Management Information

June 2012
Question paper

All questions are compulsory and MUST be attempted.

Do not open this paper until instructed by the supervisor

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examination hall

Kaplan Publishing/Kaplan Financial

Paper MA1

FIA FINAL ASSESSMENT

FIA MA1: MANAGEMENT INFORMATION

Kaplan Financial Limited, 2011

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FINAL ASSESSMENT QUESTIONS

ANSWER ALL QUESTIONS

1

Which of the following would generally be produced by a management accountant?

A

Statement of financial position

Cash flow statement

Variance report

Income statement

Which of the following could not be classified as a cost unit?

A

A table

A barrel of beer

A chargeable man-hour

A factory

Which of the following is the best example of a semi-variable cost?

A

Rent

Labour

Electricity

Petrol

The budgeted output for a period is 5,000 units and the budgeted time for
production of these units is 2,500 hours.
The actual output in the period is 5,500 units and the actual time worked by the
labour force is 2,000 hours.
What is the capacity utilisation ratio?

80.0%

100.0%

110.0%

137.5%

A company has four production departments. Fixed overhead costs are as follows:
Department

Hours taken

10,000

5,000

14,000

6,000

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The company produces one product and the time spent in each department is shown
above. If overheads are recovered on the basis of labour hours and budgeted
production is 5,000 units, the fixed overhead cost per unit is

$3.00

$7.00

$12.50

$17.50

A manufacturer holds stock of a raw material item. The manufacturer makes and
sells a single product, and each unit of product uses 2.5 kilograms of the raw
material. The budgeted product for the year is 6,000 units of the product. At the
start of the year, the manufacturer expects to have 1,800 units of the raw material
in stock, but plans to reduce stock levels by half by the end of the year.
What will be the budgeted purchase quantities of the raw material item in the year?

13,800 kg

14,100 kg

15,000 kg

15,900 kg

A manufacturing company has budgeted sales next year of 4,000 units of product T.
Each unit of product T uses 3 units of a component X. The company plans to increase
stocks of finished goods by 200 units by the end of the year, and to decrease stocks
of component X by 400 units.
What will be the budgeted purchase quantities of component X?

12,200 units

12,400 units

12,600 units

13,000 units

A manufacturing company makes and sells a single product. The sales budget for the
year is 6,000 units. Each unit of the product requires 1.2 kilograms of raw materials.
The company has budgeted to reduce stocks of finished goods from 2,000 units at
the start of the year to 1,500 units at the end of the year, but it plans to increase
stocks of raw material from 1,500 kilograms to 2,400 kilograms.
How many kilograms of raw materials does the company need to purchase?

6,000 kg

6,600 kg

7,500 kg

8,700 kg

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FINAL ASSESSMENT QUESTIONS

10

What term describes: 'the identification of differences between actual and planned
outcomes?
A

Feedforward control

Variance analysis

Budgeting

Feedback control

A product has a budgeted total labour cost of $6 per unit. In a period, production
volume was as follows:
Budget

8,000

Actual

7,700

Actual total labour costs for the period were $47,600.

What was the total labour cost variance?

11

$400 favourable

$400 adverse

$1,400 favourable

$1,400 adverse

A product has budgeted direct materials cost of $12 per unit. Production volume for
the period was:
Actual

6,750 units

Budget

6,500 units

Actual direct materials cost for the period was $79,840.

What was the total direct material cost variance?

12

$1,160 favourable

$1,160 adverse

$1,840 favourable

$1,840 adverse

A product has a budgeted direct material cost of $5 per unit. In a period production
of the product was:
Budget

9,000 units

Actual

8,800 units

$44,380 was incurred on direct materials for the periods production.

What was the direct material activity (volume) variance?
A

$1,000 adverse

$1,000 favourable

$620 adverse

$620 favourable

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FIA MA1: MANAGEMENT INFORMATION

13

The budgeted output for a period is 3,000 units and the budgeted time for
production of these units is 300 hours.
The actual output in the period is 2,500 units and the actual time worked by the
labour force is 200 hours.
What is the efficiency ratio?

14

66.67%

83.33%

100.00%

125.00%

The budgeted output for a period is 5,000 units and the budgeted time for
production of these units is 2,500 hours.
The actual output in the period is 5,500 units and the actual time worked by the
labour force is 2,000 hours.
What is the production volume ratio?

15

80.0%

100.0%

110.0%

137.5%

XYZ plc operates a process costing system for product F1 with the following details
for May:

There was no work-in-progress at the start of the period.

1,000 units of were commenced processing and completed output was 800
units.

The work-in-progress was 70% complete for labour costs which were $2.00 per
equivalent unit.

There were no losses or gains in the process.

What amount was included in the closing work-in-progress for labour costs?

