1. A business manufactures a single product. Budgeted production for the period is 80,000units. Which are expected to take 120,000 hours to produce? The fixed overhead expenditure budget is $720,000. The standard fixed overhead cost per unit is therefore $9(1.5 hours per unit at $6 per hours). Actual output for the period was 81,500 units. These took 130,000 hours to produce and fixed overhead expenditure was $767,000. What was the fixed overhead volume variance for the period?a. $13,500(a)b. $50,000(f)c. $13,500(f)d. $33,500(A)e. $45,300(A)Answer:(Budgeted production actual production)x standard OH rate per unit(80,000 81,500)x 91,500 x 9 = 13,500(F)81,500 x 9 = 733,500

(actual output x standard rate) x budgeted fixed OH81,500 x 9 - 720,000733,500 720,000 = 13,500 (F) 2. A company budgets to produce 25,000 units of product H90 monthly, each unit requiring 15 minutes of labour time. The standard direct labour rate is $16 per hour and the standard variable production overhead rate is $2 per hour. During October 23,000 units of H90 were produced. The labour time required for production was 5,500 hours. Direct labour hours costs were $90,750 and variable production overhead costs were $9,900. What was the direct labour efficiency variance in October?a. 4,125(f)b. 4,125(a)c. 4,000(a)d. 8,000(a)e. 4,000(f)Answer:(Actual standard time for actual output actual time) x standard rate23,000 x 15 / 60 = 5,750(5,750 5,500)x 16250 x 16 = 4000(F)

3. The intentional over estimation of costs and/or estimation of sales revenue in the budgeting process?a. Managerial fraudb. Incremental budgetingc. Budget bargainingd. Asprational levels.e. Budgetary slack.

4. the following incomplete WIP account is for process 2 during May:Process account units $Opening WIP b/fwd 2,000 10,210Direct materials 18,000 74,250Conversion costs 90,150Normal loss 900Abnormal loss 300By products 1,800Finished goods 14,000Closing WIP c/fwd 3,000

the opening WIP, whose value consists of direct materials $7,270 and conversion costs $2,850 has complete for materials and 25% complete for conversion costs, loss has no scrap value, but by product has a sale value of $3 per unit. Closing WIP is 100% complete for materials and 40% complete for conversion cost using the FIFO method, the cost of finished output in the method?a. $115,700b. $146,255c. $74,250d. $142,545e. $155,2555. Using the same above information; but using the average method the value of WIP is ?a. $24,000b. $20,400c. $20,000d. $18,600e. $24,0006. A company sets up a new division investing $800,000 in non-current assets with an anticipated successful life of ten years and no scrap value. Annual profit before depreciation is expected to be $200,000 each year. The straight line method of depreciation will be applied. The calculated ROI for the division for the first three years, by expressing annual profits as a percentage of the average net book value of assets for the year, will be?a. Year 1=15.0%,year 2=17.0% &year 3 =21.0%b. Year 1=15.8%,year 2=17.6% &year 3 =20.0%c. Year 1=5.0%, year 2=10.0% &year 3 =15.0%d. Year 1=20.0%, year 2=17.6% &year3 =15.8%e. Year 1=16.2%, year 2=17.8% &year 3=19.3%ANSWER;Average net book value = Original cost of asset at start of investment +Cost of asset at the end of the first year 2= 800,000 + 720,000 = 1,520,000 = 760,000 2 2ROI= net profit/cost of investment x 100%Net profit= profit before tax depreceation= 200,000 80,000 = 120,000Depreceation of straight line = value of asset/no of yrs of asset= 800,000/10,000=80,000Profit year 1 ROI = 800,000 + 720,000 /2 =1,520,000/2 ==120,000/760,000= 15.78%Year 2 = 720,000+640,000/2 = 1,360,000/2 ==120,000/680,000=17.6%Year 3 = 640,000 +560,000/2 = 1,200,000/2= 120,000/600,000=20%Average of book value = max level +min level /2

