(1) A product which cost $12.50 in 2011, cost $13.65 in 2012.

Calculate the simple price index (or price

relative) for 2012 based on 20109.20

1. 105.64
2. 106.71
3. 107.59

(2) A time series model of sales volume has the following trend and additive seasonal variation.

Trend

Y= 5,000 +4,000 X

Where:

Y= quarterly sales volume in units

X= the quarter number (Where the first quarter of 2009= quarter 17, the second quarter of 2009=
quarter 18 etc).

Quarter seasonal variation(units)

first +3000

second +1000

third -1500

fourth -2500

What would be the time series forecast of sales units for the third quarter of 2010?

a. 79,500
b. 95,500
c. 97,000
d. 98,500

(3) A company has the following data for a semi-variable cost

Output (Units) Total costs ($)

20,000 85,000

60,000 253,000

The fixed element of total cost increases by $8,000 at output levels in excess of 30,000 units. What is
the variable cost per unit?

a. $4.00
b. $4.20
c. $4.22
d. $4.25
(4) Seasonal variations arise in the short-term. It is very important to distinguish between trend and
seasonal variation. Seasonal variations must be taken out, to leave a figure which might be taken as
indicating the trend (deseasonalised data)

a. True
b. False

(5) Which of the following is a common application of spreadsheet?

a. management accounts
b. revenue analysis
c. budgets and forecasts
d. all of the choices

(6) Which of the following statements are true/false?

1. A spreadsheet is the most suitable software for the storage of large volume of data
2. A spreadsheet could be used to produce a flexible budget
3. Most spreadsheets contain a facility to display the data within them in a graphical form

(7) The following data is available on the production and sales for the first three years of a company’s
new product.

Year 1 Year 2 Year 3

Production units 5,000 6,000 4,000

Sales unit s 4,000 6,000 5,000

Variable costs per unit, selling price and total fixed costs per year were constant over the three-year
period. The company is considering the use of either marginal or absorption costing.

Which of the following statements is/are true?

(1) Absorption costing will show a lower profit than marginal costing in Year 1

(2) Marginal costing will show a lower closing inventory valuation than absorption costing in Year 2

(3) Total profit over the three-year period will be the same under both methods

a. 1 only
b. 2 only
c. 3 only
d. 2 and 3

(8) When all the functional budgets have been prepared, they are summarised and consolidated into
what?

a. Master budget
b. Statement of equity

(9) What is the budget officer primarily responsible for?

 a. ensuring that deadlines are met
b. dealing with budgetary control problems
c. liaising between the budget committee and managers responsible for budget preparation
d. educating people about budgetary control
e. all of the choices

(10) A company has the following budgeted costs and revenues:

$ per unit

Sales price 50

Variable production cost 18

Fixed production cost 10

In the most recent period, 2,000 units were produced and 1,000 units were sold. Actual sales price,
variable production cost per unit and total fixed production costs were all as budgeted. Fixed
production costs were over-absorbed by $4,000. There was no opening inventory for the period.

What would be the reduction in profit for the period if the company has used marginal costing rather
than absorption costing?

a. 4,000
b. 6,000
c. 10,000
d. 14,000

(11)

(12) Which of the following are examples of revenue expenditure?

a. Improvements to the earning capacity of non-current assets

b. Purchase of inventories
c. Purchase of a company car by an estate agency business
 d. Addition of an extension to a building

(13) Which of the following is an appropriate use of standard costing?

a. it acts as a control device by establishing standards (planned costs), highlighting activities that
are not conforming to plan and thus alerting management to areas which may be out of control
and in need of corrective action
b. it is used to value inventories and cost production for cost accounting purposes
c. it is useful for planning, control and motivation
d. all of the choices

(14) Which of the following statements are true/false?

1. The marginal costing operating statement has a sales volume variance that is calculated using
the standard contribution per unit (rather than a standard profit per unit as in absorption
costing)
2. In marginal costing statement, there is no fixed overhead volume variance

(15) What is the difference between actual hours should cost and actual hours did cost?

1. variable overhead expenditure variance

2. variable overhead efficiency variance
3. variable overhead total variance
4. none of the choices

(16) What is the name of the policy of reducing the variety ad range of materials and components
purchased by the manufacturer and of components produced?

a. Standardisation of materials and components

b. Reducing Labour Costs: Work Study
c. Value engineering

(17) A process produces two joint products A and B in equal physical quantities. A and B are sold at
split off point for $5 per kg and $8 per kg respectively. There are no further costs after the split off
point. If joint costs are apportioned on a relative sales value basis, which of the following statements
is true?

a. Both products will have the same return on sales ratio (operating margin)
b. Product A will have the higher return on sales ratio (operating margin)
c. The cost per kg will be the same for both products
d. The cost per kg of product A will be higher than that of product B

(18) When producing reports on calling management attention, it is important to offer

recommendations and conclusions as to how performance may be improved.

a. True
b. False

(19) Which of the following is not an example of cost reduction techniques

a. budgetary control
 b. value analysis
c. redesigning and simplifying a product
d. using standardized components

(20) What are the indicators to measure efficiency?

a. variance analysis
b. cost per unit of activity
c. comparisons with benchmark information
d. all of the choices

(21) Which of the following are measures of risk?

a. interest cover and gearing

b. current ratio and acid test ratios
c. gross margin and asset turnover
d. none of the choices

(22) Which of the following is not an indicator of effectiveness?

a. cost recovered as a proportion of costs incurred

b. flexibility such as average waiting time
c. quality of service/output measures
d. client satisfaction in the service being provided

(23) Which of the following statements are true/false?