$140

$200

$280

$400

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FINAL ASSESSMENT QUESTIONS

16

Z Inc has the following results:

Turnover

$246,000

Gross Profit

$54,000

Operating Profit

$36,000

Net Profit

$24,000

Net assets

$416,000

What is the gross profit margin of Z Inc?

17

4.56%

7.70%

12.98%

21.95%

At the end of a period the percentage completion of the work-in-progress in a

continuous manufacturing process was over estimated.
What effect would correction of the error have on the cost per equivalent unit and the
total cost of output completed in the period?

18

Unit cost

Cost of output

Decrease

Decrease

Decrease

Increase

Increase

Decrease

Increase

Increase

A manufacturing organisation incurs costs relating to the following:

(1)

Wages payable to production line workers.

(2)

Inspecting all products.

(3)

Packing the products at the end of the manufacturing process prior to moving
them to the warehouse.

Which of these costs are classified as production costs?

19

(1) and (2) only

(1) and (3) only

(2) and (3) only

(1), (2) and (3)

In an organisation manufacturing a number of different products in one large

factory, the rent of that factory is an example of an indirect expense when costing a
product.
Is this statement true or false?
A

True

False

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FIA MA1: MANAGEMENT INFORMATION

20

The following statement refers to a quality of good information: The cost of

producing information should be less than the value of the benefits of that
information to management.
Is this statement true or false?

21

22

23

True

False

For which of the following is a profit centre manager responsible?

A

Costs only

Revenues only

Costs and revenues

Costs, revenues and capital investment

Which of the following best describes a fixed budget?

A

A budget which shows fixed production costs only

A budget which is not changed to reflect the actual output level

A budget which shows sales revenue and costs at different levels of activity

A budget that is updated halfway through the year to incorporate the actual
results for the first half of the year

A business reported an absorption costing profit of $45,000 last period. Its inventory
values for the period were as follows:
$
Opening inventory

28,000

Closing inventory

36,400

If the business had used marginal costing, the inventory values would have been as
follows:
$
Opening inventory

16,000

Closing inventory

20,800

What would have been the reported profit using marginal costing?

$41,400

$48,600

$57,000

$60,600

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FINAL ASSESSMENT QUESTIONS

24

A manufacturing company recorded the following costs in October for Product X:

Direct materials
Direct labour
Variable production overhead
Fixed production overhead
Variable selling costs
Fixed distribution costs
Total costs incurred for Product X

$
20,000
16,300
14,700
19,750
4,500
16,800

92,050

During October 5,000 units of Product X were produced but only 3,600 units were
sold. At the beginning of October there was no inventory.
The value of the inventory of Product X at the end of October using marginal costing
was:

25

$10,164

$14,280

$15,540

$19,810

INK Inc operates a process costing system for product W3 and had the following
details for December:

There were no losses or gains during the month

There was no opening work-in-progress brought forward

2,500 litres of a raw material were input to the process.

2,000 litres of finished product were output from the process.

The stage of completion of the work-in-progress was:

Materials 100%

Labour and other conversion costs 40%

What were the equivalent units of work in progress in the period?

Materials

Conversion costs

2,500

1,000

500

200

2,000

500

2,500

2,200

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FIA MA1: MANAGEMENT INFORMATION

26

27

28

Which one of the following is not a book of prime entry?

A

Sales day book

Petty cash book

Wages book

Nominal ledger

Which of the following is in the correct chronological sequence for purchase

documents?
A

Goods received note Remittance advice Invoice Purchase order

Delivery note Goods received note Purchase requisition Invoice

Purchase order Delivery note Goods received note Invoice

Purchase requisition Invoice Goods received note Delivery note

A company operates a chain of builders merchants across the country selling

building, plumbing and electrical goods. The management are keen to identify
underperforming regions.
How might the company best analyse its profitability?

29

By area of the country

By contract with each supplier

By customer payment method

By product line stocked

An employee is paid on a piecework basis. The scheme is as follows:

1 100 units per day

$0.25 per unit

101 200 units per day

$0.30 per unit

> 200 units per day

$0.35 per unit

Only the additional units qualify for the higher rates. Rejected units do not qualify for
payment.
An employee produced 202 units in a day of which 5 were rejected as faulty.
How much did the employee earn for the day?

10

$54.10

$55.00

$59.10

$60.60

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FINAL ASSESSMENT QUESTIONS

30

31

32

On an excel spreadsheet the cell A1 is 2, A2 is 2 and A3 is 3. The formula

=SUM(A1*A2+A3) would be:
A

Calculated correctly as 7

Calculated incorrectly as 7

Calculated correctly as 10

Calculated incorrectly as 10

Which of the following are factors that might affect a decision as to whether to
investigate a variance?
(1)

Controllability of variance

(2)

Cost of investigation

(3)

Size of variance

(1) and (2) only

(1) and (3) only

(2) and (3) only

(1), (2) and (3)

Z Inc has the following results:

$
Turnover

246,000

Gross Profit

54,000

Operating Profit

36,000

Net Profit

24,000

Net assets

416,000

What is the asset turnover of Z Inc.?

