29 Questions
What type of diagram would BEST highlight the differences between areas based on the average salary of part qualified accountants in different regions?
A multiple bar chart
Which of the following is NOT an advantage of non-financial measures over financial measures?
The relative importance of non-financial measures is more easily judged
What is Martin's pay for the week if he produces the following output: $232.50
232.50
How many liters of material were input into the process during the period if 340 liters were produced and there was a normal loss of 10% and an abnormal loss of 5%?
377
What is the annual pension amount payable from 1 January 20X7 if the index-linked pension was $10,000 a year payable from 1 January 20X5?
10,297
What is the net cash inflow or outflow relating to the sale of the non-current asset for Sparrow Co in August 20X5?
25000
What is the classification of the following items for Sparrow C: Investment of $30,000 in new factory premises? (______/expense)
asset
What is the classification of the following items for Sparrow C: A $10,000 extension to enhance the production capacity of a factory? (______/expense)
asset
What is the classification of the following items for Sparrow C: Cleaning of a factory $900? (asset/______)
expense
What is the classification of the following items for Sparrow C: Office furniture for the managing director? (______/expense)
asset
What is the classification of the following items for Sparrow C: Payment of factory staff wages? (asset/______)
expense
What is the classification of the following items for Sparrow C: Breakdown repairs on faulty machine? (asset/______)
expense
Calculate the direct labour rate variance for June for Seashell Co.
432000
Calculate the variable overhead efficiency variance for June for Seashell Co.
180000
Calculate the sales volume variance for Seashell Co in June if the reported variance was $24,000 (A).
33600
Which of the following factors are the MOST important for Seashell Co to consider before investigating variances?
Materiality
Match the following performance measurement terms with their definitions:
Critical success factors = Performance requirements fundamental to competitive success Mission statements = Business's rationale for existing Key performance indicators = Measures used to assess performance Strategic objectives = Quantified embodiments of mission
Which TWO of the following would be appropriate as a measure of service quality for Ins Co?
Number of repeat customers
Which TWO of the following alternative approaches to performance measurement would be suitable for a human rights campaign organisation?
Speed of response to emerging issues
What is the mean speed for the whole journey if a train covers a distance of 30 miles, traveling the first 20 miles at 30 miles per hour and the remaining 10 miles at 60 miles per hour?
40
At the end of year 5, how much remains from a $15,000 investment for five years at 10% per annum after a withdrawal of $5,000 at the end of year 3?
$14,965
Which of the following statements best describes direct costs?
Costs directly identified with a product or service
How many kg of raw material should be purchased if the opening inventory is 30,000 kg and the closing inventory is budgeted to be 50,000 kg?
620000
What was the amount spent on purchases of raw materials for the period if the standard cost of raw material G issued to production was $150,000, with a materials usage variance of $10,000 favorable and a materials price variance of $30,000 adverse?
$190,000
What was the variable overhead expenditure variance if the budgeted variable overhead cost was $250,000 and the actual cost was $226,500, with 100,000 budgeted labor hours and 86,000 actual labor hours?
$23,500 adverse
Which TWO of the following statements relating to Total Quality Management (TQM) are true?
TQM requires a commitment to quality across the whole organisation
What is the favorable fixed production overhead expenditure variance if the standard cost per unit was Direct materials: $20, Direct labor: $15, Variable overhead: $10, and Fixed production overhead: $5, with actual production and sales of 7,000 units and fixed production overheads of $28,000?
2000
Which of the following is MOST likely to be classified as a step cost?
Supervisor salary
Which TWO of the following are characteristics of job costing?
