Mock Paper 1 Process Variacne and Budget With Answers MTQ Batch 2 BI 2014

8/18/2019 Mock Paper 1 Process Variacne and Budget With Answers MTQ Batch 2 BI 2014

1/12

1. Following are some statements given about process costing. Identifywhether each statement is correct or incorrect.i. If joint cost is distributed on the basis of output, then cost per unit will be same for allproducts . ______________ Trueii. If joint cost is distributed on the basis of sales revenue, then dierent products canhave prot or losses at the same time. ___________ falseiii. If joint cost is distributed on the basis of output then gross prot % will remain samefor all products. ___________f

1

Foundation in

Management

Accounting (FMA)

Timings 10:00-12:00Date: 13th December 2012

Mock # 1

om!i"ed $:

Miss Zaira AneesFaculty member of College of Accounting

and Management Science (CAMS)

A % % &

' A T ' &

& F

A * T + * +

D

+ * T '

F ' + D A & ,

T A T ( A

A )


2/12

iv. N! method of distribution is used when output re"uire further processing. ___________t

2. #udgeted sales of product $ net period are &,'() units. *ach unit of product $re"uires & +g of material . #udgeted inventories are as follows-

Product Y Material Z

units gpening inventor/ &01 ',2))3losing inventor/ (4) ',5&)

The budgeted purchases of material , in +g, net period are-6 &,'51 # '(,4&)3 '(,0') 7 '(,&&)

!. "he term #budget slac$ refers to%6 the etended lead time between the preparation of the functional budgets and themaster budget# the dierence between the budgeted output and the brea+even output3 the additional capacit/ available which can be budgeted for7 the deliberate overestimation of costs and underestimation of revenues in a budget

&. ' (e)ible budget is%6 a budget which, b/ recognising dierent cost behaviour patterns, is designed tochange as the volume of activit/ changes# a budget for a dened period of time which includes planned revenues, epenses,assets, liabilities and cash 8ow3 a budget which is prepared for a period of one /ear which is reviewed monthl/,whereb/ each time actual results are reported, a further forecast period is added andthe intermediate periodforecasts are updated7 a budget of semi variable production costs onl/

*. "he budgeted contribution for last month was +&*,*--. "he following

variances arose%9

:ales total variance 2,5)) adverse7irect material total variance 5,(&' favourable7irect labour total variance 5,)() adverse!ariable overhead total variance ;'1 adverse

The actual contribution for last month was 9 ________________ ;4&25

. /hich of the following items of information would be contained in thebudget manual0 "ic all that are correct.


3/12

4. 6ssuming that sales volume is the principal budget factor, place the followingbudgets in the order that the/ would be prepared in the budgetar/ planning process.Indicate the correct order b/ writing 5, 4, 2, etc. in the boes provided. :ales budget 5 ?aterials purchases budget ' ?aterials inventor/ budget 1

@roduction budget 2 >inished goods inventor/ budget 4 ?aterials usage budget ;

5. *ach nished unit of product A contains 2 litres of li"uid B. Ten per cent of the inputof li"uid B is lost through evaporation in the production process. #udgeted output of product A for Cune is 2,))) units. #udgeted inventories of li"uid B are-

The re"uired purchases of li"uid B for Cune are litres.D pening inventor/, 5 Cune 5,4)) litresD 3losing inventor/, 2) Cune ()) litres

The re"uired purchases of li"uid B for Cune are ____________ litres (0))

1-. ' company maes one product, which passes through a single process.7etails of the process for last period are as follows-?aterials 1,))) +g at E4.)) per +gBabour 90,&))@roduction overheads 54)% of labourNormal losses are 5)% of input in the process, and without further processing an/losses can be sold as scrap for E).1 per +g.

The output for the period was ;,')) +g from the process. There was no wor+ in progress at the beginning or end of the period. The value of the abnormal gain is E________________ 1(&

11. /hich of the following best describes the principle of reporting bye)ception06. :ending budget reports onl/ to those eceptional managers who are able tounderstand their content.#. @roviding detailed reports onl/ on those areas of the business that are performingeceptionall/ well and providing onl/ subsidiar/ information about other areas of thebusiness.3. @roviding detailed reports onl/ on those areas of the business that are notperforming according to budget and providing onl/ subsidiar/ information aboutaspects that are in line with budget.12. ' standard cost is%6 the planned unit cost of a product, component or service in a period-# the budgeted cost ascribed to the level of activit/ achieved in a budget centre in acontrol period-3 the budgeted production cost ascribed to the level of activit/ in a budget period-7 the budgeted non production cost for a product, component or service in a period.

