MA1 – Management Information Date: September 16,2023

Lecturer: Mr. Sasenarine Ramnarine (ACCA, MSC )

Please answer all questions

1. In the cost coding system of Company A each digit of a code represents a classification, with each further
to the right representing a smaller subset than the previous digit. What type of coding system is Company A
using?

A. Sequential B. Mnemonic C. Block D. Hierarchical

2. As part of the purchasing cycle, what is the correct order in which the following documents will be
processed?
A. Purchase requisition, purchase order, invoice, goods received note
B. Purchase requisition, purchase order, goods received note, invoice
C. Purchase order, purchase requisition, invoice, goods received note
D. Purchase order, purchase requisition, goods received note, invoice

3. Which department is responsible for preparing a goods received note?

A. Accounts B. Purchasing C. Quality Control D. Stores (Warehouse)

4. Summary Financial results for Q Co for the last two years have been as follows:
Year one (1) Year two (2)
Sales Revenue $100,000 $140,000
Net Profit $4,500 $6,100
Capital Employed $27,300 $34,800

In terms of net profit margin and return on capital employed (ROCE) has the profitability of Q Co, (increased or
decreased) from year 1 to year 2?

Net Profit Margin ROCE

A. Increased Increased
B. Decreased Decreased
C. Increased Decreased
D. Decreased Increased

5. A company has calculated the following ratios for a period:

Asset Turnover 3.6 Times
Net Profit Margin 5%

What is the return on capital employed (ROCE)?

A. 13.90% B. 1.80% C. 18.00% D. 1.40%

6. Which formula calculates the production volume ratio?

A. Standard hours of actual production / Budgeted hours

B. Standard hours of actual production / Actual hours
C. Budgeted hours / Standard hours of actual production
D. Actual hours / Budgeted hours
 7. How is the amount of free inventory calculated?

A. Inventory on hand + Inventory on order

B. Inventory – Inventory already requisitioned for use
C. Inventory on hand + Inventory on order – Inventory already requisitioned for use
D. Inventory on order – Inventory already requisitioned for use

8. What is the function of the sales day book?

A. To record cash received from customers

B. To list the value of sales invoices
C. To describe features of products
D. To record transactions grouped by customer

9. Which of the following is an example of external information of an organization?

A. Financial reporting standards
B. Organisation Structure
C. Report of Cost
D. Sales Ledger records

10. At the end of its financial year a manufacturing company has the following materials held in inventory:
1. 100 toy cars which are complete but require packaging prior to being sold or dispatched
2. One ton of plastic which will be moulded in various products

Which of the following is the correct classification for the toy cars and the plastic?

A. Toy cars are finished goods and the plastic is raw material
B. Both the toy cars and the plastic are work in progress
C. Toy cars are work in progress and the plastic is raw material
D. Toy cars are finished goods and the plastic is work in progress

11. In which department is a purchase order usually prepared?

A. Purchasing department of the buying organization
B. Dispatch department of the supplying organization
C. Goods received department of the buying organization
D. Inventory stores department of the buying organization

12. What is an organization chart designed to show?

A. Coding Structure
B. Aim of the organization
C. Directions of responsibility
D. Main items of expenditure

13. What is the double entry for the purchase of raw materials on credit in an integrated accounting system?
A. Dr Payables Control CR Raw materials control
B. DR Cost ledger Control CR Purchase ledger control
C. DR Purchase ledger control CR Raw materials control
D. DR Raw materials Control CR Payables Control

14. Which of the following is an advantage of having centralized rather than de-centralised business
administration?
A. Economy in terms of space and cost
 B. Administration under control of local management
C. Self Sufficient local offices
D. Systems tailored to individual requirements

15. Making invoices between alternatives indicates a decision making process rather than control, planning or
reporting. Which of the following would NOT be a task of a Trainee Accountant?

A. Authorising invoices
B. Calculate material cost
C. Estimate product profitability
D. Value inventory

16. Which of the following would MOST likely influence the content of a management information report?
A. The cost of obtaining the necessary information
B. The information requirement of the recipient within the report
C. The degree of accuracy of the information within the report
D. Whether the information is from internal or external sources

17. The following information relates to a division of a business for a period:

Sales Revenue $ 420,000
Capital employed $ 260,000
Net Profit Margin 10%
Cost of Capital 8%

What is the residual income of the division?

A. 2%
B. $ 21, 200
C. $ 3,200
D. $ 7,600

18. The labour efficiency and capacity utilization ratios in a period were 112% and 94% respectively. What
was the production volume ratio in the period to the nearest %?

A. 105%
B. 84%
C. 106%
D. 119%
19. Sales and Production of Product P in the next period are 6000 units and 5800 units respectively. 50 litres of
Material “M” are used per 100 units of Product P. Inventory of Material M is planned to reduced by 60
litres in the next period. What quantity of Material M needs to be purchased in the next period?

A. 2,940 litres
B. 3,060 litres
C. 2,840 litres
D. 2,960 litres

20. In a Factory there are four types of job:

1. Machine operators
2. Supervisors
3. Maintenance engineers
4. Quality control checkers
What would be classified as direct and indirect labour?