7. In items produced by a division in a bamaby group is both sold in an intermediate external market and transferred to another division within the group where it is enhanced and sold to an external end-market. If the external markets for both the transferred item and the end product are perfect, with no variable selling costs, the ideal transfer price is..?a. The market price in the intermediate market.b. Full costc. The market price in the end marketd. A dual price arrangement.i. The market price in the end marketii. Full costiii. The market price in the intermediate market.iv. The lesser of (a) the market price in the intermediate market, and (c) the market price in the end market.v. A dual price arrangement8. A transport business makes a particular journey regularly, and has established that the standard fuel cost for each journey is 20 liters of fuel at $2 per liters. Due to a change in the vehicle used for the journey and an unexpected rise in fuel costs. It is decided retrospectively that the standard cost per journey should have been 18 liters at $2.50 per liters. If the fuel consumption for the 120 journey was 2,090 liters, the operational variance for fuel consumption in the period was..?a. $175(A)b. $95(F)c. $175(F)d. $600(A)e. $600(F)Answer:Operational variance= Actual standard (revised)=120 x 18 x 2.50 = 5400 (standard or revised)Actual = 2090 x 2.50 = 52255400 5225 = 175 (F)Favorable, because it is a cost, so whenever the cost decrease it is a favourable one and vise verse 9. Bamaby group has two divisions, division A and Division B. division A makes a product A77 and is able to sell 20,000 units in an external market at $15 each. The variable cost of product A77 is $8 per unit. Division B has offered to buy 3,000 additional units of A77 from Division A to utilize its compare capacity. The units transferred would be altered and sold to division B customers for $15 each, after incurring variable cost of alteration of $3 per unit. The manager of division B will not pay more than $10 per unit for units of A77 transferred. The manager of division A will not accept less than the external market price of $15. head office decides on a dual transfer price arrangements, with sales of A77 priced at $15 for division A and purchased priced at $10 for division B. therefore under this dual pricing arrangement what loss would be charged to head office for the transfer.?a. $12,000b. 0c. $30,000d. $15,000e. $24,00010. the following data relates to production in a manufacturing business that uses absorption costing:Absorption rate 150% of direct cost labourDirect labour cost $30,000Actual productionOverhead expenditure $42,600Which of the following entries would be recorded in the cost ledger?a. Debit production overhead $7,400, credit costing profit /loss $7,400b. Debit production overhead $2,400, credit costing profit/loss $2,400c. Debit costing profit/loss $2,400, credit production overhead $2,400d. Debit WIP $2,400 , credit production overhead $2,400e. Debit production overhead $2,400, credit WIP $2,400.

11. for which of the following purposes might a budget be used;a. Continuous improvement.b. Recording costs.c. Rewording good performance.i. (A) Continuous improvement.ii. (c) Rewording good performance.iii. (b) Recoding cost and arise (a) continuous improvement.iv. (b)Recording costs only.v. All of these

12. which one or more of the following statement is true, spreadsheet model can be used to:a. Prepare fixed budgets.b. Prepare flexible budgets.c. Calculate variance & present variance reports.d. Prepare fixed-forward control reports.i. A,B,C AND Dii. A AND B ONLYiii. A,B,AND C ONLYiv. B AND C ONLY

13. During a particular week 1,200 liters were input to process 1, normal loss is 10% of input. Losses can be sold for $1.80 per liter costs of the process totaled $12,096. Actual output was 1,120 liters. There was no opening or closing work-in-process. The net value of the abnormal gain in the week was?a. There was no abnormal gain. It was an abnormal loss $368.b. $368c. $376d. $446e. $448Answer:Units of abnormal gain =Actual output expected outputExpected output = input normal lossTo calculate the cost of abnormal gain =Total cost incurred scrap value of normal loss Input normal lossUnits of abnormal gain= 1,120 (1200-120=1080)= 40cost of abnormal gain =12,096 0 = 12,096/108 = $11.2/unit 1080 Cost of per unit = 11.2 x 40 = 448Sale price of abnormal gain = 40 x 1.8 = 72448 72 = 376

