.

A units B 1, units C 1, units D 1, units 2 marks 6. A 1, units B 2, units C 2, units D 2, units 2 marks 6. What is the economic order quantity, to the nearest unit? Optimal A reorder quantity B recorder level C order quantity D inventory level for production 2 marks 6. What is the Economic Order Quantity to the nearest unit?

A B C D 1, 2 marks 6. What would be the effects on the EOQ and the total annual holding cost of a decrease in the cost of ordering a batch of raw material?

Each order placed with the supplier of the components is for 2, components, which is the economic order quantity. The company holds a buffer inventory of components.

What is the total annual cost of holding inventory of the component? Fall Co estimates annual demand to be 5, units. What is the economic order quantity?

A units B 90, units C 1, units D units 2 marks 6. What is the level of safety inventory in whole units? A units B 62 units C 44 units D units 2 marks 6. A 3, units B 6, units C 7, units D 8, units 2 marks 6. Other information is available as follows. A 1, units B 7, units C 31, units D , units 2 marks 6. G Co makes the following purchases and sales. The following receipts and sales were recorded during January.

Using a weighted average method of valuation, calculate the value of closing inventory at the end of January. Budgeted and actual production data for the year that has just ended are as follows. Product Budgeted production Actual production Units Standard machine hours Units W 15, 3, 12, X 20, 8, 25, Y 14, 7, 16, Z 6, 9, 5, Total machine hours worked in the period amounted to 29, hours. A A piece rate scheme with a minimum guaranteed wage B A straight piece rate scheme C A straight time rate scheme D A differential piece rate scheme 2 marks 7.

What is his gross pay for the day? Rejected units do not qualify for payment. During a particular day the employee produced units of which 17 were rejected as faulty. What did the employee earn for their day's work? During the last week of October, Employee A worked for 42 hours. The overtime hours worked were for the following reasons: Machine breakdown: 4 hours To complete a special job at the request of a customer: 2 hours How much of Employee A's earnings for the last week of October would have been treated as direct wages?

What are the accounting entries for these wages costs? During the year, a total of 15 direct production employees had left the company to work for a local competitor. What is the labour turnover rate for last year? The team is rewarded by a group bonus scheme whereby the team leader receives 40 per cent of any bonus earned by the team, and the remaining bonus is shared evenly between Jane and the other team member.

Details of output for one day are given below. What is the labour turnover rate per year? Service cost centres may be apportioned to production cost centres by the ……………………… method or by the Under or over absorption of overheads occurs because the predetermined overhead absorption rates are based on forecasts estimates.

In absorption costing fixed production costs are ……. Inventory values using absorption costing are therefore …………… than those calculated using marginal costing. If closing inventory is greater than opening inventory, absorption costing will report a ………….

If opening inventory is greater than closing inventory ie inventory levels ……………. Service cost centres may be apportioned to production cost centres by the direct method or by the step down method of reapportionment.

Over-absorbed overhead occurs when actual overhead is less than absorbed overhead, and therefore too much overhead has been charged to production. Under-absorbed overhead occurs when actual overhead is greater than absorbed overhead, and therefore too little overhead has been charged to production. Under or overabsorption of overheads occurs because the predetermined overhead absorption rates are based on forecasts estimates. Contribution is the difference between the sales value and the marginal cost of one unit of product or service.

In absorption costing fixed production costs are absorbed into the cost of units and are carried forward in inventory to be charged against the sales revenue for the next period. Inventory values using absorption costing are therefore greater than those calculated using marginal costing. If closing inventory is greater than opening inventory, absorption costing will report a higher profit than marginal costing.

If opening inventory is greater than closing inventory ie inventory levels decrease , then absorption costing will report a lower profit than marginal costing. Budgeted information relating to two departments in a company for the next period is as follows. A company has the following actual and budgeted data for year 4.

A The number of machines in each cost centre B The floor area occupied by the machinery in each cost centre C The value of the machinery in each cost centre D The operating hours of the machinery in each cost centre 2 marks 8. A Only production related costs should be considered B Allocation is the situation where part of an overhead is assigned to a cost centre C Costs may only be reapportioned from production centres to service centres D Any overheads assigned to a single department should be ignored 2 marks 8.

