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ACCA F2 Management Accounting Mock test Dec 2008 Prepared by: Ben Lee

A and U.50 18. a company has 300 units of its products in stock. The dotted area indicates the feasible region.Question 1 Taree Limited uses linear programming to establish the optimal production plan for the production of its two products. Which points are the most likely to give the optimal solution? a) A and B only b) B. B and C only ( ) 2 marks Question 2 On the first day of a particular period. During the period.50 11. The following graph has been established bearing in mind the various constraints of the business. valued at $3.080.00 What is the gross profit for the month using the weighted average method of pricing stock issue? Ans :___$ ___ 2 marks . D and E only c) D and E only d) A. given that it has the objective of minimising costs. the following purchases and sales of this product took place: Day 8 14 16 22 Purchases Units 400 800 Sales Units Cost $/units 10.00 Selling price $/units 500 600 17.

000 + 1 x Quantity Total cost = 61.5 72. planning.250 + 1.75 Units produced '000 3 1.5 1.000 + 3 x Quantity Total cost = 71.5 2 .25 x Quantity ( ) 2 marks Total cost $'000 74 72.25 75 69.75 73.5 x Quantity Total cost = 70.Question 3 Which of the following is NOT correct? a) b) c) d) Management accounting provides appropriate information for decision-making. control and performance evaluation Routine information can be used for both short-term and long run decisions Financial accounting information can be used for internal reporting purposes Cost accounting can be used for stock valuation to meet the requirements of internal reporting only ( ) 2 marks Question 4 Which of the following statements is correct? a) b) c) A stores ledger account will be updated from a goods received note only The term 'lead time' is best used to describe the time between receiving an order and paying for it Authorisation is required to make an issue from stores ( ) 1 marks Question 5 Balcombe has recorded the following costs over the last six months: Month 1 2 3 4 5 6 a) b) c) d) Total cost = 65.75 2 2.250 + 5.

it is planned that this product will generate a total revenue of $300.000 with a total contribution of $125. Fixed costs are $100. the annual stock holding cost of the material is $4 per kg and total purchases in a year are 3. In the coming month.Question 6 A production department absorbs overhead using a machine hour basis. what is the best description of this labour cost? a) b) c) d) A semi-variable (mixed) cost A variable cost A fixed cost A production cost ( ) 2 marks Question 9 The order quantity of a raw material is 450 kg. 480. What is the margin of safety? a) b) c) 20% 30% 40% ( ) 1 marks Question 8 If a salesman is paid a basic salary plus commission for each sale made. A safety stock of 120 kg is planned to be held.570 re-apportioned from the service departments in the factory.630 with a further $51. Overhead allocated to the department in a period are $39.000 per month.000 kg.000units of product are manufactured at 60 units per machine hour. What is the total annual stock-holding cost of the raw material? Ans :__$ _ 2 marks . What is the overhead absorption rate in the production department? Ans :$ _ per machine hour 2 marks Question 7 Hill Limited sells a single product.000.

000. Bumblebee's fixed overhead expenditure was budgeted at $150.000 units and 29.000 units were actually manufactured. based on $8. being partly the difference between budgeted and actual expenditure and partly the production shortfall of 1.000 units ( ) c) d) 2 marks Question 11 What is the main purpose of an overhead absorption rate? a) b) c) To control overheads To charge overheads to products To share out common costs to cost centres that benefit from them ( ) 1 marks Question 12 A company operates a piecework system of remuneration but also guarantees its employees 85% of a time based rate of pay. on a particular day when eight hours were worked. What is the employee’s gross pay for that day ( to one decimal place)? __ Ans :___$ 2 marks . The standard time allowed to produce one unit of output is four minutes.000. being partly the difference between budgeted and actual expenditure and partly the production shortfall of 1. Piecework is paid at the rate of $0.000.000.Question 10 Bumblebee Limited absorbs fixed overhead costs on a unit basis.12 per standard minute.000.000 units at $5 per unit Fixed overheads were under-absorbed by $5. being the difference between budgeted and actual production at $5 per unit Fixed overheads were under-absorbed by $3.00 per hour for an eight hour working day. a) b) Fixed overheads were over-absorbed by $3. For the year just ended. The budgeted production level was 30.000 but was actually $148.000 units Fixed overheads were under-absorbed by $5. If an employee produces 120 units. being the difference between budgeted expenditure and 29.

