The Association of Chartered Certified Accountants OBU F2 Management Accounting

1. Question 1 Which of following would be included in the financial account, but may be excluded from the cost account? A B C D Direct material cost Depreciation of storeroom handling equipment Bank interest and charge Factory managers salary

2. Question 2 Consider the following incomplete statements relating to management information: (i) (ii) (iii) (iv) A B C D Clear to the user Detailed and completed accurate Provide whatever the cost Relevant for purpose (i) and (ii) (i) and (iv) (ii) and (iv) (i), (ii) and (iii)

Which of the above are necessary features of useful management information?

3. Question 4 Which of the following statements are true? (i) (ii) (iii) A B C D Information is raw material for data processing External sources of information include an organisations financial accounting records The main objective of non profit making organisation is usually to provide goods and services (i) and (iii) only (i), (ii) and (iii) (ii) and (iii) only (iii) only

4. Question 4 Which of the following statement is not true? A B C D Management accounts detail the performance of an organisation over a defined period and the state of affairs at the end of that period There is no legal requirement to prepare management accounts The format of management accounts is entirely at management discretion Management accounts are both an historical record and a future planning tool

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The Association of Chartered Certified Accountants OBU F2 Management Accounting

5. Question 5 A cost centre is A B C D A unit of product or service in relation to which costs are ascertained An amount of expenditure attributable to an activity A production or service location, function, activity or item of equipment for which costs are accumulated A centre for which an individual budget is drawn up

6. Question 6 Which of the following are indirect costs? (i) (ii) (iii) A B C D The depreciation of maintenance equipment The overtime premium incurred at the specific request of a customer The hire of a tool for a specific job Item (i) only Items (i) and (ii) only Items (ii) and (iii) only All of them

7. Question 7 A company has to pay a royalty of $1 per unit to the designer of a product which it manufactures and sells. The royalty charge would be classified in the companys accounts as: A B C D A direct expense A production overhead An administrative overhead Selling overhead

8. Question 8 Which of the costs listed below is not a fixed cost? A B C D Insurance Business rates Depreciation-based on straight-line method Materials used in production

9. Question 9 Which of the following items would be treated as an indirect costs? A B C D Wood used to make chairs Metal used for the leds of the chairs Fabric to cover the seat of the chairs Staples to fix the fabric to the seat of the chair

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The Association of Chartered Certified Accountants OBU F2 Management Accounting

10. Question 10 Four cost behaviour patterns are demonstrated on the chart below. Which line on the chart represents the behaviour of total raw material costs where a volume discount applies to all purchases in a period once a required level is reached?

A B C D

Line A Line B Line C Line D

11. Question 11 The following data have been collected for four cost types W, X, Y, Z at two activity levels: Cost type W X Y Z Cost @ 100 units $ 8,000 5,000 6,500 6,700 Cost @ 140 units $ 10,560 5,000 9,100 8,580

Where V = variable. SV = semi variable and F = fixed, assuming linearity, the four cost types W, X, Y and Z are respectively W A B C D V SV V SV X F F F F Y SV V V SV Z V SV V SV

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The Association of Chartered Certified Accountants OBU F2 Management Accounting

12. Question 12 The following charts demonstrate various costs in relation to activity:

Which of the above charts represents fixed cost per unit? A B C D Chart 1 Chart 2 Chart 3 Chart 4

The following information related to question 13 to 15 Direct material Direct labor Direct expenses Factory expenses variable Fixed Non-manufacturing costs variable Fixed Total Profit is 33% of total cost 13. Question 13 What is the final selling price? A B C D 60 75 80 90 7 5 2 4 60 10 29 3

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The Association of Chartered Certified Accountants OBU F2 Management Accounting

14. Question 14 What is the variable cost? A B C D 54 per unit 42 per unit 51 per unit 49 per unit

15. Question 15 What is prime cost? A B C D 54 per unit 60 per unit 42 per unit 49 per unit

16. Question 16 A firm is trying to find a relationship between its sales volume in a quarter and its telephone expenses that quarter. If a sales volume of 2 million units corresponds to a telephone expenses of $ 5000 and sales volume of 4 million units corresponds to a telephone expenses of $ 6000, then if the sales volume is 5 million, the telephone expense is likely to be: A. B. C. D. $ 2,500 $ 6,500 $ 7,000 $ 7,500

17. Question 17 The following data are records of output levels and overhead costs January Hours worked Total costs 18,000 86,000 December 21,000 97,438

There was 3% inflation between January and December. The variable cost per unit hour worked at January level and to the nearest $ 0,01 is: A B C D $ 4.52 $ 2.86 $3.35 $2.6

18. Question 18 In a period of rising prices, which one of the following will be true with a first in first out (FIFO) system of pricing stock (inventory) issues? A. B. C. D. Product costs are overstated and profits understated. Product costs are overstated and profits overstated Product costs are understated and profits understated Product costs are understated and profits overstated

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The Association of Chartered Certified Accountants OBU F2 Management Accounting

19. Question 19 A company uses two very similar types of fixing bracket, Z99 and Z 100. The bracket are purchase from an outside supplier. When the company undertakes a stock check it finds some differences as show below: Product Z99 Z100 Stock record 100 80 Stock count 79 101