Actual production was 4, units. What was the actual fixed production overheads incurred for the period? Fixed overhead costs are to be absorbed on a direct labour hour basis. What is the budgeted fixed overhead cost per unit for product Y? By how much was the total overhead under or over absorbed for the period? A 44 per machine hour B 45 per machine hour C 48 per machine hour D 49 per machine hour 2 marks 8.

There were , budgeted machine hours for the forthcoming period. Overhead costs apportioned to each department are as follows. After the apportionment of the service centres to the production departments, what will the total overhead cost be for the mixing department? A company uses standard absorption costing to value inventory. In a recent period where there was no opening inventory of finished goods, 20, units were produced using , labour hours.

What profit would have been earned under a standard marginal costing system? Each unit of T requires 3 machine hours. Inventories of product T last period were: Units Opening inventory 2, Closing inventory 2, Compared with the marginal costing profit for the period, the absorption costing profit for product T will be which of the following? Cost and selling price details for product Z are as follows. A 32, B 52, C 65, D , 2 marks 9. What is the fixed overhead absorption rate per unit? Opening inventory was units and closing inventory is units.

What was the profit under absorption costing? How much profit is made under marginal costing if the company sells , units? Opening inventory was units and closing inventory was units. What is the profit under absorption costing?

The company currently uses absorption costing. If the company used marginal costing principles instead of absorption costing for this month, what would be the effect on the budgeted profit? What was the actual expenditure on fixed overheads last month?

What would the profit for last month have been using marginal costing? Sales last month were 10, units. What was last month's production in units? A 7, B 9, C 10, D 12, 2 marks 9. The budgeted output for the period is 2, units.

Opening inventory at the start of the period consisted of units and closing inventory at the end of the period consisted of units. If absorption costing principles were applied, the profit for the period compared to the marginal costing profit would be which of the following? Actual sales price, variable production cost per unit and total fixed production costs were all as budgeted. There was no opening inventory for the period.

What would be the reduction in profit for the period if the company has used marginal costing rather than absorption costing? If it has a scrap value then it is valued at this amount. It is given a cost. Revenue from normal scrap is treated as a reduction in costs. Costs for each job are collected on a …………………… Overhead is absorbed into the cost of jobs using the …………………………………………….. The cost per unit manufactured in a batch is calculated by dividing the ………………………………..

Characteristics of services The cost per unit is calculated by dividing the …………………. Costs for each job are collected on a job cost sheet or job card. Overhead is absorbed into the cost of jobs using the predetermined overhead absorption rate. The cost per unit manufactured in a batch is calculated by dividing the total batch cost by the number of units in the batch. The cost per unit is calculated by dividing the total costs for the period by the number of service units in the period.

What was the prime cost of the job? The estimated costs for job are as follows. What is the total cost of job ? A firm makes special assemblies to customers' orders and uses job costing. Job number BB15 was completed on the last day of the period. She anticipates working a hour week and taking four weeks' holiday per year. Assignment number took 54 hours of a senior consultant's time and hours of junior consultants' time. What is the final fee to be charged for Assignment ? What is the total cost of job number ?

What is the cost per kg-km? A truck delivered sand to two customers in a week. The following details are available. Each customer delivery was carried out separately, and the truck made no other deliveries in the week. In a period, 2, kgs of material were input and there was an abnormal loss of 75 kgs. What quantity of good production was achieved? A 2, kgs B 2, kgs C 2, kgs D 2, kgs 2 marks The following information relates to questions A company manufactures Chemical X, in a single process.

At the start of the month there was no work-in- progress. At the end of the month litres of Chemical X were transferred to finished goods inventory. There were no losses in the process and there is no scrap value available during months when losses occur.

Material Conversion costs A 25 litres 25 litres B 25 litres 50 litres C 50 litres 25 litres D 50 litres 50 litres 2 marks There were no inventories at the beginning or end of the process. In which of the following circumstances is there an abnormal gain? How many litres of material were input into the process during the month?

A litres B litres C litres D litres 2 marks The following information relates to questions A company produces a certain food item in a manufacturing process. On 1 November, there was no opening inventory of work in process. There was no loss in process. A company makes a product in two processes.

