Managerial Accounting 2

A manufacturing company benchmarks the performance of its accounts receivable department with that of a leadingcredit card company. What type of benchmarking is the company using? FUNCTIONAL BENCHMARKING

Which of the following BEST describes target costing? SETTING A COST BY SUBSTRACTING A DESIRED PROFIT MARGIN…

Information relating to two processes (F and G) was as follows: Process Normal loss as Input Output % of input (litres) (litres) F 8 65, 000 58, 900 G 5 37, 500 35, 700 For each process, was there an abnormal loss or an abnormal gain? F-ABNORMAL LOSS; G-ABNORMAL GAIN

The following budgeted information relates to a manufacturing company for next period: Units $ Production 14, 000 Fixed production costs 63, 000 Sales 12, 000 Fixed selling costs 12, 000 The normal level of activity is 14, 000 units per period. Using absorption costing the profit for next period has been calculated as $36, 000. What would be the profit for next period using marginal costing? 27. 000$

The Eastland Postal Service is government owned. The government requires it to provide a parcel delivery service toevery home and business in Eastland at a low price which is set by the government. Express Couriers Co is a privatelyowned parcel delivery company that also operates in Eastland. It is not subject to government regulation and most ofits deliveries are to large businesses located in Eastland’s capital city. You have been asked to assess the relativeefficiency of the management of the two organizations. Which of the following factors should NOT be allowed for when comparing the ROCE of the two organizations to Assess the efficiency of their management? DIFFERENCE IN WORKFORCE MOTIVATIONS

Under which sampling method does every member of the target population has an equal chance of being in thesample?

A Company manufactures and sells one product which requires 8 kg of raw material in its manufacture. The budgeteddata relating to the next period are as follows: Units Sales 19, 000 Opening inventory of finished goods 4, 000 Closing inventory of finished goods 3, 000 Kg Opening inventory of raw materials 50, 000 Closing inventory of raw materials 53, 000 What is the budgeted raw material purchases for next period (in kg)? 147. 000 KG

Which of the following are benefits of budgeting? 1 It helps coordinate the activities of different departments 2 It fulfils legal reporting obligations 3 It establishes a system of control 4 It is a starting point for strategic planning (ANS: 1 AND 3 ONLY)

Which of the following are suitable measures of performance at the strategic level? (1) Return on investment (2) Market share (3) Number of customer complaints (1 AND 2)

Which of the following are feasible values for the correlation coefficient? 1 +1·40 2 +1·04 3 0 4 –0·94 (3 AND 4)

A company’s operating costs are 60% variable and 40% fixed. Which of the following variances’ values would change if the company switched from standard marginal costingto standard absorption costing? SALES VOLUME VARIANCE

Up to a given level of activity in each period the purchase price per unit of a raw material is constant. After that pointa lower price per unit applies both to further units purchased and also retrospectively to all units already purchased. Which of the following graphs depicts the total cost of the raw materials for a period?

(GRAPH D)

The following statements relate to the participation of junior management in setting budgets: 1. It speeds up the setting of budgets 2. It increases the motivation of junior managers 3. It reduces the level of budget padding Which statements are true? (ONLY 2)

A company has a capital employed of $200, 000. It has a cost of capital of 12% per year. Its residual income is$36, 000. What is the company’s return on investment? (30%)

A company has calculated a $10, 000 adverse direct material variance by subtracting its flexed budget direct materialcost from its actual direct material cost for the period. Which of the following could have caused the variance? (1) An increase in direct material prices (2) An increase in raw material usage per unit (3) Units produced being greater than budgeted (4) Units sold being greater than budgeted (1 AND 2 ONLY)

A company has recorded the following variances for a period: Sales volume variance $10, 000 adverse Sales price variance $5, 000 favourable Total cost variance $12, 000 adverse Standard profit on actual sales for the period was $120, 000. What was the fixed budget profit for the period? 130. 000$

ABC Co has a manufacturing capacity of 10, 000 units. The flexed production cost budget of the company is asfollows: Capacity 60% 100% Total production costs $11, 280 $15, 120 What is the budgeted total production cost if it operates at 85% capacity? (13680$)

Using an interest rate of 10% per year the net present value (NPV) of a project has been correctly calculated as $50. If the interest rate is increased by 1% the NPV of the project falls by $20. What is the internal rate of return (IRR) of the project? (12. 5%)

Net present value is negative when (the present value of cash outflows is greater than the present value of cash inflows)

The deferred income tax liability:

The purchase of an office building by issuing long-term notes payable should be reported as a (noncash investing and financing activity)

In the annual report, where would a financial statement reader find out if the company’s financial statements give a fair depiction of its financial position and operating results? (Auditor’s report)

The financial statement that reports the revenues and expenses for a period of time such as a year or a month is the (INCOME STATEMENT)

The financial statement that reports the assets, liabilities, and stockholders' (owner's) equity at a specific date is the (BALANVE SHEET)

