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MA1 > MA1 Exam Qs > Flashcards

MA1 Exam Qs Flashcards

1
Q

What is a PRIME cost?

A

Included all direct costs (direct material, direct labour, direct expenses) aka. Total direct cost

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2
Q

Several courier companies. £5 payment made to the couriers for each delivery made. What type of cost behaviour do delivery costs display?

A

Variable

Total cost increases with activity level: as the number of sales transactions increases, the number of deliveries and total amount paid increases

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3
Q

Which cost would NOT be included in the prime cost of producing an unusual, one off wooden table

A

Factory rent

Factory rent is an indirect production cost

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4
Q

What would be excluded from cost per unit using marginal costing ?

A

Fixed production costs are excluded from unit costs

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5
Q

Adam is responsible for his departments costs and revenues. He is not responsible for investment decisions - what type of responsibility centre is Adam’s area of business?

A

A profit centre.

Profit center managers responsible for both costs and revenue

  • a cost centre manager not responsible for revenue
  • revenue centre manager only respon for revenue
  • investment centre manager responsible for investment as well as revenue
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6
Q

Main difference between cost and profit centres = the manager of a profit centre had some influence over both revenues earned and costs incurred

A
  • a profit centre may be smaller than a cost centre in a large organisation
  • the manager of a cost centre only influences costs
  • profit centres can incur losses eg if costs exceed revenue
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7
Q

The PROFIT centre manager has responsibility for which of the following?

A

Costs & revenues

  • a profit centre will not make investments, its manager will have no responsibility for investments
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8
Q

Which of the following LEAST likely to be a profit centre?

A

The despetch team -> will incur costs but not generate any revenue

A profit centre can be an individual, in the case of the sales team member
IT, in this case is a profit centre which generates revenue
As charges are made for the delivery, the van will be a slide of revenue and costs

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9
Q

Constant sales tax rate in cell B10 -> absolute cell reference for both row and column (needs to refer to cell B10 regardless of where you copy the formula)

A

$B$10

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10
Q

What function key allows you to edit a cell’s contents?

A

F2

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11
Q

F1 key activates the ‘help’ function

F2 key also moves the insertion point to the end of the contents of the active cell

A

F4 key switches between absolute and relative cell references

F5 activates the ‘Go To’ feature

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12
Q

To lock these cells, which step should the management accountant take first

1: select required 4 cells
2: select cell A14
3: select the entire worksheet
4: click format cells

A

Select the ENTIRE worksheet (for unlocking).

second step is to unlock all cells - unticking the Locked box in the protection tab of the Format cells. next step to select required 4 cells and lock them. Finally, the sheet is protected by a password

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13
Q

What approach is NOT a good way to design a spreadsheet?

A

Including variables such as tax rates within formulae

[inc key variables within formulae is not a good way - variables should ideally be held in a separate cell of the spreadsheet]

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14
Q

Which term describes the spreadsheet approach that tests the effect of changes to critical variables on a data set?

A

What if? analysis

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15
Q

What is a limitation of spreadsheet software

A

lack of formal audit trail

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16
Q

What is NOT an advantage of using spreadsheets in management accounting?

A

Data can easily be overwritten if it isn’t password protected. [data being overwritten is a limitation, not an advantage of spreadsheet use]

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17
Q

Which statement is the most accurate definition of the standard hour?

A

The amount of work achievable, at the expected level of efficiency, in an hour

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18
Q

When materials arrive at a business, which of the following actions is carried out to record their receipt into the business?

A

the quantity and quality of goods received are recorded in the system

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19
Q

What is NOT a purpose of a job card

  • gathering together the costs associated with a specific job
  • providing a record of earnings
  • providing the employer with the means to compare and control the cost
  • Helping to establish the profit or loss made by performing a job
A

Providing a record of earnings

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20
Q

What classification is NOT used to analyse sales revenue
- customer type
- geographic region in which the sale was made
- product type sold
- Bank account into which the sales revenue was paid

A

Bank account into which sales revenue is paid [not useful]

rest could provide management information

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21
Q

Which transaction should be debited to the work in progress account?

A

The cost of direct materials issued to production

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22
Q

Which inventory method assumes the newest items of inventory are sold first?

