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ACCA FINAL ASSESSMENT
Management Accounting
QUESTION PAPER
Time allowed 2 hours
All 50 questions are compulsory and must be attempted
Formulae Sheet is on page 3
Do not open this paper until instructed by the supervisor
This question paper must not be removed from the examination hall
JUNE 2011
Kaplan Publishing/Kaplan Financial
Pape
r F2
ACCA F2 MANAGEMENT ACCOUNTING
2 KAPLAN PUBLISHING
© Kaplan Financial Limited, 2010
The text in this material and any others made available by any Kaplan Group company does not amount to advice on a particular matter and should not be taken as such. No reliance should be placed on the content as the basis for any investment or other decision or in connection with any advice given to third parties. Please consult your appropriate professional adviser as necessary. Kaplan Publishing Limited and all other Kaplan group companies expressly disclaim all liability to any person in respect of any losses or other claims, whether direct, indirect, incidental, consequential or otherwise arising in relation to the use of such materials.
All rights reserved. No part of this examination may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without prior permission from Kaplan Publishing.
FINAL ASSESSMENT QUESTIONS
KAPLAN PUBLISHING 3
Formulae Sheet
Linear regression
r = ]y)(-y[n ]x)(-x[n
yx-xyn2222 ∑∑∑∑
∑∑∑
If y = a + bx,
b = 22 x)(-xnyx-xyn
∑∑
∑∑∑ and a =
ny∑
- bnx∑
Economic order quantity
Economic order quantity = H
O
CD2C
Economic batch quantity = ⎟⎠⎞
⎜⎝⎛
RD-1C
D2C
H
O
ACCA F2 MANAGEMENT ACCOUNTING
4 KAPLAN PUBLISHING
All 50 questions are compulsory and must be attempted
1 A Ltd manufactures a single product which it sells for $9 per unit. Fixed costs are $54,000 per month and the product has a variable cost of $6 per unit.
In Period 1, actual sales amounted to $180,000. What was A Ltd’s margin of safety?
units (2 marks)
2 The following details are available for a company:
Budget labour hours 8,500
Budgeted overheads $148,750
Actual labour hours 7,928
Actual overheads $146,200
Based on the data given above, what is the amount of overhead under/over absorbed?
A $2,550 under-absorbed
B $2,529 over-absorbed
C $2,550 over-absorbed
D $7,460 under-absorbed (2 marks)
3 Over the last two months the following production costs were incurred by Department Z:
Level of activity
Production cost
May 5,269 units $36,614
June 4,821 units $33,926
In July budgeted production was 2,560 units. The budgeted production cost would be:
A $20,360
B $15,740
C $18,880
D $14,552 (2 marks)
FINAL ASSESSMENT QUESTIONS
KAPLAN PUBLISHING 5
4 The annual demand for an item produced by Fish Ltd is 10,000 units. The cost of placing an order is $320 and the cost of holding an item in stock for one year is $60. What is the economic order quantity to the nearest unit?
A 325
B 330
C 327
D 337 (2 marks)
The following information is to be used for questions 5 and 6.
During the month of June a manufacturing process incurs material costs of $8,000 and conversion costs of $4,500. 2,000 kg of material was input. There is a normal loss of 10% and all losses have a scrap value of $1.75 per kg. During the period 1,700 kg were output to finished goods. Opening and closing stocks in the process were nil.
5 What was the cost per kg output in the period?
$ (2 marks)
6 What was the value of the abnormal loss written off in the profit and loss account?
$ (2 marks)
7 The following information is available about a product a company sells:
Direct material (per unit) $12
Direct labour (per unit) $23
Variable overheads (total) $30,000
Fixed overheads (total) $50,000
Production (units) 10,000
What is the prime cost per unit?
A $15
B $38
C $43
D $35 (2 marks)
ACCA F2 MANAGEMENT ACCOUNTING
6 KAPLAN PUBLISHING
8 A company has recorded the following results:
March April May
Units 2,800 3,000 2,700
Production costs $29,200 $30,000 $28,800
In June, the budgeted output is 3,250 units. The budgeted production costs should be:
A $13,000
B $31,000
C $31,250
D $32,500 (2 marks)
9 A company uses process costing in calculating output cost. The following details are available for a particular department in June 20X2. All materials are added at the start of the process.
