1、 Fundamentals Level Knowledge ModuleManagement AccountingSpecimen Exam applicable from June 2014Time allowed: 2 hoursThis paper is divided into two sections:Section A ALL 35 questions are compulsory and MUSTbe attemptedSection B ALL THREE questions are compulsory and MUSTbe attemptedFormulae Sheet,
2、Present Value and Annuity Tables are onpages 16, 17 and 18.Do NOT open this paper until instructed by the supervisor.This question paper must not be removed from the examination hall.The Association of Chartered Certified AccountantsSection A ALL 35 questions are compulsory and MUST be attemptedPlea
3、se use the space provided on the inside cover of the Candidate Answer Booklet to indicate your chosen answer toeach multiple choice question.Each question is worth 2 marks.1 A manufacturing company benchmarks the performance of its accounts receivable department with that of a leadingcredit card com
4、pany.What type of benchmarking is the company using?ABCDInternal benchmarkingCompetitive benchmarkingFunctional benchmarkingStrategic benchmarking23Which of the following BEST describes target costing?ABCDSetting a cost by subtracting a desired profit margin from a competitive market priceSetting a
5、price by adding a desired profit margin to a production costSetting a cost for the use in the calculation of variancesSetting a selling price for the company to aim for in the long runInformation relating to two processes (F and G) was as follows:Process Normal loss as% of inputInput(litres)Output(l
6、itres)FG8565,00037,50058,90035,700For each process, was there an abnormal loss or an abnormal gain?Process F Process GABCDAbnormal gainAbnormal gainAbnormal lossAbnormal lossAbnormal gainAbnormal lossAbnormal gainAbnormal loss4 The following budgeted information relates to a manufacturing company fo
7、r next period:Units $ProductionSales14,00012,000Fixed production costsFixed selling costs63,00012,000The normal level of activity is 14,000 units per period.Using absorption costing the profit for next period has been calculated as $36,000.What would be the profit for next period using marginal cost
8、ing?ABCD$25,000$27,000$45,000$47,00025 The Eastland Postal Service is government owned. The government requires it to provide a parcel delivery service toevery home and business in Eastland at a low price which is set by the government. Express Couriers Co is a privatelyowned parcel delivery company
9、 that also operates in Eastland. It is not subject to government regulation and most ofits deliveries are to large businesses located in Eastlands capital city. You have been asked to assess the relativeefficiency of the management of the two organisations.Which of the following factors should NOT b
10、e allowed for when comparing the ROCE of the two organisations toassess the efficiency of their management?ABCDDifferences in prices chargedDifferences in objectives pursuedDifferences in workforce motivationDifferences in geographic areas served6 Under which sampling method does every member of the
11、 target population has an equal chance of being in thesample?ABCDStratified samplingRandom samplingSystematic samplingCluster sampling7 A Company manufactures and sells one product which requires 8 kg of raw material in its manufacture. The budgeteddata relating to the next period are as follows:Uni
12、tsSalesOpening inventory of finished goodsClosing inventory of finished goods19,0004,0003,000KgOpening inventory of raw materialsClosing inventory of raw materials50,00053,000What is the budgeted raw material purchases for next period (in kg)?ABCD141,000147,000157,000163,0003 P.T.O.8 Up to a given l
13、evel of activity in each period the purchase price per unit of a raw material is constant. After that pointa lower price per unit applies both to further units purchased and also retrospectively to all units already purchased.Which of the following graphs depicts the total cost of the raw materials
14、for a period?$ $A B0 0$ $C D0 0ABCDGraph AGraph BGraph CGraph D9 Which of the following are benefits of budgeting?1234It helps coordinate the activities of different departmentsIt fulfils legal reporting obligationsIt establishes a system of controlIt is a starting point for strategic planningABCD1
15、and 4 only1 and 3 only2 and 3 only2 and 4 only10 The following statements relate to the participation of junior management in setting budgets:1.2.3.It speeds up the setting of budgetsIt increases the motivation of junior managersIt reduces the level of budget paddingWhich statements are true?ABCD1 o
16、nly2 only2 and 3 only1, 2 and 3411 A company has a capital employed of $200,000. It has a cost of capital of 12% per year. Its residual income is$36,000.What is the companys return on investment?ABCD30%12%18%22%12 A company has calculated a $10,000 adverse direct material variance by subtracting its
17、 flexed budget direct materialcost from its actual direct material cost for the period.Which of the following could have caused the variance?(1) An increase in direct material prices(2) An increase in raw material usage per unit(3) Units produced being greater than budgeted(4) Units sold being great
