Quiz's 1-4 Flashcards
As a company’s management accountant you would:
prepare plans & forecasts for the total activities of the business.
Statements that relate to business objectives:
- 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
What is part of the management accountants role?
To provide a service to departmental managers
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.
(D) Management Accounts are used by managers within the organisation.
What does management accounting aim to primarily maximize?
The efficiency of the organisation.
Qualities of good information:
- it should be communicated to the right person
- it should be understandable by the recipient
Organisation’s management information systems:
- it generates both financial & non-financial information
- it often uses a database system
Spreadsheets:
- have a facility to allow data within them to be displayed graphically
- could be used to prepare a budgeted profit & loss account
Strategic planning:
- it is concerned with quantifiable & qualitative matters
- it is concerned predominantly with the long term
What is an initial requirement of a management control system?
Setting organisational objectives
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
(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
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
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
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.
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
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
B Remains at the same level up to a particular level of output
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
D Costs of templates and moulds used in production
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
B Be more than zero if no products were made and would then increase in direct proportion to output.
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
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
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
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
What situations could give rise to idle time?
- A machine breakdown has occurred.
- Direct labour is waiting for work to be completed in a previous process.
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
(D) Forklift truck drivers in the stores of an engineering company
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
C employees’ income tax
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
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
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
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
