f2 Mock Exam

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TOC F
Paper F2: MANAGEMENT ACCOUNTING – Question and Answer Practice Papers
Published by Tony Surridge Online Limited in 2010
Copyright © Tony Surridge Online Limited

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TOC F
Table of Contents
Introduction to Tony Surridge +AddVance Study Materials .............................................................................. Go To

Copyright ............................................................................................................................................................. Go To
Table of Contents ..........................................................................................................................................................
How to use this +AddVance E-book ................................................................................................................... Go To
Management Accounting F2 – Syllabus Outline ............................................................................... See Full Version
CBE (Computer Based Exam) question types and exam format ....................................................................... Go To
Formulae Sheet ................................................................................................................................................... Go To
REVIEW TEST 1 - QUESTIONS ............................................................................................................. See Full Version
REVIEW TEST 1 - ANSWERS .............................................................................................................. See Full Version
REVIEW TEST 3 - QUESTIONS .............................................................................................................................. Go To
REVIEW TEST 3 - ANSWERS ...............................................................................................................................Go To
Congratulations on Completion ......................................................................................................... See Full Version

TOC F
How to use this +AddVance E-book
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TOC F
CBE (Computer Based Exam) question types
and exam format
CBE Question Types
Multiple choice (MCQ) (two marks) - where you are required to choose one answer from four
options by clicking on the appropriate ‘radio button’.
Multiple choice (MCQ) (one mark) – where you are required to choose on answer from either two or
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number of related statements by clicking on the 'radio button' which corresponds to the appropriate
response for each statement.
Number entry (two marks) – where you are required to key in numerical responses to a question
shown on screen.
Exam Format
ACCA Qualification (F1-F3)/MSER exams MMA and MFA
Each exam:
Is of two hours duration
Contains 50 questions (40 two-mark questions and 10 one-mark questions)
Is out of 90 marks with a pass mark of 50%
Contains questions types: one and two mark MCQ’s, one and two-mark multiple response questions,
two-mark multiple response matching questions and two-mark number entry questions.
Preparing for the Exams

Syllabus and study guide documents, for all modules assessed using computer based exams
(CBEs), can be found in the Exam Paper Resources section in the Student pages on this website.
Details for exams with examinable documents, ie T3 and F3, are also available within the same
section. These documents are updated at the start of each exam session.
The content of the CBEs are updated two times a year to reflect any changes in the examinable
documents.

TOC F
TOC F
SAMPLE DOWNLOAD

TOC F
Computer Based Assessment – SAMPLE DOWNLOAD - QUESTIONS ACCA Paper F2: Management Accounting (MA)
1 The following diagram represents the behaviour of one element of cost:

$
Which ONE of the following statements is consistent with the above diagram?
A
A Annual factory power cost where the electricity supplier sets a tariff based on a fixed charge plus a constant
unit cost for consumption but subject to a maximum annual charge.
B Weekly total labour cost when there is a fixed wage for a standard 40 hour week but overtime is paid at a
premium rate.
C Total direct material cost for a period if the supplier charges a lower unit cost on all units once a certain
quantity has been purchased in that period.
D Total direct material cost for a period where the supplier charges a constant amount per unit for all units
supplied up to a maximum charge for the period.
2 The following represents a profit/volume graph for an organisation:

$
At the specific levels of activity indicated, what do the lines depicted as ‘T’ and ‘V’ represent?
Line ‘T’ Line ‘V’

A Loss Profit
B Loss Contribution A
C Total fixed costs Profit
D Total fixed costs Contribution

TOC F
3 An organisation manufactures and sells a single product. At the budgeted level of output of 2,400 units per week, the
unit cost and selling price structure is as follows:
$ per unit $ per unit

Selling price 60
Less – variable production cost 15
– other variable cost 5
– fixed cost 30
–––
(50)
–––
Profit 10
–––
What is the breakeven point (in units per week)?
A 1,200
B 1,600 A
C 1,800
D 2,400
4 A company manufactures one product which it sells for $40 per unit. The product has a contribution to sales ratio of 40%.
Monthly total fixed costs are $60,000. At the planned level of activity for next month, the company has a margin of safety of
$64,000 expressed in terms of sales value.
What is the planned activity level (in units) for next month?
A 3,100
B 4,100
C 5,350
A
D 7,750
5 A company manufactures and sells two products (X and Y) both of which utilise the same skilled labour. For the coming
period, the supply of skilled labour is limited to 2,000 hours. Data relating to each product are as follows:
Product X Y
Selling price per unit $20 $40
Variable cost per unit $12 $30
Skilled labour hours per unit 2 4
Maximum demand (units) per period 800 400
In order to maximise profit in the coming period, how many units of each product should the company
manufacture and sell?
A 200 units of X and 400 units of Y