Opening work in progress Nil units
Units started 10,000 units
Closing work in progress 1,000 units
100% complete for materials
75% complete for conversion
Normal loss 200 units
Units completed 8,000 units
If all losses occur at the start of the process, then how many equivalent units should be included for materials?
A 7,750
B 8,750
C 8,800
D 9,800 (2 marks)
FINAL ASSESSMENT QUESTIONS
KAPLAN PUBLISHING 7
10 A company makes three products as follows:
Chairs Tables Cupboards
Wood @ $5 per m2 $20 $40 $60
Labour @ $6 per hour $12 $24 $48
Fixed costs absorbed $10 $20 $40
Profit $4 $6 $10
Selling price $46 $90 $158
Maximum demand for each product is 1,000 units, however supplies of wood are limited to 30,000 m2 and the labour force will only work 6,000 hours.
To maximise its profits, the company should produce:
A 1,000 chairs
B 1,000 chairs and 1,000 tables
C 1,000 cupboards
D 333 chairs, 333 tables, 333 cupboards (2 marks)
11 A company uses a predetermined overhead absorption rate based on machine hours. The budgeted factory overhead for one year was $68,000, but the actual overhead incurred was $72,000. In the period, 17,500 machine hours were worked and overheads were over-absorbed by $2,375.
The budgeted level of machine hours was:
A 16,530
B 16,000
C 17,090
D 16,520 (2 marks)
12 If ∑x = 440, ∑y = 330, ∑x2 = 17,986, ∑y2 = 10,366, ∑xy =13,467 and n = 11.
The value of r, the co-efficient of correlation, to two decimal places, is:
(2 marks)
ACCA F2 MANAGEMENT ACCOUNTING
8 KAPLAN PUBLISHING
13 A product requires 3 kilos of raw material per unit. The standard cost of each kilo is $2. During the last period, 5,000 units were produced, 16,000 kilos were purchased and used costing a total of $30,400.
The materials price and usage variances were:
Price Usage
A $1,600 F $2,000 A
B $1,600 A $2,000 F
C $65,600 F $84,000 A
D $65,500 A $84,000 F (2 marks)
14 When accounting for the outputs of a chemical manufacturing process, costs incurred in the process are shared between the main product and its by-products.
The above statement is:
A True
B False (1 mark)
15 Jones Inc is considering undertaking a project requiring 350 skilled labour hours. Jones Inc have a workforce of 25 skilled workers who are currently not fully employed. They are on annual contracts and the number of spare hours currently available for this project is 275. Any hours in excess of this will have to be paid at time and a quarter. The normal hourly rate is $25.
The relevant cost of skilled labour in the contract is:
A $1,875.00
B $2,343.75
C $8,593.75
D $8,750.00 (2 marks)
16 Depreciation of equipment is usually classified in the cost accounts as a:
A production overhead
B administration overhead
C direct expense
D selling overhead (2 marks)
FINAL ASSESSMENT QUESTIONS
KAPLAN PUBLISHING 9
17 Study the breakeven chart below:
At the breakeven point, fixed and variable costs are approximately:
A Fixed costs $500,000, variable costs $750,000
B Fixed costs $750,000, variable costs $250,000
C Fixed costs $500,000, variable costs $250,000
D Fixed costs $150,000, variable costs $500,000 (2 marks)
18 A company manufacturing a single product has the following costs at two different activity levels:
Activity level (units) 15,000 25,000
Total costs ($) 94,500 151,500
Variable costs are constant at all activity levels, but fixed costs increase by $2,000 every 10,000 units.
What are the fixed costs at an activity level of 5,000 units?
$ (2 marks)
10 20 30 40 50 60
400
200
600
800
1,000
$000s
Activity budget (units)
ACCA F2 MANAGEMENT ACCOUNTING
10 KAPLAN PUBLISHING
19 Overheads for maintenance department S1 are apportioned 45%, 40% and 15% among the manufacturing departments M1, M2 and M3.
What will be the overhead apportioned to M2 if the service department’s overheads total $74,425?