18、er than budgetedABCD2 and 3 only3 and 4 only1 and 2 only1 and 4 only13 A company has recorded the following variances for a period:Sales volume varianceSales price varianceTotal cost variance$10,000 adverse$5,000 favourable$12,000 adverseStandard profit on actual sales for the period was $120,000.Wh
19、at was the fixed budget profit for the period?ABCD$137,000$103,000$110,000$130,00014 Which of the following are suitable measures of performance at the strategic level?(1) Return on investment(2) Market share(3) Number of customer complaintsABCD1 and 22 only2 and 31 and 35 P.T.O.15 Which of the foll
20、owing are feasible values for the correlation coefficient?1234+140+1040094ABCD1 and 2 only3 and 4 only1, 2 and 4 only1, 2, 3 and 416 A companys operating costs are 60% variable and 40% fixed.Which of the following variances values would change if the company switched from standard marginal costingto
21、 standard absorption costing?ABCDDirect material efficiency varianceVariable overhead efficiency varianceSales volume varianceFixed overhead expenditure variance17 ABC Co has a manufacturing capacity of 10,000 units. The flexed production cost budget of the company is asfollows:Capacity 60% 100%Tota
22、l production costs $11,280 $15,120What is the budgeted total production cost if it operates at 85% capacity?ABCD$13,680$12,852$14,025$12,34018 Using an interest rate of 10% per year the net present value (NPV) of a project has been correctly calculated as $50.If the interest rate is increased by 1%
23、the NPV of the project falls by $20.What is the internal rate of return (IRR) of the project?ABCD75%117%125%200%619 A factory consists of two production cost centres (P and Q) and two service cost centres (X and Y). The total allocatedand apportioned overhead for each is as follows:P Q X Y$95,000 $8
24、2,000 $46,000 $30,000It has been estimated that each service cost centre does work for other cost centres in the following proportions:P5030Q5060X10YPercentage of service cost centre X toPercentage of service cost centre Y toThe reapportionment of service cost centre costs to other cost centres full
25、y reflects the above proportions.After the reapportionment of service cost centre costs has been carried out, what is the total overhead forproduction cost centre P?ABCD$124,500$126,100$127,000$128,50020 A company always determines its order quantity for a raw material by using the Economic Order Qu
26、antity (EOQ)model.What would be the effects on the EOQ and the total annual holding cost of a decrease in the cost of ordering abatch of raw material?EOQ Annual holding costLowerHigherHigherLowerABCDHigherHigherLowerLower21 A company which operates a process costing system had work-in-progress at th
27、e start of last month of 300 units(valued at $1,710) which were 60% complete in respect of all costs. Last month a total of 2,000 units werecompleted and transferred to the finished goods warehouse. The cost per equivalent unit for costs arising last monthwas $10. The company uses the FIFO method of
28、 cost allocation.What was the total value of the 2,000 units transferred to the finished goods warehouse last month?ABCD$19,910$20,000$20,510$21,71022 A manufacturing company operates a standard absorption costing system. Last month 25,000 production hours werebudgeted and the budgeted fixed product
29、ion cost was $125,000. Last month the actual hours worked were 24,000and standard hours for actual production were 27,000.What was the fixed production overhead capacity variance for last month?ABCD$5,000 Adverse$5,000 Favourable$10,000 Adverse$10,000 Favourable7 P.T.O.23 The following statements ha
30、ve been made about value analysis.(1) It seeks the lowest cost method of achieving a desired function(2) It always results in inferior products(3) It ignores esteem valueWhich is/are true ?ABCD1 only2 only3 only1 and 3 only24 Under which of the following labour remuneration methods will direct labou
31、r cost always be a variable cost?ABCDDay ratePiece rateDifferential piece rateGroup bonus scheme25 A company manufactures and sells a single product. In two consecutive months the following levels of production andsales (in units) occurred:Month 13,800Month 24,400SalesProduction 3,900 4,200The openi
32、ng inventory for Month 1 was 400 units. Profits or losses have been calculated for each month using bothabsorption and marginal costing principles.Which of the following combination of profits and losses for the two months is consistent with the above data?Absorption costing profit/(loss) Marginal c
33、osting profit/(loss)Month 1$Month 2$Month 1$Month 2$ABCD200(400)2004,4004,4003,2003,200(400)200(400)2003,2003,2004,4004,400(400)26 The following statements relate to the advantages that linear regression analysis has over the high low method in theanalysis of cost behaviour:1.2.3.the reliability of