The following data is available for the latest period, for process 1. Opening work in progress of units was valued as follows. A B C D 2 marks What were the equivalent units for conversion costs? A 9, units B 9, units C 9, units D 9, units 2 marks What was the valuation of one unit of output to one decimal place? There were no opening or closing inventories and output for the period was 2, units. What was the output valuation? What was the value of the input during the period?

A company manufactures two joint products, P and R, in a common process. Data for June are as follows. Data for November are as follows. Joint costs are apportioned on a sales value basis. Data for May are as follows. G can be sold immediately after split-off. H requires further processing before it is in a saleable condition. There are no opening inventories and no work in progress. Both products can be sold immediately after split-off.

There are no opening inventories or work in progress. A Activity based costing is an alternative to traditional volume-based costing methods B Activity based costs provide an approximation of long-run variable unit costs C Activity based costing cannot be used to cost services D Activity based costing is a form of absorption costing 2 marks What stage is it in? A Desired selling price — actual profit margin B Market price — desired profit margin C Desired selling price — desired profit margin D Market price — standard profit margin 2 marks The development will take one year and the product is expected to have a life cycle of two years before it is replaced.

Which of the following statements are true of life cycle costing? Statement 1 It is useful for assessing whether new products have been successful. Statement 2 The individual profitability for products is less accurate. A Both statements are true B Both statements are false C Statement 1 is true and statement 2 is false D Statement 2 is true and statement 1 is false 2 marks As part of the scheme, the chain offers a free replacement drink to any customer not completely satisfied with their purchase.

Which of the following BEST describes the cost of providing replacement drinks? The square of the correlation coefficient is called the It measures the As with all forecasting techniques, the results from regression analysis will not be wholly reliable. There are a number of factors which affect the reliability of forecasts made using regression analysis. For example, it assumes that a The time series analysis forecasting technique is usually used to Spreadsheet packages have the facility to perform It measures the proportion of the total variation in the value of one variable that can be explained by variations in the value of the other variable.

For example, it assumes that a linear relationship exists between the two variables. The time series analysis forecasting technique is usually used to forecast sales. Spreadsheet packages have the facility to perform what-if calculations at great speed. It is not wholly reliable. Without carrying out any calculations, which of the following correlation coefficients best describes the relationship between x and y?

Using the equation, what is the predicted reject rate for an operative with 12 months' experience? Which of the following increase the reliability of the forecast? Which of the statements shown follow from this? The correlation coefficient is 0. Which of the following are true? Which of the following is true? A X must be the variable which will be forecast B It does not matter which variable is which C Y must be the dependent variable D Y must be the variable shown on the vertical axis of a scatter diagram 2 marks What is the value of a?

Monthly deviations from trend have been calculated and month 19 is expected to be 1. What is the forecast number of items to be sold in month 19? If the 16th period has a seasonal factor of — The underlying trend at this point was 4, people and the seasonal factor is 0. Using the multiplicative model for seasonal adjustment, what is the seasonally-adjusted figure in whole numbers for the quarter? A 3, B 3, C 5, D 5, 2 marks Monthly deviations from the trend have been calculated and follow an additive model.

In month 24, the seasonal variation is estimated to be plus 8. What is the forecast number of items to be sold in month 24? What are the values of X, Y in the original time series? If the seasonal component in the fourth quarter is —30, what is the forecast for the actual value for the fourth quarter of 20X6, to the nearest whole number? What are the forecast sales to the nearest dollar for the first month of 20X9 if the seasonal component for that month is 0.

A When a model easily understood by non-accountants is required B When the trend is increasing or decreasing C When the trend is steady D When accurate forecasts are required 2 marks What are the forecast profits for the year 20X9 using an additive model if the cyclical component for that year is —30?

A 90, B , C , D , 2 marks A Both statements are true B Both statements are false C i is true and ii is false D ii is true and i is false 2 marks Laspeyre index for price in 20X5 with base year of 20X0 The price indices are as follows.

The same index now stands at What is the best estimate of the current cost of material X per kg? What is the best estimate of the current cost of material M per kg? The following data relates to a company's overhead cost. A The level of sales will determine the level of cash at the end of the period B The level of sales will determine the level of profit at the end of the period C The company's activities are limited by the level of sales it can achieve D Sales is the largest item in the budget 2 marks A Spreadsheets make the calculation and manipulation of data easier and quicker B Spreadsheets are very useful for word-processing C Budgeting can be done very easily using spreadsheets D Spreadsheets are useful for plotting graphs 2 marks The following data applies to questions In a computer spreadsheet the cells F1 to F12 contain the budgeted monthly sales units for the twelve months of next year in sequence, with January sales in cell F1 and finishing with December sales in F Which of the following formulae will generate the budgeted production in units for March next year?

