Fundamentals of Management Accounting

Weekly Quiz
Week 1 to 7

What are the main 4 reasons a company will

calculate a cost value for its products?
Write down 4 major differences between
Financial accounting & Management
accounting
Managers in a business carry out 3 main
activities, what are they?
Draw a diagram to illustrate the 3 main Levels
of Management in a typical Company

Draw a typical Company organisation chart

showing a range of different functions or
disciplines
What is a Cost Unit?
There are 3 main Cost Classifications, What
are they?
With examples, describe the Direct & Indirect
Cost Classifications
With examples, describe Production & NonProduction Cost categories

In Cost behaviour studies, there are often

said to be 4 types of cost behaviour pattern,
what are they? & sketch the appropriate
graph for each.
What is the Level of Activity a measure of?
Give some examples of Semi-Variable Costs

If you are given Total Costs for Levels of

Activity, what method can you use to split
variable from fixed Costs?
Write out the High/Low method, what is the
grid you would use?
What adjustments might you make to the
Total Costs for Step Costs & Bulk
Discounts, do you subtract Step Costs & add
Bulk Discounts?: True or False?



What is a:
Cost centre?
Revenue Centre?
Profit Centre?
Investment Centre?
How do you measure Performance in an
Investment centre?
What is the R.O.C.E. formula?



What is an Overhead?
What are the three As?
What is Allocation of Overheads?
What is Apportionment of Overheads?
What is re-Apportionment of Overheads?
What is Absorption of Overheads?
Look at the diagram on the next slide & fill in
the areas you know

Direct
Production
Costs
Direct Materials
Direct Labour
Direct Expenses
Allocate
Directly:

Indirect
Production
Costs

Production
Cost
Centre

Allocate
Apportion

Service
Cost
Centre

Re-Apportion
Absorption

Full Absorption Cost

Per Unit

OAR = Budgeted O/H

B Level of Activity

In order to re-apportion Service Centre Costs

to Production Cost Centres, 2 methods are
required in your syllabus, what are they?
What golden rules do you need to follow
with Service to Production re-apportionment?
Answer: Service to Service, reciprocal if
necessary, then Service to Production.

Absorption rates are NOT based on Actual

instead they use budgeted Overhead Costs?
Why are BOAR rates set in advance?
What is the OAR Formula?
What 3 methods attach themselves to the
Budgeted Level of Activity
OAR Rates can be broken into 2 categories,
what are they?
Answer: Blanket or Departmental

Because BOARs are based on estimates, what

is the issue that could occur at the end of the
accounting period?
What is OVER Absorption?
What is UNDER Absorption?
You have been taught a 3 Box layout to
measure Under/Over Absorption, write out
the pro-forma layout



Define what job costing is

What records are kept to keep track of job
costs?
What is batch costing?
How do you calculate the cost per unit under
batch costing?
What is pricing?
What are the TWO likely pricing methods you
have to use in CIMA C1?



What is Mark-up based on?

What is Margin based on?
What is Marginal costing?, what happens to
Overhead Costs?
What is Contribution?
What is deducted from Contribution to get
Net Profit?

IF Sales & Production quantities differ, the

profits WILL DIFFER True or False?
Write out a diagram showing what happens
when Opening & Closing Stock differ or
remain the same. These are KEY rules & need
to be learned.

If Op Stock > Close Stock

MC Profit > AC Profit

If Op Stock = Close Stock

MC Profit = AC Profit

If Op Stock < Close Stock

MC Profit < AC Profit

These are KEY Rules: remember them

Process Costing has 2 Main features, what are

they?
In a T account, what is on the Debit & Credit
sides?
What is a NORMAL LOSS?
What is an ABNORMAL LOSS?
What is an ABNORMAL GAIN?
How do you calculate the Cost per Unit of
good output?

What is a Conversion Cost?

What is an Equivalent Unit?

There are 3 steps to calculating an EU, what
are they?
1. Statement of EUs
2. Cost per EU
3. Statement of Evaluation

What are Joint Products?

What are By-products?

Give examples

Up to the split off point costs are classed as
joint or shared, after this point additional
costs may be incurred for various products.

What methods are used to split joint or
common costs?
1. Physical quantity
2. Sales value



What is the definition of a Budget?

Why does a Company have a budget?
What are the most common Functional
Budgets in use by a Manufacturing Company?
What is a Master Budget & what 3 elements
does it have?
What is a Budget Committee?
What is a Budget Manual?
What is a PBF, Principal Budget Factor?

In what order are Budgets prepared for a

typical Manufacturing Company?
What are the Golden Rules concerning
Opening & Closing inventory?, which is
ADDED & which is SUBTRACTED to
Production/Usage Budgets?
What is a Cash Budget & what should be
included/excluded?
What is the issue regarding TIME with Cash
Budgets?



What is a Fixed Budget?

What is a Flexed Budget?
What type of Cost Behaviour are you
interested in for a Flexed Budget?
Who is in this picture?



What is a Standard Cost?

What is a Variance?
What is a Standard Cost Card?
What are the 4 types of Standard Cost?
Describe an Ideal Standard
Describe a Current Standard
Describe an Attainable Standard
Describe a Basic Standard



A Variance can be ---------- or -------?

Draw out the Family Tree of Variances, with
the appropriate formulae
What does AQ, AP, SP & SQ stand for?
What is the purpose of an Operating
Statement?
List some basic reasons for
Materials/Labour & Overhead Variances

Family Tree of Variances

Material

Price

Variable Overheads

Usage

Expenditure

Labour

Rate

Efficiency

Efficiency

Sales

Price

Volume Profit



What is the Break Even point for a business?

How do you calculate the unit Contribution?
How do you calculate the Total Contribution?
How do you calculate the BEP in units?
What is the Contribution Target?
What is the Margin of Safety (MoS)?
How do you calculate the MoS?
How do you calculate the Contribution to
Sales Ratio (C/S Ratio)?

How do you calculate the BE revenue using

the C/S Ratio?
Draw a Break Even Graph
Draw a Profit/Volume Chart



What is a Limiting Factor?

How do you calculate the Contribution per
Limiting Factor?