A job costing system is used to collect production cost on each customer order. Non production overhead are applied to each job at 15% of total production cost.260 Direct labour hour worked 246 98 Direct labour rate $ per hour 8.00 12.00 What is the total production cost of job ABC? Ans :___$ _ 2 marks Question 15 Which department would normally be responsible for completing a standard purchase requisition for goods in a service organisation? a) b) c) d) The buying (purchasing) department The department that requires the goods The goods inwards department The accounting department staff.00 10. ( ) 2 marks . The following information relates to job ABC which has been completed by the company. Department X Y Direct material used ( $ ) 6.00 Production overhead $ per direct labour hour 12.Question 13 Which of the following best describes joint products? a) b) c) Two or more products output from the same process which have significant sales value but which are indistinguishable up to the point of separation Two or more products output from a process which require further processing before being completed and available for sale Two or more products output from a process recognised by a relatively low sales value compared to the main output produced ( ) 1 marks Question 14 A company carry out work to customer order.700 1.

000units in a period.700 were incurred in the manufactures of 68. These costs reduce by $14. 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? EOQ Total annual holding cost a) Higher Lower b) Higher Higher c) Lower Higher d) Lower Lower ( ) 2 marks .Question 16 Which one of the following groups of workers would be classified as indirect labour? a) Machinists in an organisation manufacturing clothes b) Bricklayers in a house building company c) Maintenance workers in a shoe factory d) Assembly workers in a vehicle manufacturing business ( ) 2 marks Question 17 Profit for a period using marginal costing is $25. What are the total fixed production costs per period? Ans :___$ __ 2 marks Question 19 A company determines its order quantity for a raw material by using the Economic Order Quantity (EOQ) model.100.000 units. finished goods stock are: Opening Closing 3020 units 2630 units What is the profit using absorption costing where the fixed production overheads are applied at $8 per unit? Ans :___$ _ 2 marks Question 18 Total production cost of $149.400 when output is reduced to 58.

20%. what percentage of the depreciation would appear (either directly or indirectly) on the 19x7 income statement? a) 27% b) 45% c) 55% d) 82% ( ) 2 marks . with all its activities conducted from a single facility. The total of Quality’s direct labor cost was: a) $60.000. If pumpkin sold 60% of 19x7 production during that year.000.000 ( ) 2 marks Question 23 “Pumpkin enterprises began operations on January 1. $60. and manufacturing activities. 45%.000 d) $89. $18. 35%.000.19x7.000 b) $71.000 c) $78. assembly-line workers. $11. $100. Labor costs incurred during a recent period were: corporate executives. administrative activities. b) The number of direct labor hours worked c) The number of machine hours worked d) The number of units produced ( ) 2 marks Question 22 Quality Appliance produces washers and dryers in an assembly-line process.000.and plant supervisor.Question 20 Which of the following is correct? a) When considering limiting factors the products should always be ranked according to contribution per unit sold b) If there is only one scarce resource linear programming should be used c) In linear programming the point furthest from the origin will always be the point of profit maximization d) The slope of the objective function depends on the contributions of the products ( ) 2 marks Question 21 Which of the following would be likely be a cost driver for the amount of direct materials used? a) The number of units sold. The company’s accountant concluded that the year’s building depreciation should be allocated as follows: selling activities. security guards.

000.000 c) $3.000 c) reduce Cost of Goods sold by $70. 403 and 404. 402. 401 and 402 were completed by year-end. ( ) 1 marks . and no. the firm will: a) reduce Finished-Goods Inventory by $70.000. Nos. I.000 and total manufacturing costs of $25.000 d) $3.000 for $82.000 ( ) 1 marks Question 25 Treetops worked on four jobs during its first year of operation: nos 401. If Treetops applies overhead at 150% of direct labor cost.000. 403 must have been: a) $0 b) $2. A review of job no 403’s cost sheet revealed direct material charges of $20. b) Management have a sales team and are given a credit control function. c) Managers can purchase capital assets and are given a credit control function. II and III I and II only I and III only II and III only ( ) 2 marks Question 27 Which of the following would be considered to be an investment centre? a) Management have a sales team. the overhead applied to job no.333 ( ) 2 marks Question 26 Which of the following statement(s) is/are correct regarding overhead application? I II III a) b) c) d) Actual overhead rates result in more accurate but less timely information Predetermined overhead rates result in less accurate but more timely information Predetermined overhead rates tend to smooth product costs over time. 401 was sold at a profit of 40% of cost.Question 24 If a company sells goods that cost $70. b) reduce Finished-Goods Inventory by $82.