A $11,163
B $29,770
C $33,491
D $44,655 (2 marks)
20 A company is trying to decide whether to sell or keep a machine which was purchased four years ago. Which of the following should be ignored in making the decision?
(1) The written down value of the machine
(2) The sale proceeds
(3) The original cost of the machine
A (1) and (2)
B (1) and (3)
C None of the above (1 mark)
21 150 hours of skilled labour are needed for a contract. There is no idle time at the moment and the workers would have to be taken off production of a different product in order to work on the contract. The details of the other product are shown below.
per unit
Selling price $100
Direct materials $12
Direct labour 2.5 hours @ $20/hour
Variable overheads $15
Fixed overheads $17
The skilled workers’ pay rate would not change, regardless of which product they worked on.
The relevant cost of the skilled labour on the contract is:
A $10,950
B $4,380
C $3,900
D $1,380 (2 marks)
FINAL ASSESSMENT QUESTIONS
KAPLAN PUBLISHING 11
22 When more than one limiting factor (apart from sales demand) constrains the activities of an organisation, the optimal production plan can be found by ranking products in order of contribution per unit of limiting factor.
This statement is:
A True
B False (1 mark)
23 The following data relate to a product manufactured by White Rabbit Inc for the last year:
Actual sales 2,000 units at $450 each
Budgeted output and sales for the year 1,750
Standard selling price $475
Budgeted profit per unit $125
Budgeted contribution per unit $175
The sales volume variance under marginal costing is:
A $31,250 (F)
B $31,250 (A)
C $43,750 (F)
D $50,000 (F) (2 marks)
24 Workwear Inc supplies shirts embroidered with the customer’s logo to a number of large companies. The following information has been estimated for a typical batch of 100 of the most popular cotton shirt:
Design of logo $50
Setting up of embroidery machine 2 hours @ $25 per hour
Shirts $130 for 50
Thread and consumables $20
Embroiderer’s wages 5 hours @ $11 per hour
The marginal cost of sales for a batch of 200 shirts is:
A $750
B $770
C $820
D $870 (2 marks)
ACCA F2 MANAGEMENT ACCOUNTING
12 KAPLAN PUBLISHING
25 Which of the following is most likely to be used as a cost unit for a hospital ward?
A Meals served
B Patient days
C Operations undertaken (1 mark)
26 A paint company has recorded the following information for a process for the last month:
$
Raw materials (350 litres) 4,250
Labour and overheads 2,495
Actual output 325 litres
Normal output is expected to be 95 litres for every 100 litres of raw material.
What is the average cost per unit of completed output?
$ (2 marks)
27 A continuous budget is:
A the budget for the factor which limits the activities of the organisation and on which other budgets are based
B a budget which is designed to change as the volume of activity changes
C a budget which is updated regularly by adding a further accounting period when the first accounting period expires (1 mark)
28 Which of the following statements are true?
(1) The sales volume variance will be higher in marginal costing than in absorption costing.
(2) There is no fixed overhead volume variance in marginal costing
(3) An adverse materials price variance means that the actual cost of the material was more than the standard cost
A (1) and (2)
B (1) and (3)
C (2) and (3)
D All three statements are correct (2 marks)
FINAL ASSESSMENT QUESTIONS
KAPLAN PUBLISHING 13
29 A company makes three products, Red, Green and Yellow. The following data are available for the next year:
Red Green Yellow
Planned sales (units) 450 375 550
Planned selling price ($) 1.20 0.95 1.35
What is the total sales budget for the next year?
A $896.25
B $1,583.75
C $1,601.25
D $1,638.75 (2 marks)
30 Attainable cost standards are based on efficient operating conditions and include an allowance for fatigue.
This statement is:
A True
B False (1 mark)
31 Process Inc uses process costing to value its product at each stage of production. The following information is available from process 1:
$
Materials $3,750 500 kg
Labour $3,000 100 hours
Overheads $1,125 −
Output − 425 kg
The normal loss is 10% of the inputs and cannot be sold. There is no opening or closing work-in-progress.
What is the value of the output to process 2?