1!. ' standard which assumes e6cient levels of operation, but whichincludes allowances for factors such as waste and machine downtime, isnown as an%6. attainable standard #. ideal standard3. current standard 7. basic standard

Following details related to 1& and 1* The standard cost of providing a meal in a fast food restaurant is as follows-

9

3


4/12

Ingredient cost 5.&)7irect labour cost ).2)!ariable overhead cost ).4)

The standard price of the meal is 9;.1) and the budgeted sales volume is ;,'1) mealseach period. 7uring period ( a total of ;,04) meals were sold for 94),0'&. The actualtotal variable cost per meal was 94.2).

1&. "he sales price variance for period 5 was%6 9;'1 favourable # 9;'1 adverse3 9;04 favourable 7 9;04 adverse1*. "he sales volume contribution variance for period 5 was%6 95;0 favourable # 95;0 adverse3 951; favourable 7 951; adverse

1. 7YZ 8td uses standard costing. It maes an assembly for which thefollowing standard data are available%:tandard labour hours per assembl/ 4;:tandard labour cost per hour 9&7uring a period &1) assemblies were made, there was a nil direct labour rate varianceand an adverse direct labour eFcienc/ variance of 9;,;)).9ow many actual labour hours were wored06 5(,&1) # 4),;))3 4),(1) 7 21,4))

13. ':; 8td uses standard costing. It purchases a small component for whichthe following information is available%6ctual purchase "uantit/ ',&)) units:tandard allowance for actual production 1,;;) units:tandard price &1c per unit?aterial price variance


5/12


6/12

#udgeted sales of product K are 5;),))) units. pening inventor/ is estimated to be55,1)) units and the compan/ wishes to reduce inventor/ at the end of the /ear b/4)%.

The budgeted number of units of product K to be produced is ____________units.520,0))

25. /hich one of the following statements about a A)ed budget is>arecorrect0' A)ed budget is%

Y=< > ?@6 budget which ignores in8ation ___________no6 budget for ed assets ___________ no6 budget which is most generall/ used for planning purposes ___________ no6 budget for a single level of activit/ ___________ /es6 budget for ed costs ___________ no

!-. 6 compan/ plans to sell 5,&)) units of product > net /ear. pening inventor/ of >is budgeted to be 51) units and Bard/ 3o budgets to increase inventor/ b/ 5)% b/ theend of the /ear. Aow man/ units of product > should be produced net /earH

_______________ units 5&51

!1. @pening /IP of a process during a period was 2,--- units 3*Bcomplete with value of C12,*--. During the period 1&,--- units werecompleted. ;ost per completed unit was C4.3ompan/ uses >I> method in process account3alculate valuation of output ollowing are the epected demand for two months of coming /ear Eanuary February

:ales volume


7/12

!*. In a period ;,&)) units were made and there was an adverse labour eFcienc/variance of 94',))). Gor+ers were paid 9& per hour, total wages were 94(;,&)) andthere was a nil rate variance.:tandard hours per unit __________________ 0 2 mars

!. In a period, there was an adverse labour eFcienc/ variance of 940,))). Thestandard wages rate per hour was 9' and 2) hours were allowed for each unit asstandard. 6ctual labour hours wor+ed were 14,1)). The number of units produced inthe period was _________________. 5()) 2 mars

!3. 6 compan/ purchased ',&1) +gs of material at a total cost of 924,5(1. Thematerial price variance was 95,20) adverse.

The standard price per +g was 9 ________________ ?@ 6 favourable sales volume variance _____________ /es 6 favourable labour eFcienc/ variance _____________

/es 6 favourable material usage variance _____________

/es 6 favourable sales price variance _____________ no

!5. 6 compan/ is reviewing actual performance to identif/ an/ signicant dierencesagainst budget. The following standard cost information is relevant.

+ per unit:elling price 017irect materials 5)

7irect labour 51>ied production overheads ;!ariable production overheads 4>ied selling costs ;!ariable selling costs 2#udgeted sales units 0,4))6ctual sales units &,;))

The favourable sales volume variance using marginal costing is 9_______________.1;))) fav

&-. /hat is a byGproduct06 6 product produced at the same time as other products which has no value# 6 product produced at the same time as other products which re"uires further

processing to put it in a saleable state3 6 product produced at the same time as other products which has a relativel/ lowvolume compared with the other products7 6 product produced at the same time as other products which has a relativel/ lowvalue compared with the other products

&1. /hich of the following would help to e)plain a favourable direct materialprice variance0


8/12


9/12

9


10/12

10


11/12

11


12/12

12

Documents

Mock Paper 1 Process Variacne and Budget With Answers MTQ Batch 2 BI 2014