A factory consists of two production cost centres (P and Q) and two service cost centres (X and Y). The total allocatedand apportioned overhead for each is as follows: P Q X Y $95, 000 $82, 000 $46, 000 $30, 000 It has been estimated that each service cost centre does work for other cost centres in the following proportions: P Q X Y Percentage of service cost centre X to 50 50 – – Percentage of service cost centre Y to 30 60 10 – The reapportionment of service cost centre costs to other cost centres fully reflects the above proportions. After the reapportionment of service cost centre costs has been carried out, what is the total overhead forproduction cost centre P? (128. 500)

A company always determines its order quantity for a raw material by using the Economic Order Quantity (EOQ)model. What would be the effects on the EOQ and the total annual holding cost of a decrease in the cost of ordering abatch of raw material? (LOWER; LOWER)

Assets are usually reported on the balance sheet at which amount? (COST)	MC

Another name for the balance sheet is (STATEMENT OF FINANCIAL POSITION)		MC

The balance sheet heading will specify a (POINT IN TIME)

Which of the following is a category or element of the balance sheet? (LIABILITIES)

Which of the following is an asset account? (PREPAID INSURANCE)

Which of the following is a contra account? (ACCUMULATED DEPRECIATION)

Manufacturing costs typically consist of_ direct materials, direct labor, and manufacturing overhead

If a home is valued at $250, 000 and the property tax rate is 2 percent, how much will the owners pay in property taxes? (5000$)

The AYIM Cotton Candy Company had the following information available regarding last year's operations: Sales (100, 000 units) $200, 000 Variable costs 100, 000 Contribution margin 100, 000 Fixed costs 50, 000 Net Income 50, 000 If sales were to increase by 200 units, what would be the effect on net income?

The excise tax – a tax

Taxes arising from: (DIGITALISATION)

Score bonito – is:

An audit team's responsibility would not include: designing client's internal controls

The appropriate segregation of functional responsibilities does not include DATA PREPARATION

A set of characteristics that defines good control working relationships in a company is referred to as the control environment.

Management fraud generally refers to Intentional distortions of financial statements

Which of the following is not considered an accounting estimate? Credit Sales

Certain conditions and circumstances are often present with management fraud. Which of the following is not such a condition or circumstance? High Liquidity

Management fraud generally refers to Intentional distortions of financial statements

What is the essential meaning of the generally accepted auditing standard that requires that the auditor be independent? The auditor must be without bias with respect to the client under audit

Which of the following is generally not considered one of the five business processes or cycles? Information technology.

The examination of all of a client's transactions would make an audit very costly. Thus, auditors rely heavily on sampling as a way to obtain evidence. Which of the following would result in a smaller sample? decrease in the desired level of assurance

The risk that an auditor's procedures will lead to a conclusion that a material misstatement in an account balance does not exist, when in fact a misstatement did occur, is known as: Detection risk.

Which of the following best describes the fiduciary relationship between management and the board of directors? MANAGEMENT REPORTS TO THE BOARD OF DIRECTORS

The net realizable value of an asset is best defined as: the amount the asset could be sold for after deducting the costs of sale

Given that non-current assets total £ 300, 000, current assets total £ 120, 000, long-term liabilities amount to £ 100, 000, and share capital and reserves total £ 230, 000, the amount of current liabilities ('creditors: amounts falling due within one year') will be: 90. 000$

The idea of the 'time value of money' is best described as: the operation of interest implies that money has a greater value the sooner it is received

Given that an asset was bought for £ 170, 000, the cost of replacing it is £ 200, 000, the expected value from selling it, after selling costs, is £ 190, 000, and the present value of the future inflows expected from its use is £ 220, 000, the deprival value of the asset is: 200. 000

The main purpose of a Statement of Changes in Equity is to summarize: all gains and losses for the year, both realised and unrealised

A holding company is best defined as one which? holds most of the shares in another company

The group’s share of the pre-acquisition reserves of a subsidiary from part of? the goodwill calculation

A non-controlling interest is best defined as? the equity stake in the subsidiary not held by the holding company

A Ltd pays £ 340, 000 for 80% of the shares of B Ltd when B’s share capital is £ 200, 000 and its reserves are £ 120, 000. Whatisthegoodwillarisingonthisacquisition? £ 84, 000

Freehold land is bought at a cost of £ 3, 500, 000. Two years later it is revalued to £ 4, 700, 000. Thedoubleentryforthiseventis? Debit land and credit revaluation reserve with £ 1, 200, 000

Which of the following is not an internal control deficiency related to factory equipment? All purchases of factory equipment are required to be made by the department in need of the equipment

An inventory turnover analysis is useful to the auditor because it may detect The existence of obsolete merchandise

The date of the management representation letter should coincide with Auditor’s report

The accuracy of perpetual inventory master files may be established, in part, by comparing perpetual inventory records with RECEIVING REPORTS

Which of the following is least likely to cause uncertainty about the ability of an entity to continue as a going concern? A potential lawasuit against the entity OR THE ENTITY IS SUING THE COMPETITOR

The document that generates recording of a sale is the: INVOICE

To be recognized revenues, must also be realized or realizable and… EARNED

A bank reconciliation will be an essential check for an external auditor to carry out because: it checks the organisation's bank record against the bank statement, which is an independent external source.