A $6,500.00
B $6,693.75
C $7,437.50
D $7,500.00 (2 marks)
ACCA F2 MANAGEMENT ACCOUNTING
14 KAPLAN PUBLISHING
32 DEF Inc uses standard costing. The fixed overhead capacity variance for the last period is a favourable variance of $435.
The details for the last period are as follows:
Budget
Fixed production overheads ($) 15,950
Budgeted production (units) 550
Standard time to produce unit (hours) 4
Actual
Fixed production overheads ($) 17,545
Units 560
The actual hours worked for the period are:
A 2,055
B 2,123
C 2,140
D 2,260 (2 marks)
33 Calc Ltd wishes to establish a daily sales forecast. The following historic sales data has been gathered over the last 20 days:
Daily sales Number of days
$200 3
$250 6
$300 8
$350 3
What is the expected daily sales to the nearest whole $?
A $1,720
B $278
C $285
D $1,715 (2 marks)
FINAL ASSESSMENT QUESTIONS
KAPLAN PUBLISHING 15
The following information is to be used for questions 34 and 35:
The following information relates to product Delta which is manufactured by Alpha Beta Inc.
Alpha Beta uses absorption costing.
Extract from cost card:
$ per unit
Direct materials 5.30
Direct labour 5.20
Variable overhead 3.80
Fixed overhead 2.90 _____
17.20 _____
The fixed overhead charged to each unit of the product is based on a monthly production level for product Delta of 1,000 units.
In the last month, actual production was 1,150 units and the costs incurred were as follows:
$
Direct materials 6,250
Direct labour 5,870
Variable overhead 5,230
Fixed overhead 3,230 ______
20,580 ______
34 The flexed budget for direct materials and labour at 1,150 units is:
A Materials $6,095, labour $5,980
B Materials $5,980, labour $6,095
C Materials $7,188, labour $6,751
D Materials $5,300, labour $5,200 (2 marks)
35 The total variance for fixed expenditure and the variable overheads expenditure variance are:
A Fixed overheads $105 (A), variable overheads $860 (F)
B Fixed overheads $105 (F), variable overheads $860 (A)
C Fixed overheads $105 (A), variable overheads $860 (A)
D Fixed overheads $105 (F), variable overheads $860 (F) (2 marks)
36 The coefficient of determination, r2, always falls within the range 0 to 1.
A True B False (1 mark)
ACCA F2 MANAGEMENT ACCOUNTING
16 KAPLAN PUBLISHING
37 In a forecasting model based on y = a + bx, the intercept is £234. If the value of y is £491 and x is 20, then the value of the slope, to two decimal places, is:
A –24.55
B –12.85
C 12.85
D 24.85 (2 marks)
38 Animal Farm Inc manufactures two products, Bull and Cow. The raw material used in the manufacture of these products is Grass. The expected production levels for the products for next year are as follows:
Production (units) Grass – requirements per unit (kg)
Bull 3,000 5
Cow 4,500 6
The expected price of Grass for the next year is $1.50 per kg. The opening inventory is 2,500 kg. The company has a target to halve inventory levels by the end of the year.
The value for next year of the material purchases budget for Grass is:
$ (2 marks)
39 Which of the following is not true of service industries?
A The output should be carefully inspected before being received and accepted
B The standard of the service is variable due to high human input
C The output is intangible (1 mark)
40 An electronics company producing hard drives has a favourable variable overhead efficiency variance. This could be caused by:
A An increase in the cost of electricity
B A change in the quality of supervision
C An increase in the demand for computer components (1 mark)
FINAL ASSESSMENT QUESTIONS
KAPLAN PUBLISHING 17
41 The following graph has been plotted to solve a linear programming to find an optimum production plan.
The area OABCD is:
A the feasible region
B the optimum production plan
C the area of maximum contribution (1 mark)
42 A company is considering a job that requires 500kg of raw material. The material is used within the company for various products. The current inventory is 2,500kg, of which 1,000 kg was purchased at a price of $3 per kg and 1,500 kg was purchased at $3.15 per kg. The current price for new material is $3.50 per kg. What is the relevant cost of material for the job?