33

0.10

0.22

0.59

1.69

Which of the following mathematical symbols used in formulae is in the correct

order of precedence in spreadsheet calculations
A

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FIA MA1: MANAGEMENT INFORMATION

The following information relates to Questions 34, 35 and 36.

The inventory records for component C24 for the month of June showed the following:

Opening inventory
4 June
25 June
30 June
34

35

36

37

12

Receipts
(units)
500
1,000
1,500

Cost per unit

($)
2.00
2.10
2.20

Issues (units)

1,500

Using the FIFO method of pricing issues, the cost of issues during the month was:
A

$3,090

$3,100

$3,300

$3,520

Using the LIFO method of pricing issues, what is the value of inventory at 30 June?
A

$3,090

$3,100

$3,520

$3,300

Using the AVCO method of pricing, at what price would the issues on 30 June be
made?
A

$2.00

$2.10

$2.20

$2.13

Which of the following are advantages of component bar charts?

(1)

The relative importance of each component can be assessed

(2)

The information can be interpreted quickly

(3)

More than one component can be displayed at a time

(1) only

(2) only

(1) and (2) only

(1), (2) and (3)

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FINAL ASSESSMENT QUESTIONS

38

A company had the following results for May:

Budgeted sales revenue:

10,000 units @ price of $20

Actual sales revenue:

12,000 units @ price of $21

Determine the variance due to the change in selling activity (volume)

39

$40,000 A

$42,000 A

$40,000 F

$42,000 F

A company inputs 100 kg of materials in to a process. Material costs $2 per kg. The
labour cost is $400 and overheads cost $300. Normal losses are expected to be 5% of
input and can be sold for $2 per kg.
This month actual output was 90 kg.
What is the value of the abnormal loss (rounded to the nearest $)?

40

41

42

$9.00

$10.00

$45.00

$47.00

Which of the following is most likely to have given rise to a favourable materials
price variance?
A

An increase in production volumes

Better quality materials being used

An increase in inflation

Improved purchasing

Which of the following variances is most likely to have been caused by the use of
better quality materials?
A

A favourable materials price variance

A favourable materials usage variance

An adverse labour efficiency variance

An adverse sales price variance

Raj is a divisional manager who is held responsible for price and cost variances and
for capital expenditure. What type of division does Raj manage?
A

Cost centre

Revenue centre

Profit centre

Investment centre

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FIA MA1: MANAGEMENT INFORMATION

43

A manufacturer holds inventory of a key component. The manufacturer makes and

sells a single product, and each unit of product uses 3 components. The budgeted
production volume for the month is 15,000 units of the product. At the start of the
year, the manufacturer expects to have 1,600 components in inventory, but plans to
increase inventory levels to 3,000 components by the end of the month.
What will be the budgeted purchase quantities of the component in the month?

44

45

46

43,600

45,000

46,400

48,000

What type of error message does Excel give when a formula tries to divide by a
blank cell?
A

#VALUE!

#DIV/0!

#NUM!

#REF!

Budgeted overheads are $260,000 and budgeted hours are 10,000. Actual overheads
are $280,000 and actual hours are 14,000. What will be the absorption rate?
A

$18.60

$20.00

$26.00

$28.00

The following data relate to the energy cost for a workshop at two activity levels:
Units completed
Energy cost

2,000

2,500

$6,500

$7,000

Using the high-low method, what is the estimate of the energy costs if 2,800 units are
completed?

47

14

$4,500

$6,500

$7,300

$7,840

Which of the following would be the most appropriate basis for apportioning the IT
department costs to cost centres within the factory?
A

The number of computers in each cost centre

The floor area occupied by each cost centre

The number of IT queries logged by each cost centre

The number of employees using a computer in each cost centre

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48

49

50

A job is budgeted to require 500 hours (including 20% idle time). If the total labour
cost budgeted for the job is $4,500, what is the labour rate paid per hour?
A

$9.00

$9.38

$11.25

$14.06

The most appropriate method of communicating formal information within a

company would be:
A

Email

Note

Letter

Report

The data in column C is to be used to create a pie chart in Excel.

A

Age

1825

59.3

2635

61.6

3645

10.3

4655

15.8

56 and over

9.9

Total

156.9

How many degrees should the pie chart use to represent age 26 - 35?
A

17.1

61.6

141.3

360.0

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FIA MA1: MANAGEMENT INFORMATION

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