000 units in process at month-end.00 ( ) 2 marks Question 29 Which of the following is the proper sequence of events in an activity-based costing system? a) b) c) d) Identification of cost drivers. Company records disclosed that the firm completed 100. calculation of cost application rates. Assignment of cost to products. ( ) 2 marks Question 30 Which of the following is not used to analyze cost behavior? a) b) c) d) Least-squares regression High-low method Linear programming Visual fit method ( ) 2 marks . calculation of cost application rates. Flagston’s equivalent-unit cost is a) b) c) d) $7. 25% complete.000 units during the month and had 20. calculation of cost application rates. and amounts incurred during the current month totaled $840.Question 28 Flagston company uses a weighted-average process-costing system. assignment of cost to products. assignment of cost to products. Identification of cost pools. assignment of cost to products.88 $8.00 $7. identification of cost pools.000. Calculation of cost application rates.40 $9. identification of cost pools. identification of cost pools. identification of cost drivers. Conversion costs related to the beginning work-in-process inventory amounted to $105. identification of cost drivers. identification of cost drivers.000. If conversion is incurred uniformly throughout manufacturing.

which uses the high-low method.000 units per month.500 units and 10. Per-unit costs at two different activity levels foe each cost type are presented below. B and C) and has a relevant range of operation between 2. has determined that machine hours best explain the company’s utilities cost.510 $9.100 machine hours.000 units 7. Type A $4 $4 Type B $9 $6 Type C $4 $3 Type D $17 $13 5.790 ( ) 2 marks . makes a product called Yin.950 9.360 8.625 9.150 Machine Hours 800 720 810 920 950 900 Using the high-low method.700 $9.Question 31 Yang manufacturing.660 $9. which uses the high-low method to analyze cost behavior. The company’s relevant range of activity varies from a low of 600 machine hours to a high of 1. the utilities cost associated with 980 machine hours would be: a) b) c) d) $9.500 units Each of the cost types shown above is identified by behavior as: Type A Fixed Fixed Variable Variable Type B Variable Semi-variable Semi-variable Fixed Type C Semi-variable Variable Fixed Semi-variable ( ) 2 marks a) b) c) d) Question 32 Atlanta Inc. The company incurs three different cost types (A.700 8.360 9. with the following data being available for the first six months of the year: Month January February March April May June Utilities $8.

(2)a cash budget.000 Unfayourable ( ) 2 marks .000 units of a product that was expected to consume five pounds of direct material per finished unit.000). and (4)a direct-labor budget? a) b) c) d) 1-3-4-2 2-3-1-4 3-1-4-2 3-1-2-4 ( ) 2 marks Question 34 What will be the effect of increasing the re-order level? a) b) There will be a decrease in stock-out costs There will be a decrease in holding costs ( ) 1 marks Question 35 In which cost classification would the amount of overtime premium contained in direct wages normally appear? a) b) c) Direct labour cost Production overhead Prime cost ( ) 1 marks Question 36 Thomas recently completed 24.000 pounds in manufacturing (cost=$605. The standard price of the direct material was $6 per pound.Question 33 Which of the following would depict the logical order for preparing (1)a production budget. (3)a sales budget. the directmaterials quantity variance would be figured as: a) b) c) d) $55. If the firm purchased and consumed 110.000 Favourable $60.000 Favourable $60.000 Favourable $115.

During the year.000 and fixed manufacturing overhead was $40.700U c) $20.700F d) $21. producing 20.000. If total variable production costs were $80. the company met anticipated manufacturing figures.000 7. favorable $3.000 higher than under variable costing.500 Standard direct labor hours 35.250U b) $20.000F ( ) 2 marks Question 38 A direct labor efficiency variance cannot be caused by: a) inexperienced employees b) poor quality raw materials c).500 ( ) 2 marks . how many units were sold? a) b) c) d) 5. producing fewer finished units than originally planned.500 10.000 units.500 Direct-labor efficiency variance. d) an out-of-date labor time standard ( ) 2 marks Question 39 Callison’s income under absorption costing was $15.Question 37 Consider the following information Actual direct labor hours 34.500 Total-actual direct labor cost $241.200 The direct labor rate variance is: a) $17.000 12.