A $1,500
B $1,575
C $1,750
D $2,500 (2 marks)
10 20 30 40 50 60
200
0
400
800
1,000
y
X
Labour constraint
Materials constraint
Sales constraint
A B
C
D
ACCA F2 MANAGEMENT ACCOUNTING
18 KAPLAN PUBLISHING
43 Zed Inc makes 2 products, X and Y. The products go through two departments, Assembly and Finishing.
The following has been estimated:
Assembly Finishing
Product X – labour hours 5 2
Product Y – labour hours 7 3
Overheads ($) 250,000 175,000
Production is expected to be 3,000 units of X and 5,000 of Y
Calculate overhead absorption rates for the two departments.
A Assembly = $8.33 per hour, Finishing = $5 per hour
B Assembly = $5 per hour, Finishing = $8.33 per hour
C Assembly = $11.90 per hour, Finishing = $3.50 per hour
D Assembly = $3.50 per hour, Finishing = $11.90 per hour (2 marks)
44 The following data relate to RP Ltd’s production process:
Opening work in process Nil
Goods completed in the period 19,000
Closing work in process 4,000
The closing work in process was 100% complete with respect to materials, but only 70% complete with respect to conversion cost. The conversion cost for the period was $118,810.
Therefore the conversion cost per equivalent unit was:
A $5.50
B $5.00
C $5.21
D $5.45 (2 marks)
FINAL ASSESSMENT QUESTIONS
KAPLAN PUBLISHING 19
45 Gold Ltd makes two products: A and B. Both products require two production processes which are carried out in two separate production departments. In each of the two production departments, the labour available for the forthcoming period is 200 hours.
Information about A and B is as follows:
A B
Contribution per unit $50 $30
Labour required, department 1 2 hours 0.5 hours
Labour required, department 2 1 hour 0.8 hours
Maximum demand for the period 100 units 100 units
To maximise contribution, which production plan should be followed?
Units of A produced Units of B produced
A 75 100
B 100 100
C 37 50
D 50 50 (2 marks)
46 Subwoofer Ltd can either make or buy component Q. The purchase cost is $28.75. If the company makes the component, it will incur the following costs per unit:
$
Materials 3.75
Labour 7.50
Variable overheads 12.50
Fixed overheads 8.75 ____
32.50 ____
Which of the following is true?
A If the fixed costs have to be paid anyway, the company should buy the component
B If the fixed costs have to be paid anyway, the company should make the component
C If the fixed costs are a relevant cost, the company should still make the component
D None of the above is true (2 marks)
ACCA F2 MANAGEMENT ACCOUNTING
20 KAPLAN PUBLISHING
47 Epsilon Inc manufactures two products, Theta and Omega. Data relating to the next year are given below:
The expected production levels for the products for next year and labour hours are as follows:
Production (units) Direct labour hours (per unit)
Theta 300 15
Omega 450 20
The standard rate for labour hours is $8.50 per hour.
The value of the direct labour budget for the next year is:
A $13,500
B $70,125
C $114,750
D $127,500 (2 marks)
48 In a period, there was a favourable variable overhead efficiency variance of $6,750. The standard variable overhead absorption rate per hour was $3 and 15 hours were allowed for each unit as standard. The actual hours worked were 21,750. The number of units actually produced was:
A 150
B 1,300
C 1,450
D 1,600 (2 marks)
49 The following is a graph of cost against volume of output:
To which of the following costs does the graph correspond?
A Electricity bills made up of a standing charge and a variable charge
B Bonus payments to employees when production reaches a certain level
C Sales commission payable per unit up to a maximum amount of commission
D Bulk discounts on purchases, the discount being given on all units purchased (2 marks)
FINAL ASSESSMENT QUESTIONS
KAPLAN PUBLISHING 21
50 The following information relates to Job 1234, which is being carried out by XY Limited to meet a customer’s order.
Department A Department B
Direct materials consumed $10,000 $6,000
Direct labour hours 800 hours 400 hours
Direct labour rate per hour $4 $5
Production overhead per direct labour hour $4 $4
Administration and other overheads 20% of full production cost
What is the cost to the customer for Job 1234?
A $20,800
B $26,000
C $30,720
D $31,200 (2 marks)
(Total: 90 marks)
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