Each order is generally for a short duration
Study Notes
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Foundations in Accountancy/ACCA Management Accounting (FMA/MA)
- 2-hour exam
- 35 multiple-choice questions in Section A
- 3 compulsory questions in Section B
Section A - Multiple Choice Questions
-
Performance measurement for non-profit seeking organizations:
- Cannot be judged by profitability
- Alternative approaches: number of members and volunteers, speed of response to emerging issues
-
Train journey: mean speed = 40 miles per hour
-
Investment: $18,108 remains at the end of year 5
-
Direct costs: costs directly identified with a product or service
-
Material purchases: 620,000 kg of raw material
-
Materials usage variance: $10,000 favourable
-
Variable overhead expenditure variance: $11,500 adverse
-
Total Quality Management (TQM): commitment to quality across the whole organization, 'get it right first time'
-
Fixed production overhead expenditure variance: $2,000 favourable
-
Step cost: supervisor salary
-
Job costing: customer-driven production, each order is of generally short duration
-
Expected level of sales: 4,333 units
-
Optimal reorder quantity: 5,000 units
-
Production costs: $20,000 for 2,000 units
-
Over-absorbed production overhead: $30,000
-
Perpetual inventory system: records updated for each receipt and issue of inventory
-
Sampling: systematic sampling
-
Diagram: simple bar chart
-
Non-financial performance measures: earlier warning signal of problems, cover issues like customer service
-
Piecework pay: $232.50 for the week
-
Normal and abnormal loss: 377 litres of material input
-
Index-linked pension: $10,297 per annum
-
Requisitioned but not issued: 80 reams of headed notepaper
-
Valuation of output: $19,836
-
Regression equation: COSTS = 1,500 + (15 × OUTPUT)
-
Variable costs: approximately $15 per unit on average
-
Production costs: likely to be about $9,000
-
Balanced scorecard: percentage of company sales derived from new products
-
Correlation coefficient: 0
-
Discounted cash flow: relevant cash flows include initial asset expenditure, scrap value, and directly attributable fixed costs
-
Overhead over-/under-absorption: cannot be determined from the data available
-
Spreadsheets: make calculation and manipulation of data easier and quicker, facilitate efficient analysis, and enable what-if analysis### Budgeting and Costing
-
A fixed budget is a budget for a single level of activity and is most generally used for planning purposes
-
A fixed budget is not a budget for fixed costs
-
A fixed budget does not use the principles of marginal costing
Asset Expenditure
- Asset expenditure involves the cost of acquiring or enhancing non-current assets
- Asset expenditure is recorded as an asset in the statement of financial position
- Asset expenditure is not expenditure on the manufacture of goods or provision of services
- Asset expenditure is not recorded as a liability in the statement of financial position
Cost Objects
- A cost object is an activity or product for which a separate measure of cost is desired
- Examples of cost objects include:
- A call taken at a call centre
- One of a bank's business customers
- Rent expense of a factory
- Interest paid on a loan is not typically a cost object
Value Analysis
- Value analysis involves the systematic investigation of factors affecting the cost of a product or service
- Value analysis considers three aspects of value
Depreciation of the Bottling Plant
- Depreciation of the bottling plant includes:
- Factory rent
- Factory manager's salary
- Cost of bottles
Sparrow Co.
- Sparrow Co. makes and sells construction materials
- Sparrow Co. has cash sales and credit sales
- Credit sales are expected to be 50% of total sales
- Cash sales receive a 10% discount
Cash Budget
- The cash budget should include:
- Cash receipts from credit sales
- Cash receipts from cash sales
- The cash budget should exclude:
- Bad debts
- Credit sales that will not be paid in the current period
Non-Current Assets
- A non-current asset is an asset that is expected to be used for more than one year
- Examples of non-current assets include:
- Factory premises
- Office furniture for the managing director
- A non-current asset is not an expense
Variance Analysis
- A variance is the difference between the actual cost and the standard cost
- Variances can be favourable or adverse
- Direct labour rate variance is the difference between the actual direct labour cost and the standard direct labour cost
- Direct material usage variance is the difference between the actual direct material usage and the standard direct material usage
- Sales volume variance is the difference between the actual sales volume and the standard sales volume
This is a final exam for the Foundations in Accountancy/ACCA Management Accounting (FMA/MA) course, covering topics from January to June 2023.
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