A The budgeted statement of profit or loss B The budgeted cash flow, budgeted statement of profit or loss and budgeted statement of financial position C The budgeted cash flow D The entire set of budgets prepared 2 marks Which of the following statements can be this situation? Opening inventory of R is expected to be 2, units and PQ Co plans to increase inventory by 25 per cent by the end of the year. How many units of product R should be produced next year? A 23, units B 24, units C 24, units D 30, units 2 marks Next month's production budget for product Alpha is as follows.

Opening inventories: Raw materials 15, kg Finished units of Alpha 2, units Budgeted sales of Alpha 60, units Planned closing inventories: Raw materials 7, kg Finished units of Alpha 3, units How many kilograms of raw materials should be purchased next month?

A , B , C , D , 2 marks Opening inventories of X for December are budgeted to be 15, units and closing inventories will be 11, units. All inventories of finished goods must have successfully passed the quality control check. What is the production budget for X for December? A 12, units B 14, units C 15, units D 16, units 2 marks Budgeted production output of product M during August is units.

Each unit of product M requires 6 labour hours for completion and PR Co anticipates 20 per cent idle time. What is the direct labour cost budget for August? Next month's budgets are as follows. Opening inventories of finished goods 3, units Planned closing inventories of finished goods 7, units Budgeted sales of Echo 36, units All inventories of finished goods must have successfully passed the quality control check. What is the direct labour hours budget for the month? Each unit requires five labour hours to make.

What is the budgeted total labour cost for the next period? Which of the following items would NOT be included in the cash budget? A Capital cost of a new collection vehicle B Depreciation of the refuse incinerator C Operatives' wages D Fuel for the collection vehicles 2 marks Credit sales values for June to September are budgeted as follows. An extract from its sales budget for the same year shows the following sales values. Each unit of product Zeta requires 3 kg of raw material and 4 direct labour hours.

The production budget for Zeta for April to June is as follows. April May June Production units 7, 8, 8, April May June 3, kg 4, kg 4, kg The closing inventory budgeted for June is 3, kg. Material purchases are paid for in the month following purchase.

What is the figure to be included in the cash budget for June in respect of payments for purchases? What is the figure to be included in the cash budget for May in respect of wages? Of the credit customers, 30 per cent pay in the month following the sale and are entitled to a one per cent discount.

The remaining customers pay two months after the sale is made. What is the value of sales receipts shown in the company's cash budget for December? Variable production overhead is paid 70 per cent in the month incurred and 30 per cent in the following month. What is the amount budgeted to be paid to suppliers in September? Which of the following variances for the latest quarter are worth investigating? A To ensure managers are motivated B To facilitate control by establishing a budget relevant to actual activity levels C To facilitate control by preventing discretionary expenditure D To enable accurate reforecasting when actual costs are known 2 marks There are, however, limitations to the effectiveness of such participation.

Which of the following illustrates one of these limitations? A Participation allows staff to buy into the budget B Staff suggestions may be ignored leading to de-motivation C Staff suggestions may be based on local knowledge D Budgetary slack can be built in by senior manager as well as staff 2 marks The present value of an investment is the amount of money which must be invested now for a number of years in order to earn a future sum at a given rate of interest.

If this constant sum lasts forever, then it is known as a If an investment has a NPV then it is acceptable. An investment with a NPV should be rejected. The project is viable if the IRR exceeds the minimum acceptable return. If this constant sum lasts forever, then it is known as a perpetuity.

If an investment has a positive NPV then it is acceptable. An investment with a negative NPV should be rejected.

You must remember what the symbols in the formula mean so that you can use the correct figures in your calculations. You are contemplating starting your own business. In considering whether or not to start your own business, what would your current salary level be? Which of the following are characteristics associated with relevant costs? What is the total relevant cost of the machine to the contract? How much interest will have been earned by 30 June?

