Quiz's 1-4

Question 1

As a company’s management accountant you would:

Answer 1

prepare plans & forecasts for the total activities of the business.

Question 2

Statements that relate to business objectives:

Answer 2

• corporate objectives relate to an organisation as a whole

- it is possible for a division of an organisation to have it’s own specific objectives

Question 3

What is part of the management accountants role?

Answer 3

To provide a service to departmental managers

Question 4

Which statement regarding management accounting is true?
(A) Management accounts are prepared for parties external to the organisation.
(B) Management accounts are used by shareholders to compare one company with another.
(C) The content of management accounts is strictly controlled by Accounting Standards and Financial Legislation.
(D) Management Accounts are used by managers within the organisation.

Answer 4

(D) Management Accounts are used by managers within the organisation.

Question 5

What does management accounting aim to primarily maximize?

Answer 5

The efficiency of the organisation.

Question 6

Qualities of good information:

Answer 6

• it should be communicated to the right person

- it should be understandable by the recipient

Question 7

Organisation’s management information systems:

Answer 7

• it generates both financial & non-financial information

- it often uses a database system

Question 8

Spreadsheets:

Answer 8

• have a facility to allow data within them to be displayed graphically
• could be used to prepare a budgeted profit & loss account

Question 9

Strategic planning:

Answer 9

• it is concerned with quantifiable & qualitative matters

- it is concerned predominantly with the long term

Question 10

What is an initial requirement of a management control system?

Answer 10

Setting organisational objectives

Question 11

If actual units produced are lower than the budgeted level of production which of the following actual costs would you expect to be lower than the budget?
(A) Variable costs per unit
(B) Fixed costs per unit
(C) Total variable costs
(D) Total fixed costs

Answer 11

(C) Total variable costs

Variable costs per unit do not change
Total fixed costs do not change
Budget lower – fixed costs spread over less units then fixed cost per unit higher
Budget lower – less units so total variable costs lower

Question 12

The following data relates to Lizard Ltd for last year :-
Highest 		Lowest
Monthly production cost	£45,000		£31,000
Monthly machine hours	14,000		9,000
Using the high/ low method, the estimated variable cost per machine hour is:-
	A	£0.36
	B	£0.50
	C	£2.80
	D	£3.21

Answer 12

C £2.80

14,000-9,000=5,000
45,000-31,000=14,000
Variable cost per machine hour 14,000/5,000=£2.80

Question 13

The following relates to two levels of output :-
10,000 units 15,000 units
Total cost £22,000 £27,000
The actual value of fixed costs assuming linearity is?
A £12,000
B £16,000
C £25,000
D Cannot be ascertained from the information given.

Answer 13

A £12,000

10,000-15,000=5,000
22,000-27,000=5,000
Variable cost per unit 5,000/5,000=£1 per hr
Variable cost at £10,000 units = £10,000
Fixed costs = £22,000 - £10,000 = £12,000

Question 14

Which of the following best describes a fixed cost?
A Represents a fixed proportion of total costs
B Remains at the same level up to a particular level of output
C Has a direct relationship with output
D Its average remains at the same level as output increases

Answer 14

B Remains at the same level up to a particular level of output

Question 15

An example of a production overhead would be:-
A Raw materials used in production
B Delivery costs
C Office rent
D Costs of templates and moulds used in production

Answer 15

D Costs of templates and moulds used in production

Question 16

A semi variable cost would :-
A Curve upwards from the origin as output increased.
B Be more than zero if no products were made and would then increase in direct proportion to output.
C Be a fixed amount when output was zero and would step up as output increased.
D Be zero if output were zero and would change erratically as output increased

Answer 16

B Be more than zero if no products were made and would then increase in direct proportion to output.

Question 17

An organisation has the following total costs at three activity levels:
Activity level (units) 8,000 12,000 15,000
Total cost £204,000 £250,000 £274,000
Variable cost per unit is constant within this activity range and there is a step up of 10% in the total fixed costs when the activity level exceeds 11,000 units.
What is the total cost at an activity level of 10,000 units?
A £220,000
B £224,000
C £227,000
D £234,000

Answer 17

A £220,000

15,000-12,000=3,000
274,000-250,000=24,000
24,000/3,000=£8 per unit variable costs
No change in fixed costs between 12,000 & 15,000
£8 x 8000 units = £64,000
Total cost = £204,000
Fixed cost = £204,000 - £64,000 = £140,000
£8 x 10000 units = £80,000
Total cost = £140,000 + £80,000 = £220,000

Question 18

A company’s total overhead cost along with the associated output levels for the last four periods have been :
Total overhead cost (£) Output (units)
April 156,000 19,000
May 151,000 17,000
June 140,000 15,000
July 147,000 16,000

Using high/low analysis what is the estimated variable cost per unit of  output?
	A	£2.00
	B	£2.50
	C	£4.00
	D	£5.50

Answer 18

C £4.00

19,000-15,000=4,000 units
156,000-140,000=£16,000
Variable cost per unit £16,000/4,000=£4

Question 19

What situations could give rise to idle time?

Answer 19

• A machine breakdown has occurred.

- Direct labour is waiting for work to be completed in a previous process.

Question 20

Which one of the following would be classed as indirect labour?
(A) Assembly workers in a car production line
(B) Bricklayers in a house building company
(C) Machinists in a factory producing clothes
(D) Forklift truck drivers in the stores of an engineering company

Answer 20

(D) Forklift truck drivers in the stores of an engineering company

Question 21

Which of the following is not a cost to the employer?
	A	employees’ basic wages
	B	employees’ holiday pay
	C	employees’ income tax
	D	overtime premiums

Answer 21

C employees’ income tax

Question 22

The following data relates to work at a factory.
Normal working day 8 hours
Basic rate of pay per hour £6
Standard time to produce 1 unit 2 minutes
Premium bonus 75% of time saved at basic rate
The direct labour cost for production in a day when 340 units are made is
A £48
B £51
C £63
D £68

Answer 22

C £63

Basic pay = £48 (8 hrs x £6 per hour)
In 1 day's work of 8 hours = 480mins
Expected production (2mins per unit) = 240 units
Actual production = 340 units
Extra units = 100 units
Time saved (2mins x 100 units) = 200mins
75% of saved time = 150mins
In hrs = 2.5hrs
At £6 per hr bonus (2.5hrs x £6) = £15
£48 + £15 = £63

Question 23

A jobbing company operates a premium bonus scheme for its employees of 75% of the time saved compared with the standard time allowance for a job, at the normal hourly rate. The data relating to Job 1206 completed by an employee is as follows:
Allowed time for Job 1206 4 hours
Time taken to complete Job 1206 3 hours
Normal hourly rate of pay £8
What is the total pay of the employee for Job 1206?
A £24
B £30
C £32
D £38

Answer 23

B £30

Basic hourly pay = 3 hrs x £8 = £24
Bonus:
Time saved (4hrs – 3hrs)	1hr
75% of time saved 		0.75hrs
At £8 per hr			£6

Total pay is therefore £24 + £6 = £30