14. Brett uses marginal costing. For the month of April, it reported a profit of $56,500, opening inventory was valued at $3,300 and closing inventory at $1,900. If the business had used absorption costing its opening inventory would have been $6,800 and closing inventory $4,100. What would have been the reported profit using absorption costing?a. $57,800b. $56,300c. $55,200d. $53,800e. $52,400

Answer:

Increase in inventory , marginal costing3,300 1,900 = 1,400 Increase in inventory, absorption costing=6,800 4,100 = 2,700Difference (profit higher with absorption costing)1,400 2,700 = 1,300Profit with marginal costing=56,500 + 1,300 = 57,800 15. bamaby international has a subsidiary in country A and another subsidiary in country B. the country A subsidiary manufacture an item that has a variable cost of $180 per unit and it transfers, 000 units each year to the subsidiary in country B. the rate of tax on company profit is 60% in country A and 25% in country B. what would be the effect on the groups annual after tax profit if the transfer price were to be reduce in $240 per unit to $200?a. Group profit would rise by $240,000b. Group profit would rise by $140,000c. Group profit would fall by $140,000d. Group profit would fall by $210,000e. Group profit would rise by $210,000

16. a level of performance or target for achievement that an individual wishes to reach. Motivated individual might seek to raise these in their budget. The above description best describe?a. Budgetary slackb. Incentive schemec. Bonus systemd. Budget bargaininge. Aspiration levels

17. Two profit centres trade with each other division 2 sells all its output to division 6, which comes to an external market, the cost of each division are as follows: Division2 division6Variable cost/unit $5 $4Fixed cost/month $50,000 $45,000

Head office has decided that the transfer price should be based on a two part tariff. Therefore, what will be the transferred price?a. A fixed price of $95,000 per month plus $0 per unit transferredb. A fixed price of $50,000 per month plus $4 per unit transferred.c. Fixed price of $45,000 per month plus $4 per unit transferred.d. Fixed price of $50,000 per month plus $5 per unit transferred.e. Fixed price of $45,000 per month plus $5 per unit transferred.18. Bambay division has net assets of $600,000 at lobalance sheet value. The replacement cost of these assets is estimated of the division 800,000 was $160,000, before depreciation charges of $24,000. If the assets were valued at replacement cost $32,000. The company has a risk adjusted cost of capital of 12% but it has a large loan from a bank on which it currently. What is the economic value added (EVA) for bambay division (ignoring taxation).a. $32,000b. $96,000c. $17,000d. $24,000e. $42,00019. A business manufactures a single product. Budget production for the period is 80,000 units. Which are expected fixed overhead expenditure budget is 720,000. The standard fixed overhead cost per unit is therefore $9 (1.5 hoursX6). Actual output for the period was 81,500 units. These took 130,000 hours to produce and fixed overhead expenditure what was the fixed overhead volume variance for the period?a. $33,500(A)b. $13,500(A)c. $13,500(F)d. $60,000(F)e. $46,000(A)Answers;

81,500 80,000 = 1,5001,500 x 9 = 13,50020. Which of the following statement is correct?a. Backflush accounting to particular appropriate for job costingb. Backflush accounting is based on a system of continuous stock taking.c. Backflush accounting make use of budget costs or standard costs.i. Statement A is correct.ii. Statement C is correct.iii. Both statement A and C is correctiv. None of the statement is correct.(there is no need for detailed tracking of material movement through stores and production.)v. Statement B is correct.21. A negotiation process between a budget holder and a senior manager, in which the budget holder argues for more funds and the senior manager tries to reduce description best describe?a. Aspiration levelsb. Incremental budgetingc. Budget baragainingd. Staff dismissede. Budgetary slack.22. The standard direct materials cost for a period is $10 per unit, costing of 2.5 litres of material D at $9 per litres. Actual output 1400 unit and materials usage variance was $600(F). the actual usage of material D in july was?a. 3350 litresb. 5350 litersc. 3530 litersd. 5530 literse. 600 litersAnswer;Muv= (sqXsp)-(aqXsp)600= 10x 1400014000+600 = 10x14600 = 10xX= 14601460 -1400 = 6060 x 2.5 = 1501460 x 2.5 = 3,6501400 x 2.5 = 35003500 150 = 335023. A variance report shows that in the pervious month there was an adverse material price variance of $600. It will $300 is investigate the variance to establish whether the cause of the variance is controllable from past experience. It 3has been estimated that is a 0.25 probability that a price variance of this size would reveal the need for control action. What must be the minimum expected benefits from control action to justify an investigation of this particular variance in ?a. $15,000b. $1,200c. $900d. $600e. $300AnswerX x 0.25 3000.25x 300 = 00.25x/0.25 = 300/0.25X = 75600 x 75% = 450 order control600 x 25% = 150 0ut of order = 600 300 = $300

