my management accounting exam

Question 1

What are the prime costs?

Answer 1

Direct material and direct labour

Question 2

What are conversion costs?

Answer 2

Manufacturing overhead and direct labour

Question 3

How to work out the predetermined overhead rate?

Answer 3

Budgeted overhead / budgeted level of cost driver

Question 4

How to work out applied overhead?

Answer 4

Actual overhead rate x actual cost driver

Question 5

How to work out over/under applied overhead?

Answer 5

Actual overhead - applied overhead

Question 6

What are equivalent units?

Answer 6

Two half-completed products are equivalent to one completed product

Question 7

How to work out absorption costing?

Answer 7

Direct material + direct labour + manufacturing overhead

Question 8

How to work out variable costing?

Answer 8

Direct material + direct labour + variable manufacturing overhead

Question 9

How to find the difference in profit?

Answer 9

Increase or decrease in units in inventory x fixed manufacturing cost per unit

Question 10

How to work out breakeven point (in units)?

Answer 10

Fixed costs / unit contribution margin

Question 11

How to work out breakeven point (in $$)?

Answer 11

Fixed costs / unit contribution margin ratio

OR breakeven unit x selling price

Question 12

How to work out unit contribution margin?

Answer 12

Unit sales price - unit variable costs

Question 13

How to work out contribution margin ratio (%)?

Answer 13

Unit contribution margin / unit sales price

Question 14

How to work out target net profit ($ amount)?

Answer 14

Fixed costs + target net profit (units) / contribution margin ratio

Question 15

How to work out sales volume (units) required to earn a net profit after tax?

Answer 15

Fixed costs + (target net profit after tax / (1-t)) / unit contribution margin

Question 16

How to work out direct material variance?

Answer 16

PQ (AP-SP)

Quantity purchase, actual price, standard price

Question 17

How to work out direct material quantity?

Answer 17

SP (AQ-SQ)

Standard price, actual quantity used, standard quantity used given actual output

Question 18

How to work out safety margin?

Answer 18

Projected sales - breakeven sales

Question 19

How to work out direct labour rate variance?

Answer 19

AH (AR-SR)

Actual hours used, actual rate per hour, standard rate per hour

Question 20

How to work out direct labour efficiency variance?

Answer 20

SR (AH-SH)

Actual hours used, standard hours allowed given actual output, standard rate per hour

Question 21

How to work out variable overhead spending variance?

Answer 21

Actual variable overhead - (AH x SVR)

Actual direct labour hours, standard variable overhead rate

Question 22

How to work out vairable overhead efficiency variance?

Answer 22

SVR (AH x SH)

Standard direct labour hours allowed for actual output, actual direct labour hours, standard variable overhead rate

Question 23

How to work out fixed overhead budget variance?

Answer 23

Actual fixed overhead - budgeted fixed overhead

Question 24

How to work out fixed overhead volume variance?

Answer 24

Budgeted fixed overhead - applied fixed overhead

Question 25

How to work out flexible overhead budget?

Answer 25

Total budgeted overhead cost = (budgeted variable overhead cost per unit of activity x total activity units) + budgeted fixed overhead cost

Question 26

Does a change in the tax rate have an impact on the breakeven point?

Answer 26

No, because at the breakeven point the firm has no profit and does not have to pay any income taxes

Question 27

What are integrated reports?

Answer 27

A concise report with the prime purpose of explaining how an organisation creates value over time

Question 28

Which is said to be better for internal decisions, absorption costing or variable costing?

Answer 28

Variable costing

Question 29

What is said to be better for external decisions, absorption costing or variable costing?

Answer 29

Absorption costing