B 400 units of X and 300 units of Y
C 600 units of X and 200 units of Y A
D 800 units of X and 100 units of Y
6 An organisation manufactures a single product. The total cost of making 4,000 units is $20,000 and the total cost of making
20,000 units is $40,000. Within this range of activity the total fixed costs remain unchanged.
What is the variable cost per unit of the product?
A $0·80
B $1·20
C $1·25 A
D $2·00

TOC F
7 In a short-term decision-making context, which ONE of the following would be a relevant cost?
A Specific development costs already incurred.

B The cost of special material which will be purchased.
A
C Depreciation on existing fixed assets.
D The original cost of raw materials currently in inventory which will be used on the project.
8 A manufacturing organisation incurs costs relating to the following:
(1) Commission payable to salespersons.

(2) Inspecting all products.
(3) Packing the products at the end of the manufacturing process prior to moving them to the warehouse.
Which of these costs are classified as production costs?
A (1) and (2) only

B (1) and (3) only
C (2) and (3) only
A
D (1), (2) and (3)
9 The demand for a product is 12,500 units for a three month period. Each unit of product has a purchase price of $15 and
ordering costs are $20 per order placed.
The annual holding cost of one unit of product is 10% of its purchase price.
What is the Economic Order Quantity (to the nearest unit)?
A 577
B 816
C 866 A
D 1,155
10 A company determines its order quantity for a raw material by using the Economic Order Quantity (EOQ) model.
What would be the effects on the EOQ and the total annual holding cost of a decrease in the cost of ordering a
batch of raw material?
EOQ Total annual holding cost

A Higher Lower
B Higher Higher
C Lower Higher A
D Lower Lower
11 A company manufactures two products, X and Y, in a factory divided into two production cost centres, Primary and
Finishing. The following budgeted data are available:
Cost centre Primary Finishing

Allocated and apportioned fixed
overhead costs $96,000 $82,500
Direct labour minutes per unit:
– product X 36 25
– product Y 48 35
Budgeted production is 6,000 units of product X and 7,500 units of product Y. Fixed overhead costs are to be
absorbed on a direct labour hour basis.
What is the budgeted fixed overhead cost per unit for product Y?
A $11
B $12 A
C $14
D $15

TOC F
12 A company uses an overhead absorption rate of $3·50 per machine hour, based on 32,000 budgeted machine hours for 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?
A Under absorbed by $3,875

B Under absorbed by $7,000 A
C Over absorbed by $3,875
D Over absorbed by $7,000
13 A company manufactures and sells a single product. For this month the budgeted fixed production overheads are
$48,000, budgeted production is 12,000 units and budgeted sales are 11,720 units.
The company currently uses absorption costing.
If the company used marginal costing principles instead of absorption costing for this month, what would be the
effect on the budgeted profit?
A $1,120 higher
B $1,120 lower A
C $3,920 higher
D $3,920 lower
14 For which of the following is a profit centre manager normally responsible?
A Costs only
B Revenues only A
C Costs and revenues
D Costs, revenues and investment.
The following information relates to questions 15 and 16:

The standard direct material cost per unit for a product is calculated as follows:
10·5 litres at $2·50 per litre
Last month the actual price paid for 12,000 litres of material used was 4% above standard and the direct material usage
variance was $1,815 favourable. No stocks of material are held.
15 What was the adverse direct material price variance for last month?
A $1,000
B $1,200
A
C $1,212
D $1,260
16 What was the actual production last month (in units)?
A 1,074
B 1,119 A
C 1,212
D 1,258

