Examiner’s report

MA1 Management Information

Based on exams from January to June 2019

The examining team share their observations from the marking process to highlight strengths and
weaknesses in candidates’ performance, and to offer constructive advice for future candidates.

General Comments

The examination consists of 50 objective test questions, each worth 2 marks. The purpose of this
report is to provide illustrations of questions set which have especially posed problems for
candidates.

The questions below, covering different aspects of the syllabus, set out the approach that should
be taken to answering each question correctly and also highlight common incorrect approaches
that many candidates have taken and the misunderstandings that they indicate. Answering
objective test questions requires candidates to have both a clear understanding of the subject
matter being examined and a logical approach.

Comments about performance

On the whole, the questions in this were answered satisfactorily. However, it was clear that many
candidates were not adequately prepared for some of the topics asked in the examination.

Sample questions for discussion

This report discusses questions with which candidates experienced difficulties.

Question 1

Henry is estimating the labour cost of a new product, PX. 100 units of PX would be produced in the
coming period and each unit of PX requires two labour hours, however 20% of the total labour
hours are expected to be idle. Labour would be paid at $10 per hour.

What would be the total labour cost of producing 100 units of PX?

1. $2,400
2. $1,600
3. $2,500
4. $2,000

Answer

The correct answer is $2,500, option 3 as follows:

Number of Rate per

Units hours hour Idle time adjustment $
* $10 per
100 * 2 hours hour / by 0.8 to adjust for 20% idle time correctly 2,500

Examiner’s report – MA1 January – June 2019 1

The incorrect answers were calculated by candidates as follows:

Option Number of Rate per

Units hours hour Idle time adjustment $

* $10 per * by 1.2 to adjust for 20% idle time

1 100 * 2 hours hour incorrectly 2,400

* $10 per * by 0.8 to adjust for 20% idle time

2 100 * 2 hours hour incorrectly 1,600

* $10 per no adjustment so ignores idle time

4 100 * 2 hours hour completely 2,000

Question 2

Which of the following will activate the 'Go To' function in a spreadsheet?

Choices:

1. F1
2. F5
3. Ctrl + Spacebar
4. Ctrl + F

The correct answer is option 2

F5 - Opens the Go to dialog box.

The incorrect options are:

Option 1 F1 - opens the excel Help task pane

Option 3 Ctrl + Spacebar - is a shortcut to select a Worksheet Column

Option 4 Ctrl + F - is the find and replace function

Examiner’s report – MA1 January – June 2019 2

Question 3

The results of a manufacturing firm for last period are as follows:

$'000
Direct costs 75
Manufacturing overhead 15
Selling and administration
10
overhead
Sales revenue 150

What was the gross profit margin for the last period?

1. 40%
2. 50%
3. 33%
4. 60%

Correct Answer

Gross
Sales Cost Profit Gross Profit
$'000 $'000 Explanation $'000 Margin Working
Calculated correctly that variable costs are 90
1 150 90 (75 +15) 60 40% 60/150

Incorrect Answers
Gross
Sales Cost Profit Gross Profit
$'000 $'000 Explanation $'000 Margin Working
Ignored variable manufacturing overhead
2 150 75 so only 75 deducted as cost 75 50% 75/150

Incorrectly calculated total cost including

3 150 100 indirect overhead (75+15+10) 50 33% 50/150

Ignored profit and just used cost of 90 as gross

4 150 90 profit in error 90 60% 90/150

Examiner’s report – MA1 January – June 2019 3

Question 4

Cell A3 of a spreadsheet contains the value 36724.896.

What value is displayed if the formula =ROUND(A3,-2) is used in cell A4?

1. 36724.90
2. 36725
3. 36700
4. 36724

The formula
ROUND( A3, -2 )

A3 is the location of the initial number in the spreadsheet.

The next number digit in the formula is -2 but this number can be positive, negative or zero as
follows:
A positive number digit value specifies the number of digits to the right of the decimal point;
A number digit value of 0 specifies rounding to the nearest integer;
A negative number digit value specifies the number of digits to the left of the decimal point.

-2 therefore means 2 digits to the left of the decimal point.

So 36724.896 becomes 36700

Option 3, 36700 is the correct choice

Question 5

Which of the following statements about management information is/are true?

(1) It can only be sourced from within the organisation

(2) To be reliable it must be written and verified
(3) It can consist of both numeric and non-numeric information

1. 3 only
2. 1 and 3 only
3. 1 and 2 only
4. 1, 2 and 3

Management information is sourced from inside and outside the organisation so that makes
statement 1 incorrect.
As for statement 2, often management information can include figures not just written data and
also can include people’s ideas and opinions which are often not verified.

Examiner’s report – MA1 January – June 2019 4

Statement 3 is correct as management information can consist of both numeric and non-numeric
information.

So the only true statement is 3 so the correct choice is option 1

Question 6

A bakery recorded the following information:

Number of loaves Total production

produced costs
($)
6,000 9,800
8,000 11,800
10,000 13,800

All loaves baked were identical and there was no wastage.

What cost behaviour pattern describes the bakery's total production cost?

1. Semi-variable
2. Variable
3. Fixed
4. Step fixed

First identify if there is an obvious pattern such as fixed. This would mean the cost says the same
irrespective of the volume of loaves. Or a stepped fixed which would mean fixed until a certain
level, then increases by a proportion called a step. Neither of these two are the answer here.

To establish if it is variable only, then divide each of the total production costs by the number of
loaves to see if the cost per unit is the same.

Loaves Costs $ Per unit

6000 9800 1.63 This proves it is not variable per unit
8000 11800 1.48
10000 13800 1.38

Next we will use high low to proof if it is a semi-variable behaviour and thus to establish the
variable cost per unit and then the total fixed cost as follows:

Using high low method

variable
Prod Cost $ =13800-9800 4000 1 per unit
Loaves =10000-6000 4000

Examiner’s report – MA1 January – June 2019 5

 Substitute back into any of the two total costs used

$ $13,800
Variable
Cost 10000*1 $10,000
Fixed cost $3,800

The correct answer is therefore semi variable.

Conclusion

It is imperative that candidates study and prepare well for all topics in the syllabus and not just a
select few. Candidates must bear in mind that questions in the examination will include questions
from all topics of the syllabus. Equipping themselves with adequate knowledge of all topics will
certainly maximise and improve the performance of candidates in future examinations. Thus,
candidates are advised to plan their revision timetable so that they have sufficient time to revise all
the topics in the syllabus. Candidates are also reminded to try and attempt all questions.

Examiner’s report – MA1 January – June 2019 6