A. Direct: 1 and 2, Indirect: 3 and 4

B. Direct: 2 and 3, Indirect: 1 and 4
C. Direct: 1 and 3, Indirect: 2 and 4
D. Direct: 1 and 4, Indirect: 2 and 3

21. Which of the following is a cost centre?

A. One of the hotels owned by a leisure company
B. The accountancy department in a business
C. The direct material cost of a product
D. The total depreciation expense of a business

22. Which item would most likely be treated as an indirect cost by a furniture manufacturer?
A. Fabric to cover the seat of a chair
B. Metal used for the legs of a chair
C. Staples to fit the fabric to the seat of a chair
D. Wood used to make the frame of a chair

23. Which of the following states the responsibility of the manager of a profit centre?
A. Responsibility for revenues but not costs
B. Responsibility for costs but not revenues
C. Responsibility for revenues and costs
D. Responsibility for revenues, costs and investment

24. Which of the following are features of an efficient and effective coding system?
1. Each item should have a unique code
2. Each code should contain a combination of letters and numbers
3. Each code should completely disguise the item being coded
4. Codes should not be uniform in length and structure

A. 1 only
B. 1 and 2 only
C. 1, 3 and 4 only
D. 2, 3 and 4 only

25. Which of the following statements is true?

A. Information consists of raw facts that have not been processed
B. Data consists of information
C. Data consists of processed information
D. Information consists of data which has been processed in a predefined way

26. What is the purpose of prime entry records?

A. Assist the preparation of a trial balance

B. Prevent unnecessary detail in the ledgers
C. Provide a check on the double-entry bookkeeping
D. Provide a list of outstanding payments
 27. Which of the following would be included in the financial accounts, but may be excluded from the cost
accounts?

A. Direct material costs

B. Depreciation of storeroom handling equipment
C. Bank interest and charges
D. Factory managers salary

28. The following information is available for a responsibility centre for a period:

Gross profit $460,000

Net profit $176,000
Non-current assets $1,200,000
Net current assets $320,000
Cost of capital 10% per period

What is the residual income for the period?

A. $340,000
B. $308,000
C. $56,000
D. $24,000

29. What is the double-entry, in an interlocking accounting system, for the purchase of raw materials on credit?

Debit Credit
A. Raw materials inventory Trade payables
B. Trade payables Raw materials inventory
C. Raw materials inventory Cost ledger control
D. Cost ledger control Raw materials inventory

30. You have been asked to write a report outlining the qualities of good information.

Which of the following would you NOT include in the report?

A. The information should be complete
B. The information should be communicated via an appropriate channel
C. The information should be understandable
D. The information should be communicated to everyone in the organization
31. Which of the following statements about management accounting are TRUE?
-Management accounting information must be prepared annually
-Management accounting information does not have to be completely accurate
-Management accounting information is required to be prepared by law

E. 1&3
F. 2&3
G. 2 only
H. All of the above

32. Another name for Cost of Sales is?

E. Direct Costs
F. Standard Costs
G. Prime Costs
H. Production Costs

Data for Questions 33 - 37

A business has credit sales of $200,000 and cash sales of $30,000. The production costs are $140,000 with
selling & distribution costs of $45,000 and administration costs of $20,000. The total assets amounted to
$90,000 and current liabilities of $30,000.

33. What is the gross profit margin?

A. 10.87%
B. 30.00%
C. 45.00%
D. 39.13%

34. What is the net profit margin?

A. 10.87%
B. 30.00%
C. 45.00%
D. 39.13%

35. What is the Asset Turnover?

A. 1.5
B. 2.5
C. 3.8
D. 0.4

36. What is the Return on Capital Employed (ROCE)?

A. 150%
B. 42%
C. 50%
D. 255%

37. The following information is available for a responsibility center for 20X8.
 Gross Profit $2,200,000
Net Profit $1,400,000
Current Liabilities $ 600,000
Non-Current Assets $5,000,000
Net-Current Assets $ 900,000

Cost of Capital is 12% per annum. What is the residual income for the year?

A. $692,000
B. $764,000
C. $1,292,000
D. $872,000

Data for Questions 38 - 39

During Quarter 1, a manufacturing business had budgeted for 15,000 labour hours. The actual hours
worked were 16,000 and the standard hours of production were 18,000.

38. What is the labour capacity utilization ratio (to one decimal place)?
A. 106.7%
B. 93.8%
C. 112.5%
D. 120.0%

39. What is the labour efficiency ratio (to one decimal place)?
A. 106.7%
B. 93.8%
C. 112.5%
D. 120.0%

40. You have purchased 2000 units of an item on credit at $20 per unit plus VAT charged at 14%. Since you
have purchased such a large volume, your Supplier has given you a 10% trade discount and offered a
further 5% cash discount on payments within seven (7) days of your purchase. What should be the gross
amount on the Supplier’s Invoice for this purchase?

A. $41,040
B. $38,760
C. $43,320
D. $45,600