The financial statement that reports the revenues and expenses for a period of time such as a year or a month is the.. INCOME STATEMENT

The financial statement that reports the assets, liabilities, and stockholders' (owner's) equity at a specific date is the.. BALANCE SHEET

Under the accrual basis of accounting, revenues are reported in the accounting period when the.. SERVICE OR GOODS HAVE BEEN DELIVERED

Under the accrual basis of accounting, expenses are reported in the accounting period when the.. EXPENSES MATCHES THE REVENUES OR IS USED UP

Assets are usually reported on the balance sheet at which amount? COST

The ADDINA Bookshelf Company is considering the purchase of a custom delivery van costing approximately $50, 000. Using a discount rate of 20%, the present value of future cost savings is estimated at $51, 200. To yield the 20% return, the actual cost of the van should not exceed the $50, 000 estimate by more than: 1. 200$

Double entry accounting reflects: the duality concept

If a sole trader operating as a florist purchases a van for £ 19, 500 for business use, paying bycheque, he will when completing his double entry accounts: debit van account and credit bank account

If a trial balance, extracted from the double entry system of a sole trader, shows that total debits equals total credits then: an equal debit for every credit will have been posted and the accounts correctly added

A trial balance will not reveal the following error: a credit sale of £ 500 made to Ashley, posted as debit sale account £ 500 and credit Ashley account £ 500

AIDAR bought several lots of inventory throughout a period for the following amounts 1, 100, 2, 200, 3, 300, 4, 400. He made sales on credit throughout this period of £ 1, 100, £ 2, 200, £ 3, 300, £ 4, 400. He sells inventory at cost plus 25%. His closing inventory at the end of the period is valued at: 2, 200

The purchase price of an item of inventory is $25 per unit. In each three month period the usage of the item is20, 000 units. The annual holding costs associated with one unit equate to 6% of its purchase price. The cost ofplacing an order for the item is $20. What is the Economic Order Quantity (EOQ) for the inventory item to the nearest whole unit? (1461 UNITS)

Which of the following BEST describes a flexible budget? (A BUDGET WHICH SHOWS SALES REVENUE AND COSTS)	MC
Which of the following statements relating to management information are true? 1. It is produced for parties external to the organization 2. There is usually a legal requirement for the information to be produced 3. No strict rules govern the way in which the information is presented 4. It may be presented in monetary or non-monetary terms. (3 AND 4 ONLY)	MC

A company’s sales in the last year in its three different markets were as follows $ Market 1 100, 000 Market 2 149, 000 Market 3 51, 000 –––––––– Total 300, 000 –––––––– In a pie chart representing the proportion of sales made by each region what would be the angle of the sectionrepresenting Market 3? (61 DEGREES)

A company uses an overhead absorption rate of $3·50 per machine hour, based on 32, 000 budgeted machine hoursfor the period. During the same period the actual total overhead expenditure amounted to $108, 875 and30, 000 machine hours were recorded on actual production. By how much was the total overhead under or over absorbed for the period? (3875$)

An organization operates a piecework system of remuneration, but also guarantees its employees 80% of a time-basedrate of pay which is based on $20 per hour for an eight hour working day. Three minutes is the standard time allowedper unit of output. Piecework is paid at the rate of $18 per standard hour. If an employee produces 200 units in eight hours on a particular day, what is the employee’s gross pay for thatday? (180$)

The following statements relate to the advantages that linear regression analysis has over the high low method in theanalysis of cost behavior: 1. the reliability of the analysis can be statistically tested 2. it takes into account all of the data 3. it assumes linear cost behavior. Which statements are true? (1 AND 2 ONLY)

Under which of the following labour remuneration methods will direct labour cost always be a variable cost? (Piece rate)

NURTAY Corporation has the following purchases budget for the last half of 2018: July $100, 000 October $ 90, 000 August 80, 000 November 100, 000 September 110, 000 December 94, 000 Historically, the company pays one half at the time of purchase and the remainder in the month following purchase. WhataretheexpectedcashdisbursementsinAugust 2018? $90. 000

The following statements have been made about value analysis. (1) It seeks the lowest cost method of achieving a desired function (2) It always results in inferior products (3) It ignores esteem value Which is/are true? (1)

Which of the following statements regarding graphs of fixed and variable costs is true? Variable costs are zero when production is equal to zero

You are given the cost and volume information below: Volume Cost 1 unit $ 15 10 units 150 100 units 1500 What type of a cost is given? (VARIABLE COST)

A manufacturing company operates a standard absorption costing system. Last month 25, 000 production hours werebudgeted and the budgeted fixed production cost was $125, 000. Last month the actual hours worked were 24, 000and standard hours for actual production were 27, 000.

What was the fixed production overhead capacity variance for last month? $5. 000 ADVERSE

A company which operates a process costing system had work-in-progress at the start of last month of 300 units(valued at $1, 710) which were 60% complete in respect of all costs. Last month a total of 2, 000 units werecompleted and transferred to the finished goods warehouse. The cost per equivalent unit for costs arising last monthwas $10. The company uses the FIFO method of cost allocation. What was the total value of the 2, 000 units transferred to the finished goods warehouse last month? 19. 910$