1. Non-financial indicators can provide managers with incentives to improve long-term financial
performance. False
2. If customer satisfaction is low, then sales demand may fall in the future.

(24) Which of the following is a disadvantage of ROI?

a. may discourage investment and requipment in more technologically up to date assets

b. the measure is based on accounting information
c. it may be open to manipulation by managers
d. ROI may lead managers to take decisions which are to their advantage but which do not benefit
the organization as a whole
e. all of the choices

(25) A division has a capital employed of $2,000,000 and earns an operating profit of $600,000. It is
considering a project that will increase operating profit by $20,000 but would increase its capital
employed by $80,000. A rate of 15% is used to compute interest on capital employed. What will be
the effect on residual income and return on capital employed if the division accepts the project?

a. Residual income Increase Return on investment Increase

b. Residual income Increase Return on investment Decrease
c. Residual income Decrease Return on investment Increase
d. Residual income Decrease Return on investment Decrease
(26) The Eastland Postal Service is government owned. The government requires it to provide a parcel
delivery service to every home and business in Eastland at a low price which is set by the government.
Express Couriers Co is a privately owned parcel delivery company that also operates in Eastland. It is
not subject to government regulation and most of its deliveries are to large businesses located in
Eastland’s capital city. You have been asked to assess the relative efficiency of the management of the
two organisations. Which of the following factors should NOT be allowed for when comparing the
ROCE if the two organizations to assess the efficiency of their management?

a. Differences in prices charged

b. Differences in objectives pursued
c. Differences in workforce motivation
d. Differences in geographic areas served

(27) T manufactures chemicals and has a normal loss of 15% of material input. Material input 200 kg
costing $4.93 per kg. Labour and overheads $4,100. Transfers to finished goods 160 kg. Losses are
identified when the process is 40% complete. There is no opening or closing WIP.

Valuation of Finished Good and Abnormal loss is ______ & ______ respectively.

(28) As part of a process to achieve a target cost, GYE Inc are interviewing prospective customers to
determine why they would buy the product and how they would use it. What term best describes this
process?

a. Value analysis
b. Operational research
c. Total quality management
d. Lifecycle costing

(29) A business is preparing its production budget for the year ahead for product A998. It is estimated
that 100,000 units of A998 can be sold in the year and the opening inventory is currently 14,000 units.
The inventory level is to be reduced by 40% by the end of the year. How many units of A998 need to
be produced? ______

(30) What is a continuous budget?

(i) Prepared in advance for the period in question

(ii) Updated regularly by adding further periods

(iii) Also known as a rolling budget

(iv) Always prepared for a full year in advance

a. A (i), (ii) and (iii) only

b. B (ii) only
c. C (ii), (iii) and (iv) only
d. D (ii) and (iv) only
(31) A company is planning to open a new store in a new geographic location. An initial site
evaluation has taken place at a cost of $5,000 and a store location has been found. The new store can
be rented for $9,500 per annum. It will require refurbishment at a cost of $320,000.

Which of the following costs are relevant for an NPV calculation?

(i) $5,000

(ii) $9,500

(iii) $320,000

a. (i) only
b. (i) and (ii)
c. (ii) and (iii)
d. (iii) only

(32) Which of the following statements about imposed budgets are correct?

(i) Imposed budgets are likely to set realistic targets because senior management have the best idea
of what is achievable in each part of the business.

(ii) Imposed budgets can be less effective than budgets set on a participative basis, because it is
difficult for an individual to be motivated to achieve targets set by someone else.

(iii) Imposed budgets are generally quicker to prepare and finalise than participative budgets.

a. (i) and (ii) only

b. (i) and (iii) only
c. (ii) and (iii) only
d. (iii) only

(33) A company uses standard marginal costing. Last month, when all sales were at the standard
selling price, the standard contribution from actual sales was $50,000 and the following

variances arose:

Total variable cost variance $3,500 Adverse

Total fixed costs variance $1,000 favourable

Sales volume contribution variance $2,000 favourable

What was the actual contribution for last month?

a. A $46,500
b. B $47,500
c. C $48,500
d. D $49,500

(34) The following details relate to product T, which has a selling price of $44.00:

$/unit
Direct materials 15.00

Direct labour (3 hours) 12.00

Variable overhead 6.00

Fixed overhead 4.00

––––––

37.00

––––––

During April 20X6, the actual production of T was 800 units, which was 100 units fewer than
budgeted. The budgetshows an annual production target of 10,800, with fixed costs accruing at a
constant rate throughout the year. Actual overhead expenditure totalled $8,500 for April 20X6.
Overheads are absorbed on the basis of units produced. What were the overhead variances for April
20X6?

Expenditure Volume

$ $

a. 367 A 1,000 A
b. 500 A 400 A
c. 100 A 1,000 A
d. 100 A 400 A

(35) A business uses marginal costing to calculate variances. If they were to use absorption costing
the current method of calculating the sales volume variance would be?

a. Higher or the same

b. Lower or the same
c. The same
d. Different but not able to say higher or lower