A

LIFO

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23
Q

The price of the materials purchased by an organisation is falling. the organisation uses FIFO to value its inventory

A

Production costs will be HIGHER than if LIFO was used

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24
Q

What is a direct cost?
- element of overtime paid at the basic rate to direct employees
- general overtime premium (indirect - not traced to specific cost unit)
- payment for idle time (indirect)
- holiday pay (indirect)

A

the element of overtime paid at a basic rate to direct employees

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25
Q

What is the correct entry to record direct labour costs?

A

Debit work in progress

Credit wages control

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26
Q

Which statement describes employee benefit contributions?

A

Benefit contributions deducted [from gross pay] by employers on behalf of employees and paid to the relevant authorities

This is separate from the emploYER benefit contributions, which are further cost to the employer.
Deductions made under PAYE system are income tax deductions

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27
Q

What are overhead absorption rates used for?

A

To charge overhead costs to the UNITS produced

[overhead absorption rates are used to charge overheads to the units produced, this happens after overhead costs have been allocated and apportioned to cost centre overheads]

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28
Q

Overheads for the period have been over-absorbed by $125. What is the double entry required to record this?

A

Debit Production overhead control 125

Credit Statement of profit or loss 125

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29
Q

What is a feature of batch costing

  • there is a continuous flow of production
  • suitable for costing the provision of a service to customer specifications
  • many similar products are produced in a group
  • the expected units calculation makes allowances for the normal level of loss expected
A
  • many similar products are produced in a group
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30
Q

True statements about batch costing

A
  • a batch is a group of products treated as a single cost unit
  • batch costing may be used where a single production line is used to make several different products
31
Q

Advantage of a centralised administration function

A

Duplication of services is avoided, so costs are lower

32
Q

statement best defines an office:

A

a centre for information and administration

33
Q

What is the primary purpose of an organisation chart?

A

To show AUTHORITY and communication lines (and reporting channels)

34
Q

Management accounting is not governed by rules and regulations and is produced to assist management in planning for and controlling the business.

The information is not publicly available

A
35
Q

which statement best describes the focus of cost accounting?

A

the identification of costs of resources and their allocation to products (or services or inventory).

[gives businesses info about how much it costs to provide a particular good or service]

36
Q

What is NOT a focus of management accounting

A

financial statements (these are the main focus of Financial accounting)

37
Q

A data file contains ‘standing’ or reference data such as customer names and addresses. What type of file is this?

A

MASTER file
[key’ file doesn’t exist]

38
Q

Monitoring actions and comparing them to expected outcomes is a CONTROL activity

A

Decision making involves choosing between various different business options

39
Q

look for number format in column being consistent

A
40
Q

Correct command sequence that enables Alex to enter a cell comment in D17.

A

Function key F5, D17, OK, right-click, insert comment

41
Q

What task is BEST suited to spreadsheet software

A

Analysing expenses against target figures

[producing aggregated lists from recorded data and capturing details best suits a dedicated database rather than spreadsheet]

42
Q

spreadsheet software is NOT an example of an accountancy package software - separate things [specialised accountancy software better suited to maintaining accounts and producing financial statements]

A

Spreadsheets are general purpose software suited to some management accountancy tasks eg. producing a basic budget

43
Q

Which option gives the correct order for charging indirect costs to cost units ?

A

Allocation, Apportionment, Reapportionment, Absorption

44
Q

APPORTIONMENT is the procedure under which overheads are spread across different cost centres

A

Over-absorbed overhead occurs when actual overhead is less than absorbed overhead [more overhead has been charged to production than should have been]

45
Q

What term is used to describe the total income received from sales for the period?

A

Revenue

46
Q

What would be the double entry for the purchase of raw materials?

A

Debit: Raw material inventory (increase in asset)

Credit: Payables control (account of supplier is credited as invoice is a liability)

47
Q

What would be the double entry for the issue of direct materials to production?