34、the analysis can be statistically testedit takes into account all of the datait assumes linear cost behaviourWhich statements are true?ABCD1 only1 and 2 only2 and 3 only1, 2 and 3827 A company operates a process in which no losses are incurred. The process account for last month, when there wasno op
35、ening work-in-progress, was as follows:Process Account$ $Costs arising 624,000 Finished output (10,000 units) 480,000Closing work-in-progress (4,000 units) 144,000 624,000 624,000The closing work in progress was complete to the same degree for all elements of cost.What was the percentage degree of c
36、ompletion of the closing work-in-progress?ABCD12%30%40%75%28 Which of the following would not be expected to appear in an organisations mission statement?ABCDThe organisations values and beliefsThe products or services offered by the organisationQuantified short term targets the organisation seeks t
37、o achieveThe organisations major stakeholders29 An organisation operates a piecework system of remuneration, but also guarantees its employees 80% of a time-basedrate of pay which is based on $20 per hour for an eight hour working day. Three minutes is the standard time allowedper unit of output. Pi
38、ecework is paid at the rate of $18 per standard hour.If an employee produces 200 units in eight hours on a particular day, what is the employees gross pay for thatday?ABCD$128$144$160$18030 A company uses an overhead absorption rate of $350 per machine hour, based on 32,000 budgeted machine hoursfor
39、 the period. During the same period the actual total overhead expenditure amounted to $108,875 and 30,000 machine hours were recorded on actual production.By how much was the total overhead under or over absorbed for the period?ABCDUnder absorbed by $3,875Under absorbed by $7,000Over absorbed by $3,
40、875Over absorbed by $7,0009 P.T.O.31 Which of the following statements relating to management information are true?1.2.3.4.It is produced for parties external to the organisationThere is usually a legal requirement for the information to be producedNo strict rules govern the way in which the informa
41、tion is presentedIt may be presented in monetary or non monetary termsABCD1 and 23 and 41 and 32 and 432 A companys sales in the last year in its three different markets were as follows$Market 1Market 2Market 3100,000150,00050,000Total 300,000In a pie chart representing the proportion of sales made
42、by each region what would be the angle of the sectionrepresenting Market 3 (to the nearest whole degree)?ABCD17 degrees50 degrees61 degrees120 degrees33 Which of the following BEST describes a flexible budget?ABCDA budget which shows variable production costs onlyA monthly budget which is changed to
43、 reflect the number of days in the monthA budget which shows sales revenue and costs at different levels of activityA budget that is updated halfway through the year to incorporate the actual results for the first half of the year34 The purchase price of an item of inventory is $25 per unit. In each
44、 three month period the usage of the item is 20,000 units. The annual holding costs associated with one unit equate to 6% of its purchase price. The cost ofplacing an order for the item is $20.What is the Economic Order Quantity (EOQ) for the inventory item to the nearest whole unit?ABCD7308941,4611
45、,633.1035 Two products G and H are created from a joint process. G can be sold immediately after split-off. H requires furtherprocessing into product HH before it is in a saleable condition. There are no opening inventories and no work inprogress of products G, H or HH. The following data are availa
46、ble for last period:$Total joint production costsFurther processing costs of product H350,00066,000Product Productionunits420,000330,000Closinginventory20,00030,000GHHUsing the physical unit method for apportioning joint production costs, what was the cost value of the closinginventory of product HH
47、 for last period?ABCD$16,640$18,625$20,000$21,600(70 marks)11 P.T.O.Section B ALL THREE questions are compulsory and MUST be attempted1 Cab Co owns and runs 350 taxis and had sales of $10 million in the last year. Cab Co is considering introducing anew computerised taxi tracking system.The expected
48、costs and benefits of the new computerised tracking system are as follows:(i) The system would cost $2,100,000 to implement.(ii)(iii)Depreciation would be provided at $420,000 per annum.$75,000 has already been spent on staff training in order to evaluate the potential of the new system. Furthertrai
49、ning costs of $425,000 would be required in the first year if the new system is implemented.(iv) Sales are expected to rise to $11 million in Year 1 if the new system is implemented, thereafter increasing by5% per annum. If the new system is not implemented, sales would be expected to increase by $200,000 perannum.(v) Despite increased sales, savings in vehicle running costs are expected as a result of the new system. These areestimated at 1% of total sales.(vi) Six new members of staff wo