What is the interest? What is the effective annual rate of interest? What is the annual rate of increase correct to one decimal place? What is the rate of interest to the nearest whole percent? What is the internal rate of return of this investment? Diamond Ltd has a payback period limit of three years and is considering investing in one of the following projects. Cash inflows accrue evenly throughout the year.

A 2 years and 2 months B 2 years and 4 months C 2 years and 5 months D 2 years and 6 months 2 marks How is the payback period calculated? What is the investment at the start of the project? What is the discounted payback period of the investment project?

A Less than 3. An investor has the choice between two investments. What is the annual effective interest rate offered by the two investments? Investment Exe Investment Wye A 4. The payback period is exactly four years. Make sure that you practise the multi-task questions on Budgeting in Section The real exam will contain three mark multi-task questions on Budgeting, Standard costing and Performance measurement.

One may be One way of deciding whether or not to investigate a variance is to investigate only those variances which exceed pre- set tolerance limits. If the variance is uncontrollable, but not simply due to chance, it will be necessary to review One may be adverse and one favourable.

One way of deciding whether or not to investigate a variance is to investigate only those variances which exceed pre-set tolerance limits. If the variance is uncontrollable, but not simply due to chance, it will be necessary to review forecasts of expected results, and perhaps to revise the budget.

Product J uses two types of material, P and S. What is the standard prime cost for one unit of product J? A A standard which includes no allowance for losses, waste and inefficiencies.

It represents the level of performance which is attainable under perfect operating conditions B A standard which includes some allowance for losses, waste and inefficiencies. It represents the level of performance which is attainable under efficient operating conditions C A standard which is based on currently attainable operating conditions D A standard which is kept unchanged, to show the trend in costs 2 marks A The operating standards set for production should be the most ideal possible B The operating standards set for production should be the minimal level C The operating standards set for production should be the attainable level D The operating standards set for production should be the maximum level 2 marks What is the standard usage of liquid per bottle?

The performance standard for product L allows for ten per cent of total labour time to be idle, due to machine downtime. What is the standard labour cost per unit of product L? SM Co values all inventory at standard cost. What are the material price and usage variances for July? A company expected to produce units of its product, the Bone, in 20X3.

In fact units were produced. During the period covered by the budget, the actual results were as follows. A An adverse direct material cost variance will always be a combination of an adverse material price variance and an adverse material usage variance B An adverse direct material cost variance will always be a combination of an adverse material price variance and a favourable material usage variance C An adverse direct material cost variance can be a combination of a favourable material price variance and a favourable material usage variance D An adverse direct material cost variance can be a combination of a favourable material price variance and an adverse material usage variance 2 marks The following information relates to Questions Each unit is budgeted to use 2 kg of material.

What were the labour rate and efficiency variances? Last month the actual hours worked were 24, and the standard hours for actual production were 27, What was the fixed production overhead capacity variance for last month?

This will result in an adverse fixed overhead volume capacity variance A i is true and ii is false B Both are true C Both are false D i is false and ii is true 2 marks The actual number of units produced in June was 2, units.

What variance for fixed production overhead would be shown in a marginal costing operating statement for November? A The sales director decided to change from the planned policy of market skimming pricing to one of market penetration pricing B Fewer customers than expected took advantage of the early payment discounts offered C Competitors charged lower prices than expected, therefore selling prices had to be reduced in order to compete effectively D Demand for the product was higher than expected and prices could be raised without adverse effects on sales volumes 2 marks The following information relates to questions A company manufactures a single product.

An extract from a variance control report together with relevant standard cost data is shown below. A units B units C units D units 2 marks The following details have been extracted from its budget for April.

What was the actual number of units produced? A 3, B 4, C 4, D 5, 2 marks What was the standard price per kg? Profit reconciliation statements are drawn up using marginal costing principles. What sales variances would be included in such a statement for period 7? The standard direct material cost per unit for a product is calculated as follows: No stocks of material are held.

A 1, B 1, C 1, D 1, 2 marks What was the sales price variance for last month? What was the total adverse fixed production overhead variance for last month? What was the total over or under absorption of overheads in the cost centre for the period? Standard cost and selling price details for product E are as follows. AD Ltd is considering using standard marginal costing as the basis for variance reporting in future.