000 favorable $20.000 favorable $50.000 favorable $60.000 units. The company’s static budget was based on 50. Fixed overheads are absorbed on a direct labour hour rate basis at a rate of $9 per direct labour hour.000 ( ) 2 marks Question 41 Nelson’s variable-overhead efficiency variance is: a) b) c) d) $40. the Henge. Actual results for the year follow.500 units were produced. Each unit of this product requires 12 labour hours to complete.000 favorable $20.000 over absorbed ( ) 2 marks . although 34. and manufactures a single product.000 favorable $50. and each unit produced has a standard time allowed of three hours.41 Nelson has a standard variable overhead rate of $4 per machine hour.000 over absorbed $54.500 under absorbed $40. Actual units produced Actual machine hours worked Actual variable overhead incurred Question 40 Nelson’s variable-overhead spending variance: a) b) c) d) $40.000 units. For a particular accounting period.000 $500.000 favorable $60. What was the under or over absorption of fixed overheads in the period? a) b) c) d) $40.000 favorable ( ) 2 marks Question 42 Stone Limited uses an absorption costing system. the normal level of activity was 30.000 120.000 favorable : : : 45.Use the following information to solve questions 40 .500 over absorbed $486.

the annual stock holding cost of the material is $4 per kg and total purchases in a year are 3. What was the conversion cost per unit for the period using FIFO method of valuation? Ans :___$ ___ 2 marks Question 45 The economic order quantity of a raw material is 450 kg. What was the value of the closing work in progress for last period? Ans :___$ ___ 2 marks Question 44 The following information relates to a process for last period. There were no losses.Question 43 The following information relates to a process for last period.000 There was no opening work in progress.000 Conversion cost was 60% completed Units completed 28. What is the total annual ordering cost of the raw material? Ans :___$ __ 2 marks . conversion takes place evenly throughout the process. and the closing work in progress was 50% complete.760 The closing work in progress was 80% complete as regards conversion costs. A safety stock of 120 kg is planned to be held.000 Closing work in progress ( Units ) 8. and there were no losses. Opening work-in-progress: Units 10.000 kg.000 Conversion cost added $465. All material are introduced at the start of the process and conversion takes place evenly throughout the process. Material cost per equivalent unit Conversion cost per equivalent unit Closing work in progress (Units ) $35 $22 5.

000. November.562 1. The following data were taken from the most recent quarterly sales forecast: Expected Sales 1.000 $52. and an extra 10 cents for every unit of production made in the week.000 ( ) 2 marks . and December were $70.000. If sales for October. respectively. and $50. and 10% are collected in the second month after sale.000 $46.Question 46 If an assembly line supervisor is paid a salary of $100 each week. how many bicycles should the company purchase in May? a) b) c) d) 1. what were the firm’s budgeted collections for December? a) b) c) d) $10.478 1.672 ( ) 2 marks Question 48 Iowa makes all sales on account.000.000 $59. this wage cost could be described as: a) b) c) a fixed cost a variable cost a semi variable cost ( ) 1 marks Question 47 Adams Sporting Goods sells bicycles throughout the southeastern United States. subject to the following collection pattern: 20% are collected in the month of sale.575 1. 70% are collected in the first month after sale.575 units 1. $60.650 units End-of-month Target inventory 315 units 412 units 425 units April May June On the basis of the information presented.400 units 1.

400 Beginning work in process Started in May Production completed Ending work in process The company’s cost per equivalent unit for materials is: a) $0.7 ( ) 1 marks Question 50 Clayton Corporation.Question 49 Which of the following correlation coefficients indicates the weakest relationship between two variables? a) b) c) +1 0.200 72. which adds materials at the beginning of production .2 -0. uses a weighted-average process-costing system.18 ( ) 2 marks . Number of Units 30.000 85.86 b) $0.90 c) $1.000 Cost of Materials $22.000 80. Consider the data that follow.10 d) $1.000 25.

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