24. The monthly production planning cost of Marget are forecast using the trend: Y= $50,000+$40xWhere y is the monthly production planning cost and x is the number of batches processed each each month may be estimated using a time series model B= 200+6mWhere b is the de-seasonalized monthly activity level and m represents the month number.In month 25, the seasonal index value is 94. The calculated production planning cosat for marget for month 25, to nearest $1000 is/a. $67,000b. $60,000c. $50,000d. $53,000e. $27,00025. The Areadia division of butten group currently has an investment base of $2.4m and annual profit of $0.48m. it is considering the following. Three mutually exclusive investment funds for which will be supplied by the company:Project A B CInitial outlay($000) 1400 600 400Annual earning afterDepreciation($000) 350 200 88Which investment would the investment manager prefer if her aim to maximize the average ROI over the period of new investment?a. Investment C at average ROI = 66.7%b. Investment B at average ROI = 25.8%c. Investment A at average ROI = 25.8%d. Investment B at average ROI = 50.0%e. Investment C at average ROI = 25.8%AnswerROI= net profit/cost of investment x 100%Net profit = profit before tax depreciation

26. An investment centre expected to make a profit of $100,000 next year and to have capital employed of $630,000. An opportunity to invest in new equipment costing $140,000. The equipment would have a three year life and would have a residual value of $20,000 at the end of year 3. The investment would increase the annual cash profits of investment centers performance in interested by residual income with national interest charged at 10% on the midyear value of net assets. If the investment is undertaken the residual income in the first year will be?a. $67,000b. $43,000c. $80,000d. $41,000e. $82,00027. The following data relates to process 123 during January;Input quantity 5000 kilosProcess costs $16,500Actual output 4,600 kilos There was no opening or closing WIP, loses are sold for a net income of $2.35 per kilo. The net cost of abnormal loss in January , to be charged as a cost in the income statement?a. $150b. $15c. $225d. $325e. $1500

28. A company produces two products S & T information below. What is the budgeted overhead cost per unit of product S? Product S product TBudgeted production(units) 2400 600Machine hours/ unit 3 3Production runs required 2 5Inspection during production 9 7Production setup cost $126,000Quality control cost $72,000

There were no other overhead costs. Therefore the overhead cost per unit of production S is?a. $3,000b. $54,875c. $3,250d. $31,875e. $31,75529. A company budgets to produce 25000 units of product H90 monthly, each unit requiring 15 minutes of labour times. The standard direct labour hour rate is $16 per hour and standard variable production overhead rate is $2 per hour. During October 23000 unit of H90 were produced, the labour time required for production was 5,500 hours. Direct labour cost were $90,750 and variable production overhead costs were $9,900. What was the direct labour efficiency variance in October?a. $4000(F)b. $8000(A)c. $4125(F)d. $4000(A)e. $4125(A)

Answer:(Actual standard time for actual output actual time) X standard rate

23,000 X 15 = 5,750 605750 5500 X 16

250 X 16 = 4000 F

30. Which of the following statement is correct?Statement 1: a sales budget and sales forecasts should always be consistant with each other

