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Ma2 Mock 1
Ma2 Mock 1
Question#17:
A capital investment project require expenditure of $90,000 in year 0 followed by cash inflow of $30,000
at the end of each of the four years of projects’s life. The project will have a terminal value of $60,000.
What is the payback period of the investment project?
A. 1 year
B. 2 years
C. 3 years
D. 4 years
Question#18:
Which of the following is MOST likely to be the cause of an increased cash surplus in a business?
A. Taking more credit from suppliers
B. Giving more credit to customers
C. Increasing inventories
D. Purchasing new non-current assets
Question#19:
A product has a budgeted labour cost of $12 per unit and budgeted output of 25,000 units in a period.
Actual cost and output in the period were $304,640 and 25,600 units respectively.
What was the total labour cost variance using the flexed budget?
A. $4,640 Fav
B. $2,560 Fav
C. $4,640 Adv
D. $2,560Adv
Question#20:
What is exception reporting?
A. The reporting of adverse variances only
B. The reporting of the results of variance investigation
C. The reporting of variance that exceeds a certain limit
D. The reporting of variances as and when required by management
Question#21:
Which of the following correctly describes the margin of safety?
A. The difference between budgeted sales and breakeven sales as a percentage of breakeven sales.
B. The difference between budgeted sales and breakeven sales as a percentage of budgeted sales
C. Budgeted profit as a percentage of budgeted fixed costs
D. The difference between sales revenue and variable costs as a percentage of sales revenue.
Question#22:
Which of the following functions is LEAST likely to be carried out by the treasury department?
A. Managing exchange dealing including futures and options
B. Preparing the annual business plan
C. Negotiating funding arrangements with banks
D. Assembling financial information for management
Question#23:
Which TWO of the following items would appear on the stores ledger account but NOT on the bin
card?
A. Unit price
B. Inventory quantity
C. Inventory value
D. Receipt and issues
Question#24:
An extract from the account of Z Co is shown below:
$
Non-current assets 228,000
Inventory 11,460
Trade receivable 18,520
Bank overdraft 2,100
Trade payable 6,440
What is Z Co’s working capital______?
Question#25:
A company manufactures a variety of components which are sold to the automotive industry. Machine
hours is the limiting factor, which prevents production of all component requirements, but this can be
overcome by buying in any quantity of any component.
What should be the basis for deciding which component would be the best to buy in to minimize cost?
A. Contribution per unit
B. Profit per machine hour
C. Saving per machine hour by manufacturing rather than buying in
D. Saving per unit by manufacturing rather than buying in
Question#26:
The cost incurred in the manufacture of 1,000 units of a product are:
$
Direct materials 4,000
Direct labour 6,000
Variable overheads 2,000
Fixed overheads 8,000
If output increases by 25% what will be the effect , if any,on the total cost per unit?
A. Decrease by $2.00 per unit
B. Decrease by $1.60 per unit
C. Decrease by $5.00 per unit
D. No effect
Question#27:
A company has two production cost centres (PC1 and PC2) and two service cost centres (SC1 and SC2).
Overheads allocation and apportionment is as follows for a period:
PC1 PC2 SC1 SC2
Overheads $460,200 $520,800 $122,000 $96,600
Reapportionment of SC1 35% 45% 20%
Reapportionment of SC2 30% 70%
What are the total overheads in PC2 after reapportionment of the service cost centre overheads?
A. $667,720
B. $660,400
C. $643,320
D. $605,500
Question#28:
What is a flexible budget?
A. A budget that results from participation of budget holders
B. A budget that is adjusted for control purposes according to the actual level of activity
C. A budget that is adjusted for uncontrollable events
A. Unavoidable costs
B. Sunk costs
C. Differential costs
D. Future costs
Question#41:
A monthly cash budget has been drawn up as follows:
March ($) April ($)
Receipts
Credit sales 20,000 22,000
Cash sales 10,000 9,000
Payments
Suppliers 13,000 8,400
Wages 4,600 4,600
Overheads 3,000 3,500
The opening cash balance for March was $1,000
What is the budgeted closing cash balance for April______?
Question#42:
An incentive scheme is in operation for each direct worker in a factory. The basic rate of pay is $8 per
hour for an 8 hour day with a bonus if hours worked are less than the standard hours for the output
achieved . The bonus is 50% of the time saved against standard, paid at the basic rate. A single product
is manufactured and the standard time is 10 minutes per unit.
What is the bonus for a worker who manufactures 60 units in an 8 hour day_____?
Question#43:
A delivery vehicle made two journeys in a week during which associated costs were $18,600
Journey 1 was 400 kilometres and the weight of the load was 12 tonnes
Journey 2 was 750 kilometres and the weight of the load was 14 tonnes
What was the cost per tone-km (to two decimal places)_______?
Question#44:
A company is considering whether to agree to do a job for a customer. The job would require 1,000 units
of material Z.
The company has 800 units of material Z in inventory which originally cost $6,000 per unit but it no
longer uses the material. These 800 units could be sold for just $2.00 per unit.
However, the 800 units of material Z could also be used in a process as a substitute for the same
quantity of a different material that cost $3.00 per unit. The cost of buying material Z from supplier is
$7.00 per unit
In making a decision about whether or not to agree to do the job for customer what is the relevant
cost of material Z required for the job______?
Question#45:
A new fixed asset costing $10,000 has a four year life with an estimated value at the end of its life of
20% of the original investment amount. Two alternative depreciation methods are being considered for
the asset:
(1) Reducing balance at 30% per annum
(2) Machine hour utilization based on:
Year 1 1,500 hours
Year 2 1,000 hours
Year 3 1,000 hours
Year 4 500 hours
Is each of the following statements about the above data true or false?
True False
The depreciation charge in year 1 would be higher using the machine hour method
The depreciation charge in year 3 would be lower using the reducing balance method
Question#46:
A company sold 10,000 units of its single product in a period during which finished goods inventory
increased by 2,000 units.
Based on absorption costing how would the profit in the period and the inventory value at the end of
the period compare with those calculated using marginal costing (MC)?
Higher than MC Lower than MC
Inventory value
Profit
Question#47:
Are each of the following production overheads included in product costs using absorption costing?
Yes No
Variable overhead costs
Fixed overhead costs
Question#48:
25,000 units of a company’s single product are produced in a period during which 28,000 units are sold.
Opening inventory was 7,000 units. Unit costs of the product are:
$per unit
Direct costs 16.20
Fixed production overhead 7.60
Fixed non-production overhead 2.90
What is the difference in profit between absorption and marginal costing______?
Question#49:
XY Co makes and sells a single product for which variable costs are as follows:
$
Direct labour 5
Direct materials 4
Variable production overheads 2
11
The sales price is $15 per unit and fixed costs per annum are $56,000. The company wishes to make a
profit of $8,000 per annum
How many units need to be sold to achieve the target profit _____units?
Question#50:
S&P Co makes two products A and B. A Sells for $25 per unit, B for $35 per unit. The variable cost per
unit of A is $17.50, that of B $20. Each unit of A uses 2 kg of raw material. Each unit of B uses 3 kg of
material.
The availability of raw material is limited to 2,000 kg. S&P Co is contracted to supply 500 units of A.
Maximum demand for the B is 250 units. Demand for the A is unlimited
How many units of A will be produced in the profit- maximizing product mix_______?