What would be the correct sales volume variance to be shown in a marginal costing operating statement for last period? Opening inventories for the year were units and closing inventories were units. The company's management accountant is considering a switch to marginal costing as the inventory valuation basis. If marginal costing were used, the marginal costing profit for the year, compared with the profit calculated by absorption costing, would be which of the following?

The following variances occurred during the month. A company calculates the following under a standard absorption costing system. A company uses a standard absorption costing system. Make sure that you practise the multi-task questions on Standard costing in Section It can play an important point in the ………….. Cascading downwards from this is a hierarchy of goals and ……………. These may be split into operational, tactical and strategic. Cascading downwards from this are the critical success factors.

A critical success factor is a performance requirement that is fundamental to competitive success. Measures should be planned programmes rather than crash programmes to cut spending levels. There are two main parts to work study: ………… …………. It can play an important point in the planning process. Cascading downwards from this is a hierarchy of goals and objectives.

Key performance indicators are quantifiable measurements which reflect the critical success factors. There are two main parts to work study: method study and work measurement. Which is the exception? A They should be observable or measurable B They should be easily achievable C They should relate to a specified time period D They should be specific 2 marks It considers the most important performance measure to be 'cost per successfully treated patient'.

Which of the three E's best describes the above measure? What are critical success factors? A Factors contributing to reduced costs B Factors necessary to match strengths to opportunities C Factors necessary to build on strengths D Factors fundamental to strategic success 2 marks A It is when non-financial performance indicators are used for measurement B It is when organisations sacrifice short term objectives C It is when there is a bias towards short term rather than long term performance D It is when managers' performance is measured on long term results 2 marks Which of the following statements are true?

What would be the effect on the value of the current and acid test ratios if the company bought more raw material inventory on three months' credit? If the new project were adopted, what would happen to the investment centre's return on investment and residual income?

A Mission statements are a marketing tool and have no part to play in performance measurement B To be of value, a performance measure must have an obvious link to the mission statement C Performance measurement involves comparing actual performance against a target and the mission statement represents the organisation's overall target D Mission statements include detailed performance standards that actual performance can be measured against 2 marks Half way through the company's current financial year, the global economy unexpectedly goes in to recession.

What impact would the unexpected recession have on performance measurement relating to sales and revenue? A The impact of a recession on the sales of new, high quality motor vehicles cannot be predicted B Sales and revenue are likely to decrease in the second half of the year and performance should be measured in that context C No impact as a recession is unlikely to impact the sales and revenue of motor vehicles D Sales and revenue are likely to increase in the second half of the year and performance should be measured in that context 2 marks A Accurate records of financial performance are required for taxation purposes B By requiring all private sector organisations to implement the Balanced Scorecard C By encouraging measurement of environmental impact including CO2 emissions D Requiring 'value for money' performance measures to be implemented in public sector organisations 2 marks A The Balanced Scorecard approach enables organisations that are struggling financially to emphasise other areas B The Balanced Scorecard approach enables organisations to consider all areas of performance relevant to achieving their strategic goals C The Balanced Scorecard approach enables organisations to more easily benchmark their performance against others D The Balanced Scorecard approach enables organisations to demonstrate their ethical credentials 2 marks A To appear socially responsible B To prevent a narrow focus on short-term financial performance C To prevent scrutiny of financial performance D To encourage short termism 2 marks What are they?

Which of the following is NOT a reason to support this criticism? A Profit provides a narrow focus for performance measurement B Profit measurement alone can lead to short-termism C Profit is simple to understand D Profit can be easily manipulated 2 marks It covers three key areas: economy, efficiency and effectiveness. Which of the following could be used to describe effectiveness in this context?

Which one of the following is not really suitable for this perspective? A Number of ideas from staff B Percentage of sales from new products C Number of new products introduced D Level of refunds given 2 marks In particular, they are keen to improve customer retention and so want to focus on the quality of service they provide to their customers.

Which of the following measures would be most appropriate as a measure of service quality? What type of benchmarking is the company using? A Cost value, exchange value, use value and esteem value B Cost value, trade value, use value and esteem value C Cost value, exchange value, use value and retail value D Competitive value, exchange value, use value and esteem value 2 marks A Ensuring all monetary values are presented in full, to the nearest whole Euro B Summarising the key points in an executive summary at the start of the report C Ensuring language used is clear and concise D Ensuring points requiring action are clearly indicated 2 marks What type of benchmarking is Company A using?