What is the most likely reason for the differences between the stock record and the stock count for each bracket? A. B. C. D. Production was higher than expected Some bracket ware damaged during production A customer asked the company to supply some extra bracket of both types Some bracket were put in the incorrect storage racks

20. Question 20 If a company wanted to ensure that its cost of production included the most recent cost for material, it would be: A B C D Standard cost FIFO Weighted average cost LIFO

21. Question 21 The following documents are used within a cost accounting system (i) (ii) (iii) (iv) invoice from supplier purchase order purchase requisition stores requisition

Which two of the documents are matched with the goods received note in the buying process? A B C D (i) and (ii) (i) and (iv) (iii) and (ii) (iii) and (iv)

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The Association of Chartered Certified Accountants OBU F2 Management Accounting

22. Question 22 Which of the following statements is/are true about group bonus schemes? (i) (ii) (iii) A B C D Group bonus schemes are appropriate when increased output depends on a number of people all making extra effort With a group bonus scheme, it is easier to reward each individuals performance Non-production employees can be rewarded as part of a group incentive scheme (i) only (i) and (ii) only (i) and (iii) only all of them

23. Question 23 Guilt Trips Ltd budgets to make 50,000 units of output (in eight hour each) during a budget period of 400,000 hours. Actual output during the period was 54,000 units which took 480,000 hours to make. The efficiency and capacity ratios are: Efficiency ratio A B C D 90% 90% 111% 111% Capctity ratio 83% 120% 83% 120%

24. Question 24 Which of the following statements is correct ? A B C D Idle time cannot be controlled because it is always due to external factors Idle time can be controlled because it is always due to external factors Idle time is always due to inefficient production staff Idle time is not always the fault of production staff

25. Question 25 A company has established a marginal costing profit of $ 72,300. Opening inventory as 300 units and closing inventory is 750 units. The fixed production OH absorption rate has been calculated as $ 5/unit. What was the profit under absorption costing? A. B. C. D. $ 67,050 $ 70,050 $ 74,550 $ 77,550

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The Association of Chartered Certified Accountants OBU F2 Management Accounting

The following information relates to questions 26 and 27 A company has following actual and budget data for year 4 Budget Production Variable production overhead Fixed production OH Sales 26. Question 26 The fixed production OH absorbed during year 4 was: A. B. C. D. $ 384,000 $ 405,000 $ 432,000 $ 459,000 8,000 units $3 $360,000 6,000 units Actual 9,000 units $3 $432,000 8,000 units

27. Question 27 Fixed production OH was: A. B. C. D. Under absorded by $ 27,000 Under absorbed by $ 72,000 Under absorbed by $ 75,000 Over absorded by $ 27,000

28. Question 28 Which of the following is a feasible value for the correlation coefficient? A. B. C. D. 2,5 1.5 0 + 1,2

29. Question 29 Which of the following are correct with regard to regression analysis? (i) (ii) (iii) A. B. C. D. In regression analysis the n stands for the number of pairs of data X2 is not the same calculation as (X)2 XY is calculate by multipling the total value of x and the total value of y i and ii only i and iii only ii and iii only i, ii and iii

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The Association of Chartered Certified Accountants OBU F2 Management Accounting

30. Question 30 The following information for advetising and sales has been established over the past six months: Month 1 2 3 4 5 6 Sales revenue 000 155 125 200 175 150 225 Advertising expenses 000 3 2.5 6 5.5 4.5 6.5

Using the high-low method which of the following is the correct equation for linking advertising and sales from above data? A. B. C. D. Sales revenue = 62,500 + ( 25 x advertising expenditure) Advertising expenditure = -2,500 + (0.04 x sales revenue) Sales revenue = 95,000 + (20 x advertising expenditure) Advertising expenditure = -4,750 + (0.05 x sales revenue)

31. Question 31 Wastage of a raw material during a manufacturing process is 25% of input quantity. What input quantity of raw material is required per kg of output? A B C D 0.8 kg 1.2 kg 1.25 kg 1.33 kg

32. Question 32 The purchase price of a stock item is $25 per unit. In each 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 of placing an order for the item is $20. What is the Economic Order Quantity (EOQ) for the stock item to the nearest whole unit? A B C D 730 894 1,461 1,633

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The Association of Chartered Certified Accountants OBU F2 Management Accounting

33. Question 33 An organisation has the following total costs at two activity levels: Activity level (units) Total costs ($) 16,000 135,000 22,000 170,000

Variable cost per unit is constant within this range of activity but there is a step up of $5,000 in the total fixed costs when the activity exceeds 17,500 units. What is the total cost at an activity of 20,000 units? A B C D $155,000 $158,000 $160,000 $163,000

34. Question 34 A company operates a job costing system. Job number 605 requires $300 of direct materials and $400 of direct labour. Direct labour is paid at the rate of $8 per hour. Production overheads are absorbed at a rate of $26 per direct labour hour and non-production overheads are absorbed at a rate of 120% of prime cost. What is the total cost of job number 605? A B C D $2,000 $2,400 $2,840 $ 4,400

35. Question 35 Which of the following are characteristics of service costing? A. B. C. D. High level of indirect costs are as a proportion of total cost Cost units are often tangible Use of equivalent unit High level of raw material costs are as proportion of total cost

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