TOC F
17 A company operates a standard marginal costing system. Last month its actual fixed overhead expenditure was 10% above
budget resulting in a fixed overhead expenditure variance of $36,000.
What was the actual expenditure on fixed overheads last month?
A $324,000
B $360,000 A
C $396,000
D $400,000
18 Last month a company budgeted to sell 8,000 units at a price of $12·50 per unit.
Actual sales last month were 9,000 units giving a total sales revenue of $117,000.
What was the sales price variance for last month?
A $4,000 favourable
B $4,000 adverse A
C $4,500 favourable
D $4,500 adverse
19 A company operates a job costing system. Job number AX28 requires $450 of direct materials and $600 of direct labour.
Direct labour is paid at the rate of $12 per hour. Production overheads are absorbed at a rate of $39 per direct labour hour
and non-production overheads are absorbed at a rate of 80% of prime cost.
What is the total cost of job number AX28?
$ A
20 An organisation operates a piecework system of remuneration, but also guarantees its employees 80% of a time-based rate of
pay which is based on $20 per hour for an eight hour working day. Three minutes is the standard time allowed per unit of
output. Piecework 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 employee’s gross
pay for that day?
$ A
END OF SAMPLE DOWNLOAD – QUESTIONS
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TOC F
SAMPLE DOWNLOAD

TOC F
Computer Based Assessment – SAMPLE DOWNLOAD - ANSWERS ACCA Paper F2: Management Accounting (MA)
Summary of correct answers:
1 A 11 D 21 See Full Version 31 See Full Version 41 See Full Version

2 D 12 A 22 See Full Version 32 See Full Version 42 See Full Version
3 C 13 B 23 See Full Version 33 See Full Version 43 See Full Version
4 C 14 C 24 See Full Version 34 See Full Version 44 See Full Version
5 D 15 B 25 See Full Version 35 See Full Version 45 See Full Version
7 B 17 C 27 See Full Version 37 See Full Version 47 See Full Version
9 D 19 $3,840 29 See Full Version 39 See Full Version 49 See Full Version
10 D 20 $180 30 See Full Version 40 See Full Version 50 See Full Version
1 A Q
2 D Q
3 C Workings:
Fixed cost : $30 x 2,400 = $72,000

Contribution per unit : $60 - $15 - $5 = $40
Fixed cost
Breakeven =
Unit contribution
$72,000
=
$40
Q
= 1,800 units
4 C Workings:
Contribution per unit = $40 x 0.4 = $16
Units
$60,000
Breakeven = = 3,750
$16
$64,000
Margin of safety = = 1,600
$40
Planned activity level 5,350 units
(Note : planned activity level = breakeven + margin of safety.)

Q

TOC F
5 D Workings:
X Y
Contribution per unit $8 $10
Hours per unit 2 4
Contribution per hour $4 $2.50
Ranking 1 2
hrs
Hours available 2,000
800 of X @ 2 hours (1,600)
400
100* of Y @ 4 hours 400
NIL
Q
*400/4 = 100
6 C Workings:
Units Cost
$
High 20,000 40,000
Low 4,000 20,000
Change 16,000 20,000
$20,000
Therefore : Variable cost =
16,000
Q
= $1.25 per unit
7 B Q
8 C Q
9 D Workings:
2 CoD
Q =
ch
2 x 20 x (12,500 x 4)
=
15 x 0.1
Q
= 1,154.7 (1,155)
10 D Workings:
2CoD
Q =
ch
Q
Cost of holding = x ch
2
1. If the numerator in the first equation reduces, the value of Q reduces. Q
2. If Q reduces in the second equation then the cost of holding also reduces.

TOC F
11 D Workings:
Calculation of budgeted hours :
Primary centre =
(36 x 6,000 ) + (48 x 7,500 )
60
216,000 + 360,000
=
60
= 9,600 hours
Finishing centre =
(25 x 6,000 ) + (35 x 7,500 )
60
150,000 + 262,500
=
60
= 6,875 hours
Fixed overhead absorption rate
$96,000
Primary centre =
9,600 hrs
= $10 per hour
$82,500
Finishing centre =
6,875
= $12 per hour
Fixed overhead cost for product Y :

$
48
Primary centre : x $10 = 8
60
35
Finishing centre : x $12 = 7
60
Q
Fixed cost per unit = 15

TOC F
12 A Workings:
$
Actual overhead expenditure 108,875
Overhead expenditure absorbed:
30,000 hrs x $3.50 105,000 Q
Overhead under absorbed 3,875
13 B Workings:
Finished inventory increases during the period by :
12,000 - 11,720 = 280 units
Therefore marginal costing profit is LOWER than absorption profit by :
$48,000
280 units x = $1,120
12,000 units Q
Note : if fixed overhead in inventory increases over a period then marginal costing profit will be lower
than absorption profit.
14 C Q
15 B Workings:
$
12,000 litres should cost (x $2.50) 30,000
Actual cost ($30,000 x 1.04) 31,200 Q
Direct material price variance 1,200 (A)
16 C Workings:
Favourable usage variance $1,815
Litres saved $1,815

