Mock exam mistakes

Question 1

How is production budget calculated?

Answer 1

Sales
Closing inv
(Opening inv)

Question 2

What is goal congruence?

Answer 2

alignment of company’s objectives with personal objectives of manager

Question 3

How is the labour rate planning variance found?

Answer 3

Difference between original standard cost and revised standard cost x actual output

Question 4

What are 3 functional budgets?

Answer 4

• Labour
• Sales
• Overheads

Question 5

Is cash a functional budget?

Answer 5

No

Question 6

At what stage of the budgetary process are budgets are summarised into a master budget?

Answer 6

Stage 6 - Final acceptance of budgets

Question 7

What should always be used in labour rate variance?

Answer 7

Hrs paid for

Question 8

What can cause an adverse sales price variance?

Answer 8

Decrease in basic selling price of an item

Question 9

What is the final stage of the planning and control cycle?

Answer 9

Respond to divergences from the plan

Question 10

What are 3 categories of relevant costs?

Answer 10

• Incremental
• Differential
• Opportunity

Question 11

What is the formula for budgeted profit?

Answer 11

MoS in units x Contribution per unit

Question 12

How is the iso-contribution line used to find where profits are maximised?

Answer 12

• Move line away from the origin
• Regions where other lines first touch x and y axis is target region

Question 13

What kind of cost is an initial survey?

Answer 13

Sunk cost and not relevant to a decision

Question 14

Are sunk costs relevant in decision making?

Answer 14

No, unless a digital product

Question 15

Are committed costs relevant in decision making?

Answer 15

No

Question 16

What is the formula for relevant cost?

Answer 16

Contribution foregone + direct labour cost

Question 17

Is netbook value relevant?

Answer 17

No as it’s an accounting measure

Question 18

When are Fc deemed not relevant?

Answer 18

Allocation of general fixed costs

Question 19

What is the seasonal index value applied to?

Answer 19

Units

Question 20

How is budgeted profit worked out using variances?

Answer 20

+ Adverse variances and - Favourable variances

Question 21

How is w C/S calculated when you have a ratio?

Answer 21

ratio % x c/s for each product

Add together

Question 22

What is the formula for breakeven point in units in a multi-product scenario?

Answer 22

FC/ Weighted average contribution

Use % of sales to find weighted average Selling price and VC

Question 23

How is the seasonal variation % found?

Answer 23

(Actual - Bud)/Bud

Question 24

What factors result in an adverse sales volume profit variance?

Answer 24

• Ineffective ad campaign
• Fall in customer demand
• Increase in selling price

Question 25

How can the gradient be found?

Answer 25

Least squares formula

Question 26

What may cause a lower unit cost for a digital product?

Answer 26

• MC close to 0
• Digital products take into account sunk costs

Question 27

How is the principal budget factor found (bottleneck)?

Answer 27

Number furthest away from target

Question 28

What is the formula for average standard profit?

Answer 28

Total profit/total units in sales mix

Question 28

What are the features of beyond budgeting?

Answer 28

• Managers given high degree of freedom
• Costs considered scarce resource
• Goals based on industry benchmarks

Question 29

What is true of the basic manufacturing standard?

Answer 29

Assessment of time and cost of past activities

Question 30

What do management accountants do as part of their role?

Answer 30

Forecast trends to assist decision making

Question 31

What is an allocated cost?

Answer 31

Cost incurred by business as a whole, irrespective of decision

Question 32

What can a management accountant do to support decision making with respect to planning process?

Answer 32

Prepare annual budgets for individual units