Statement 2: responsibility accounting means identifying the costs that budget center managers can control

a. None is correctb. Statement 1 only is correct but in context of activity base costingc. Statement 1 only is correctd. Statement 2 only is correcte. Both statement are correct.31. A branch makes and sells two product P & Q the following budget has been prepared Product P product QSales price/unit $3 $6Kilos/unit $2 $3Budgeted fixed cost are $140,000Budgeted sales are 20,000 units of product P and product Q.Calculate by how much the profit would be reducted or increased it the total sales revenue is the same as in the original budget revenue is one-third product P and two-third product Q. therefore the profit would fall or increase by?a. $21,000 increaseb. $10,000 fallc. $30,000 falld. $30,000 increasee. $10,000 increaseANSWER:Contribution per unitQ= sale price variable cost = 6 -3 = 3 per unitP= 3 -2 = 1 per unitThen total contribution is =Q = 3 x 50,000 = 150,000P = 1 x 20,000 = 20,000Total contribu = 170,000Less fixed cost= 140,000Budgeted profit = 30,000

20,000 X 1/3 = 6,667 50,000 X 2/3 = 33,333 40,000

When there is sales mix we must take the total mix unit.For Q = 3 X 40,000 = 120,000 P = 1 X 40,000 = 40,000Total contribution = 160,000Less fixed cost = 140,000Mix profit = 20,000

Then from all this information our profit are falling by $10,000

32. The standard cost of a particular task is budgeted as 0.75 hours of grade A labour at $10 per labour. Due to a short was decided that the task should be performed by grade B labour. An expert standard labour cost for carring out 0.60 hours of grade B labour at $14 per hour, during March. The task was performed 250 times. The variance for this work in march will be reported as planning and operational variance. What is the planning variance?a. $250 (F)b. $225 (F)c. $225(A)d. $98(F)e. $98(A)Answer(0.75x10)-(0.60x14)7.5 - 8.4 0.9 x 250 = 225(A)33. The intentional over-estimation of cost and for under-estimation of sales revenue in the budgeting process. The above description best describes:a. Budget baragainingb. Aspirational levelsc. Budgetary slackd. Managerial fraude. Incremental budgeting34. Which of the following is the most suitable definition of a performance metric?a. A record of performanceb. A measure used to monitor performancec. A performance targetd. A measure of actual performancei. (C)a performance targetii. (A) a record of performanceiii. (A)a record of performance and also (c) a performance target.iv. (B)a measure used to monitor performancev. (D) a measure of actual performance35. A company makes & sells two products X & Y budgeted data for the next period are as follows: Product X product YProduction unit 3,500 5,200Sells unit 4,000 5,000 X YProduction cost of units in the period 53 26Production costs of opening inventory 53 26Sales price 70 35

The budgeted gross profit for the period is?

a. $111,000b. $113,000c. $311,000d. $131,000e. $133,000

36. the standard direct material cost for one unit of product A44 is as follows:Material A 4 liters @ $5 per liter $20Material B 1 liters @ $10 per liter $10Material C 3 liters @ $2 per liter $6 Total $36 During February 1,000 units of A44 were produced and the usage of material included 4,800 liters of material A and 900 liters of material B. the material yield variance was $900 adverse. The quantity of material C used was?a. 3,600 litersb. 2,500 litersc. 2,000 litersd. 500 literse. 2,550 litersType of SQ for SQ SQxSP AQ AP AQxAP AQxAP AQxSP Material AQA 4000 5 20000 4800 5 24000 24000 24000 B 1000 10 10000 900 10 900 9000 9000C 3000 2 6000 x 2 2x 2x 2x 36000 5700+x

RQ RQXSP2850+0.5X 14,250+2.5X712.5+0.125X 7125+1.25X2137.5+0.375X 4275+0.75X 25650+ 4.5X

4000/8000 X 5700+x = 5X0.5 X 5700+x= 2850+0.5x

1000/8000 X 5700+x = 10 X 0,125 X 5700+x = 712.5+0.125x

3000/8000 X 5700+x = 2 X 0.375 X 5700+x = 2137.5 +0.375x

MMV=RQXSP - AQXSP900=(25,650+4.5x) - (33000+2x)900= 7350 2.5x7350 900=2.5x6450/2.5 = 2.5x/2.5x=2580

MYV= (SQXSP) - (RQXSP)-900= 36,000 25,650 + 4.5x-900= 10,350 + 4.5x-10,350-900=4.5x-11,250 = 4.5X= -2500