= 726 litres
2.50
Actual litres used 12,000

Budgeted litres for actual output 12,726
Standard litres per unit = 10.5
12,726
Therefore actual output =
10.5
Q
= 1,212 units
17 C Workings:
Let x = budgeted expenditure

1.1 x - x = $36,000
0.1 x = $36,000
x = $360,000
Actual expenditure = $360,000 x 1.1

= $396,000
Q
TOC F
18 C Workings:
$
9,000 units should earn (x $12.50) 112,500
Actual revenue 117,000 Q
Sales price variance 4,500 (F)
19
$3,840
Workings:
$
Prime cost (450 + 600) 1,050
Production overheads (600/12) x 39 1,950
———
Total production cost 3,000
Non-production overheads (1,050 x 0.8) 840
——— Q
Total cost 3,840
———
20 $180
Workings:
200 units × (3 ÷ 60) × $18 = $180 Q

Note: this is greater than the guaranteed minimum of: $20 x 8 x 0.8 = $128
END OF SAMPLE DOWNLOAD - ANSWERS

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ACCA Paper F2 – Management Accounting (MA)

Number of Review Tests: 7

We hope that you will enjoy using our +AddVance materials.

Good luck with your studies.

© Tony Surridge Online limited 2010 www.tonysurridge.co.uk

Published by Tony Surridge Online Limited in 2010

Copyright © Tony Surridge Online Limited

Tony Surridge Online Limited

© Tony Surridge Online limited 2010 www.tonysurridge.co.uk

Introduction to Tony Surridge +AddVance Study Materials .............................................................................. Go To

© Tony Surridge Online limited 2010 www.tonysurridge.co.uk

The list of the Icons are is follows:

© Tony Surridge Online limited 2010 www.tonysurridge.co.uk

ACCA Qualification (F1-F3)/MSER exams MMA and MFA

Preparing for the Exams

© Tony Surridge Online limited 2010 www.tonysurridge.co.uk

© Tony Surridge Online limited 2010 www.tonysurridge.co.uk

1 The following diagram represents the behaviour of one element of cost:

2 The following represents a profit/volume graph for an organisation:

Line ‘T’ Line ‘V’

© Tony Surridge Online limited 2010 www.tonysurridge.co.uk

$ per unit $ per unit

What is the breakeven point (in units per week)?

A 200 units of X and 400 units of Y

What is the variable cost per unit of the product?

© Tony Surridge Online limited 2010 www.tonysurridge.co.uk

A Specific development costs already incurred.

8 A manufacturing organisation incurs costs relating to the following:

(1) Commission payable to salespersons.

Which of these costs are classified as production costs?

A (1) and (2) only

What is the Economic Order Quantity (to the nearest unit)?

EOQ Total annual holding cost

Cost centre Primary Finishing

© Tony Surridge Online limited 2010 www.tonysurridge.co.uk

A Under absorbed by $3,875

The company currently uses absorption costing.

14 For which of the following is a profit centre manager normally responsible?

The following information relates to questions 15 and 16:

10·5 litres at $2·50 per litre

16 What was the actual production last month (in units)?

© Tony Surridge Online limited 2010 www.tonysurridge.co.uk

What was the actual expenditure on fixed overheads last month?

What was the sales price variance for last month?

What is the total cost of job number AX28?

END OF SAMPLE DOWNLOAD – QUESTIONS

© Tony Surridge Online limited 2010 www.tonysurridge.co.uk

© Tony Surridge Online limited 2010 www.tonysurridge.co.uk

Summary of correct answers:

1 A 11 D 21 See Full Version 31 See Full Version 41 See Full Version

Fixed cost : $30 x 2,400 = $72,000

Contribution per unit = $40 x 0.4 = $16

Planned activity level 5,350 units

(Note : planned activity level = breakeven + margin of safety.)

© Tony Surridge Online limited 2010 www.tonysurridge.co.uk

© Tony Surridge Online limited 2010 www.tonysurridge.co.uk

Calculation of budgeted hours :

Fixed overhead absorption rate

= $10 per hour

= $12 per hour

Fixed overhead cost for product Y :

© Tony Surridge Online limited 2010 www.tonysurridge.co.uk