Q.

1
Double Co provides a photocopying service for clients at a price of $0.10 per
copy. Itneeds to choose which of two new photocopier models to rent. The
costs of each photocopier model are given in the following table:

Photocopier model S T
Annual rental cost $10,000 $8,000
Cost per copy $0.03 $0.05

What is the minimum number of copies per year at which model S

would be preferred to model T?

Options:

A. 100,001

B. 142,857

C. 160,000

D. 150,000

Q. 2
Match the stages required to the correct step number to describe the sequence
used when operating target costing.
Q. 3

A company wants to know whether there is a correlation between the

number of labour hours worked (x) and the value of factory overheads (y).
The following figureshave been calculated:

∑x 89
∑y 1,063
∑x² 1,047
∑y² 150,251
∑xy 12,475
n 8

Which of the following statements, if any, is/are correct?

(1) The correlation coefficient is 0.9 (to one decimal place)

(2) 90% of the variation in factory overheads is explained by
changes in thenumber of labour hours worked

Options:

A. 1 only
 B. 2 only

C. Both 1 and 2

D. Neither 1 nor 2

Q. 4
Return on investment (ROI) and residual income (RI) are commonly used
divisionalperformance measures.

Match the following statements about the advantages and disadvantages of

the performance measures to whether they apply to ROI only, RI only or
both.
Q. 5
B Co. operates a production process which generates a contribution of $4 per hour.
Wages are paid at $7 per
hour and labour is fully utilised. During busy periods workers are offered the chance
to work overtime, which is paid at $10 per hour. However, workers are currently
refusing to work overtime because of an industrial dispute.

B Co has just received an additional order which must be fulfilled immediately which
will require 10 hours of labour to fulfil.

What is the total relevant cost of labour for the additional order?
A $11
B $40
C $100
D $110

Q. 6 B Co produces quarterly rolling budgets and had forecast the costs of material
purchases for the next four quarters (quarters 1, 2, 3 and 4). Purchases for quarter
1 were budgeted to be $220,000 and it was anticipated that the cost of materials
would rise at a rate of 2% per quarter.
At the end of quarter 1:
– Actual material purchases were recorded at $210,000. This was due to a change of
material supplier duringthe quarter.
– A revised estimate for the increase in material purchase costs was made. The rise
was now predicted to be only 1% per quarter.
– The budget was updated.

What estimate for total annual material purchases should be recorded in the
updated budget?
A $896,754
B $852,684
C $861,211
D $1,071,211
Q. 7
Which TWO of the following statements about shadow prices are

true?Options:

A. If demand and labour hours are the constraints at the optimum solution,
both will have a shadow price of zero

B. The shadow price is the maximum amount a company will pay for one
more unit of a scarce resource

C. If a resource has a shadow price greater than zero, obtaining one more
unit of that resource will alter the optimum solution

D. A resource which is critical to the optimum solution cannot have a zero

shadow price

Q. 8
A company makes product M and to meet demand of 2,000 units, it has budgeted to
use the following resources per unit of product X:

Material A 1.2 kg at $10 per kg

Material B 1.3kg at $9 per kg
Labour 2.5 hours at $15 per hour
Variable overheads are allocated at a rate of $5 per kg of material B used.

Fixed overheads are $80,000 and are absorbed based on the quantity of material A
used.

What is the standard full cost per unit of product X (to two decimal places)?

Q. 9
Grey Co has two divisions, Division A and Division B. Division A manufactures
component T500 which it sells to Division B and to external customers.
Division Ahas an annual capacity to produce 20,000 units of component T500
and has estimated external sales of 12,000 units of component T500 for the
current year.

Each unit of component T500 costs $20 to make (made up of $15 of variable cost
and $5 of fixed cost). Division A sells component T500 to external customers for
$22each.

Division B needs to purchase 14,000 units of component T500 in the current year.
 Assuming that decisions are made in the best interest of the company,
what isthe minimum TOTAL cost which Division B would expect to pay to
Division A for supplies of component T500 for the current year (to the
nearest whole $)?

Q. 10
Which TWO of the following statements are consistent with the theory
of constraints?

Options:

A. There should be a small amount of buffer inventory held prior to the

bottleneck

B. Raw materials should be converted into sales as slowly as possible

C. Operations prior to the bottleneck should operate at a faster level than

thebottleneck

D. Conversion costs and investment costs are kept to a minimum

Q. 11 Product C currently sells 8,000 units per year at a price of $50 per unit.
Market research shows that an increase in price of $2 would decrease
annual sales by 800units.

What is the marginal revenue at an output level of 6,000 units (to the
nearest
$)?

Core Care Trust is a public sector 'health and care' home providing care
Q. 12 for the elderly. Income is received on a contract basis from the local
government authority.Care workers are mainly full-time staff but
occasionally temporary staff from a localemployment agency must be
brought in, at great expense, to fill staff rota gaps.

There is a regulatory body monitoring the work done by care

homes known asCHQC which sets targets for the standard of care
expected.

It is generally regarded that residents spend a much happier time

 whilst in a carehome if they are able to establish long-lasting
relationships with care home staff providing their direct care.

The six performance measures below are used by the management

of Core CareTrust to monitor performance as part of the value for
money framework.

Match the performance measures to the elements of the

value for moneyframework which they are measuring.

Measures Economy

Direct staff cost as a percentage of

contract income

Temporary staff usage (hours) as a

percentage of total staff hours

Food cost per meal served to

Efficiency
residents

Achieving the CHQC’s designated

standard of care for the elderly

Number of voids (the number of

empty beds as a percentage of total

Staff turnover Effectiveness

Which TWO of the following bases for setting a transfer price are
Q. 13 most likely toresult in goal congruent behaviour by BOTH the
selling and receiving divisions?

Options:

A. Opportunity cost
 B. Market price

C. Actual cost

D. Standard full cost plus

Q. 14 Indicate, by clicking on the relevant boxes in the table below,

whether each ofthe statements made about short-term decisions are
true or false.

Q. 15
A business has formulated a linear programming function for two products, A and B. The
objective was to maximise the contribution and this was reflected by C = 3A + 2B. Both units
are produced with the help of Chemical X, which is available in the market at a price of $5
per kg. The shadow price of Chemical X is determined to be $9 per kg.
In the context of this scenario, which of the following statements is correct?

A. The maximum price to be paid for an additional unit of Chemical X is $4

per kg.
B. The maximum price to be paid for an additional unit of Chemical X is $5
per kg.
C. The maximum price to be paid for an additional unit of Chemical X is $9
per kg.
D. The maximum price to be paid for an additional unit of Chemical X
is $14 per kg.