Make sure that you practise the multi-task questions on Performance measurement in Section Was there an abnormal loss or abnormal gain arising in each process during the period?

A Budgeted production volumes were achieved during the period B Direct labour is a variable cost C The actual selling price per unit exceeded the standard selling price per unit D Direct material cost savings were achieved against the budget cost allowance 2 marks They assume stable conditions iii Standard costing systems assume that performance to standard is acceptable.

A Cost of acquiring or enhancing non-current assets B Expenditure on the manufacture of goods or the provision of services C Recorded as an asset in the statement of profit or loss D Recorded as a liability in the statement of financial position 2 marks Direct labour hours are used to absorb overheads in A and B and machine hours are used in C and D. Finished inventory increased by 4, units in the period. Which of the following correctly describes the use of marginal costing in comparison with absorption costing in the above situation?

A A product produced at the same time as other products which has no value B A product produced at the same time as other products which requires further processing to put it in a saleable state C A product produced at the same time as other products which has a relatively low volume compared with the other products D A product produced at the same time as other products which has a relatively low value compared with the other products 2 marks Three quarters of the costs were variable and one quarter fixed.

There were no opening inventories. By how much will the profit calculated using absorption costing principles differ from the profit if marginal costing principles had been used? What are the total annual costs of inventory ie the total purchase cost plus total order cost plus total holding costs? What is the relevant labour cost of the contract? The estimated cost for the job is as follows. There are 10, budgeted labour hours each year.

What is the total production cost of the job? The company is adopting a balanced scorecard approach to setting performance targets. As part of its objective of closing the skills gap between itself and rival companies, the division's management has set a target of providing at least 40 hours of training each year for all its employees.

What does this performance target reflect? Which one of the following costs is classed as a quality-related appraisal cost? What profit would it have earned under an absorption costing system? A i only B ii only C ii and iii only D ii and iv only 2 marks Which statement is false? A They are an efficient method of storing text based files B They facilitate 'what if' analysis C They allow data to be displayed graphically D They allow the font, size and colour of text to be changed 2 marks What was the favourable sales volume profit variance for November?

Which of the following variances will occur as a result of the loss in production labour hours? A Adverse fixed overhead capacity variance B Adverse fixed overhead efficiency variance C Adverse direct labour efficiency variance D Adverse direct labour rate variance 2 marks What will the effect be on its current ratio and quick acid test ratio?

It randomly selects a number of locations from around the UK and then interviews everyone who lives in these locations. What is this approach to sampling known as? What does the slope of the regression line represent? What will be the effect on residual income and return on capital employed if the division accepts the project? To reduce travelling costs, the country was divided into constituencies. A sample of 50 constituencies was selected at random.

With each of these constituencies, 5 polling districts were selected, again using random techniques. Interviewers will visit a random selection of 30 people on the electoral register of each district selected. What sampling method is the company using? A fixed rental amount is payable up to a certain number of copies each period.

If the number of copies exceeds this amount, a constant charge per copy is made for all subsequent copies during that period. Which one of the following graphs depicts the total photocopier rental costs described? A B C D E 1 Sales figures for Product A 2 January February March Total 3 South , , , , 4 North 78, 45, , , 5 East 45, 57, 87, , 6 West 23, 19, 15, 57, 7 Total , , , 1,, Which formula would be used to calculate total sales in the West? A i only B ii only C ii and iii only D iii and iv only 2 marks A It may lead to excessive investment in short-term projects B Its use will hinder liquidity C It is a fairly complex technique and not easily understood D It tends to maximise financial and business risk 2 marks What is the prime cost of a Whoopie?

A A unit of output in relation to which costs may be ascertained B The quantity of work achievable in one hour at standard levels of performance C Notional whole units which represent incomplete work D A unit of output which is identical to others previously manufactured in the same process 2 marks In a time series analysis, the multiplicative model is used to forecast sales and the following seasonal variations apply: Quarter 1 2 3 4 Seasonal variation 1.