A

Debit: Work in progress (also an asset, increases)

Credit: raw material investory (asset reduced)

48
Q

What staff member is MOST likely to raise a materials requisition?
- production manager
- management accountant
- warehouse manager
- purchasing manager

A

Production manager

49
Q

A perpetual inventory system involves CONTINUOUSLY updating the number of items in the inventory. A periodic inventory system counts inventory on a specific date, usually annually

A

An inventory record shows the number of items held but does not usually include the monetary value of the inventory held

50
Q

A manager’s performance is assessed based on residual income. type of cost centre responsible for =

A

investment centre

51
Q

A cost centre can become a profit centre

A
52
Q

Which individual is managing an investment centre?

A

The Owner and Manager of a coffee shop, responsible for maximising sales, keeping expenses under control and the purchase of all non-current assets

[control over revenue, costs and capital expenditure]

53
Q

What is an example of information rather than data?

A

Actual spending against budget analysed by month
[processed to become meaningful, not just raw numbers]

54
Q

Which statement correctly reflects the distinction between data and information?

A

Data comprises raw facts and figures, whereas information has been processed to provide meaning

55
Q

What is NOT a characteristic of useful information?

A

accurate whatever the cost - should be Cost effective and accurate for purpose intended. spending should not outweigh benefit obtained

56
Q

What is meant by cost classification?

A

Grouping costs based on their common attributes /characteristics

57
Q

Variable costs vary in total due to changes in production output

A

The cost per unit of variable costs is the same for each unit produced

58
Q

A publishing company pays an author a royalty of $3 per book sold. what type of cost does this royalty expense represent?

A

Variable

[changes in proportion of books sold]

59
Q

Which statements about marginal and absorption costing are true?

A

Under marginal costing, the cost per unit calculation will not include fixed production costs

[the fixed production costs will be treated as a period cost under marginal costing]
[absorption costing treats fixed production costs as product costs]

60
Q

Under absorption costing, what costs are included in the cost of output produced?

A

Fixed and variable costs

[under absorption costing, direct costs such as materials and labour (usually variable costs) and fixed and variable overheads are all absorbed into the cost of the product

61
Q

A factory overhead of $25000 is a fixed cost. The factory uses an absorption costing approach

A

The fixed cost per unit decreases as productivity increases

[the fixed cost is spread over more units, reducing the cost per unit]
If a marginal costing approach were used, the fixed cost would not be included in unit costs (it would be expensed for the period]

62
Q

In marginal costing, all fixed costs are charged to the incurred period.
A change in inventory levels will not impact the amount charged to that period, as the fixed costs are treated separately from the production costs

A

In absorption cositng, each unit carries a portion of fixed production overhead. thus is some units are not sold, their share of fixed production costs is charged to a future period when they are sold. Therefore, the sales activity level will affect the level of profit.

63
Q

What would be the double-entry when returning raw materials purchased on credit to the supplier in a financial accounting system?

A

Debit Payables control (supplier liability reduced)

Credit Raw materials inventory

64
Q

Which costing method is appropriate when it is impossible to identify separate production units

A

Process

65
Q

What is a timesheet used for

A

to calculate PAY and to CHARGE COST CENTRES for the work done

66
Q

Entry for the issue of indirect material to production

A

Dr Production overhead
Cr Materials control

67
Q

Which of the following are reasons for formatting data in a spreadsheet?

A
  • To make the spreadsheet more visually attractive
  • to make the information on the spreadsheet easier for users to understand
68
Q

True about analysis of sales:

A

The sales figure that should be taken from an invoice is net of both trade discount and sales tax

Sales may be analysed in a number of different ways for management accounting purposes

69
Q

consistently rising prices of materials

A

closing inventory values will be lower using periodic weighted average rather than cumulative weighted average

70
Q

What is the charging of an overhead cost directly to a cost centre known as?

A

Overhead allocation

71
Q

Which is normally treated as a DIRECT labour cost?

A

Overtime premium at the specific request of a customer

72
Q

what tasks are likely to be carried out by a trainee accountant

A
  • analysing departmental expenditure for control pruproses
  • calculating the quantity of raw materials in store
  • calculating wages for employees working on special shifts

-would NOT set selling prices for products and services]

73
Q

If prices are rising, the earlier purchases of material will be at a lower price than the more recent purchases.

if FIFO is used, then the cheaper material will be issued first, leaving the more expensive material as closing inventory

A
74
Q
A

MA1 (2 decks)

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