Management Accounting F2

SECOND TEST

1 A company’s management accountant is analysing the reject rates achieved by 100 factory operativesworking in identical conditions. Reject rates, Y%, are to be related to months of experience, X, by thisregression equation: Y = 20 – 0.25X. (The correlation coefficient was r = –0.9.)

Using the equation, the predicted reject rate for an operative with 12 months experience is closest to

A 17%B 19%C 20%D 23%

2 (1) Management accounting will report information on the past period in order to compare it to the original budget. (2) Financial accounting will plan for the future periods.

A One true one falseB Both trueC Both false

3 What is the Economic Order Quantity (EOQ) where monthly demand is 2,000 units, order costs are $45per order, inventory costs $2,160 per unit and the company's cost of capital is 10%.

A 70 unitsB 80 unitsC 90 unitsD 100 units

4 A company makes computers. Which one of the following is likely to be a Variable Cost?

a) The salary of the managing director b) The salary of the factory manager c) The wages of shop floor workers paid by piece rate d) The Business rates of the factory

5 Which of the following is the appropriate name for planning which considers how the functional heads within a business unit will coordinate employees on a day-to-day basis?

A Strategic planningB Tactical planningC Operational planning

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Management Accounting F2

6 A company has the following information about its total production costs:

Output Total costs $ 2,000 10,000 4,000 15,000 6,000 20,500 8,000 28,000

What are the company's fixed costs?A $2,000B $4,000C $10,000D $18,000

7 A business has collected data relating to a particular costs incurred at four different activity levels: when the output was 5 units the cost totalled $20; when the output was 10 units the cost totalled $35; when the output was 50 units the cost totalled $155 and when the output was 75 units the cost totalled $230. Which of the following best describes the behaviour of this cost?

A A semi-variable costB A fixed costC A production costD A variable cost

8 An accountant obtained the costs associated with the manufacture of five batches of identical items.These were as follows

Batch 1 2 3 4 5Batch size 100 200 300 400 500Total cost $800 $1,500 $2,500 $3,500 $4,400

Using linear regression, what is the gradient of the sample line depicting the relationship between batchsize and total cost?

9 Which of the following could be used to document the transfer of materials from one production department to another?

A Materials requisition noteB Materials returned noteC Materials transfer note

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Management Accounting F2

10

11 The following are two projects that could be carried out by a company. The company can onlycarry out one project. Project A Project B Probability Profit Probability Profit 0.3 $10,000 0.2 $5,000 0.7 $7,000 0.5 $12,000 0.1 $3,000 0.2 ($7,000)

Which project should the company should choose to carry out?

A Project AB Project B

12 Annual demand for raw material is 1,000,000 units. Each unit costs 15 cents. Procurement costs for each order are $20 and lead time has been estimated as 2 days. There are 250 working days per annum, the carrying cost of inventory is 10 cents per unit and the cost of a stockout is 20 cents per unit.

What is the optimal reorder level?

A 125B 8,000C 20,000

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Management Accounting F2

Data for a component part with stock number B1422 is as follows:

Minimum usage 1,000 unitsMaximum usage 2,250 unitsLead time (delivery time) 8-16 daysReorder Quantity 14,500 units

13 The Minimum inventory holding below which inventory should not fall (in units) is

14 What is the maximum inventory holding above which inventory should not rise?

A 32,500 unitsB 34,500 unitsC 42,500 unitsD 58,500 units

The following information relates to questions 15, 16 and 17

A company budgeted to produce 10,000 items at a rate of 5 hours per unit for January. It actually made 11,000 items in January consuming 52,500 labour hours.

15 What is the labour efficiency ratio (expressed to the nearest whole percentage)?

A 105%B 110%C 95%D 91%

16 What is the labour capacity ratio (expressed to the nearest whole percentage)?

17 What is the labour production volume ratio (expressed to the nearest whole percentage)?A 105%B 110%C 95%D 91%

18 Which of the following would be classed as indirect labour?

A A coach driver in a transport companyB Machine operators in a milk bottling plantC A maintenance assistant in a factory maintenance departmentD Plumbers in a construction company

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Management Accounting F2

19 The production overhead of department D is absorbed using a machine hour rate. Budgeted productionoverheads for the department were $280,000 and the actual machine hours were 70,000. Production overheads were under absorbed by $9,400.

If actual production overheads were $295,000 what was the overhead absorption rate per machine hour (tothe nearest cent)?

20 An internet service provider operates a customer service centre to deal with domestic and industrialcustomers' enquiries about their internet connection. A standard time is allowed for dealing with each enquiry and employees are paid a bonus for any time saved compared with the standard allowance

The following data relates to the bonus scheme.Basic daily pay for each employee 8 hours @ $15 per hourStandard time allowed to deal with one enquiry 10 minutesBonus payable at basic hourly rate 30% of time saved

The bonus payable to an employee who deals with 60 enquiries in a single day would be $ .

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