A The trend line for sales decreased between quarter 1 and quarter 2. B The trend line for sales increased between quarter 1 and quarter 2. C The trend line for sales remained constant between quarter 1 and quarter 2. D The trend line for sales cannot be determined from the information given. What does the intercept of the regression line represent? Which one of the following is most likely to lead to short-termism?

A Linking managers' rewards to share price B Setting quality based as well as financial targets for managers C Setting cost cutting targets D Making short-term targets realistic 2 marks A Identifying the factors which cause the costs of an organisation's major activities B Applying a zero defect philosophy to the management of all resources and relationships within an organisation C Tracking and accumulating costs and revenues attributable to each product over its life D Estimating product costs by subtracting a desired profit margin from a selling price 2 marks The following information is available for June.

There was no opening or closing inventory during June. What is the value credited to the process account for the normal loss and the abnormal loss for the period? The following information is available for May.

There was no opening inventory for either product. What was the standard price per kg of the raw materials? What was the price per kg in the base year? Which one of the following is correct with regard to the above two statements? A Both statements are false B Both statements are true C Statement i is true but statement ii is false D Statement i is false but statement ii is true 2 marks What is the value of the gradient?

The details for last year were as follows: Production and Sales Budget Actual Production units 26, 26, Sales units 28, 25, There was no inventory at the start of the year.

The variable cost per unit is constant. In each six month period the usage of the item is 50, units. The fixed element of the costs steps up when 20, or more units are produced. What is the company's return on investment? Last month 10, litres were input to the process and good production was 9, litres. There was no work-in-progress. What was the credit entry in the process account for abnormal loss last month?

A 11, B 13, C 13, D 14, 2 marks What was the price per unit in the base year? What is the total sales value for Dee Co? What is the value of the intercept? A B 1, C 1, D 1, 2 marks Actual production was 5, units. The opening inventory at the start of next year is expected to be as follows. Production and sales are budgeted to occur evenly throughout the year. Closing inventory at the end of the year is budgeted as follows. Closing inventory of raw material X One month's worth of production Closing inventory of component M Two months' worth of sales a How many units of component M are to be produced in the year?

What are the receipts from January and February sales that are received in March? All sales are on credit. More favourable credit terms are offered to larger customers class A than to smaller customers class B.

All sales are invoiced at the end of the month in which the sale occurs. Class A customers will be given credit terms requiring payment within 60 days of invoicing, while class B customers will be required to pay within 30 days of invoicing. Bad debts will therefore be written off 60 days after the end of the credit period. Required a Prepare a statement showing the budgeted cash to be received by HM Co from customers in each of the three months of November 20X2, December 20X2 and January 20X3, based upon the prudently estimated receipts from customers.

State two advantages and two disadvantages of the high-low method. The materials used and their prices, in 20X6 and 20X7, are as follows. Which of the following would be a correct entry for this cell? As a first step it wishes to analyse the behaviour of its costs. The following data is available for the previous four periods.

Sales of hairdryers are estimated to be 50, units per annum. This includes a refurbishment of the gym space. It is anticipated he would stay for one month. He would not be replaced at the other fitness centre during this month. Required a State whether each of the following items are relevant or irrelevant cashflows for a net present value NPV evaluation of whether to refurbish the gym.

It anticipates that they will sell of their best selling beds in June 20X6. What number of beds should be manufactured in June to ensure that inventory levels are as required at the beginning of July? The standards cost and selling price details for the DG are as follows. CT Co is considering using standard marginal costing as the basis for variance reporting in the future. What was the adverse material price variance?

What were the favourable sales price and adverse sales volume contribution variance? Required a Calculate the direct labour efficiency variance for product X for the most recent period. Required: a Using the high-low technique, calculate the following: i The budgeted variable overhead per tonne. It uses a standard costing system to control costs. The cutting department cuts the shapes which are sold as toy animals. Working and Practicing through the questions in the Kit will provide an excellent preparation for the exam.

It is also very important to tackle questions under exam conditions. Allow yourself only the number of minutes shown next to the questions in the index and candidates are suggested not to look at the answers until they have finished.

For questions candidate answer incorrectly, think about the answer and the correct answer. If candidate requires a further clarification, go back to the explanation of the topic provided in your Interactive Text. Question practice is an essential and viral part of your revision, so do not neglect it. About us Contact us Disclaimer Fair Use. If downloading link is expired, Comment below OR Let us know here!

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