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ACCA
Management
Accounting
Mock Exam 1
Answers
(Duration: 3 hours) LSAM
ANSWER 1
B – False
The definition given is that of a flexed budget.
ANSWER 2
D
ANSWER 3
C
{[Buffer inventory + (EOQ ч2)] Annual holding cost per component}
= [700 units + (1500 units ч 2)] €3.00
= €4,350
ANSWER 4
B
ANSWER 5
C
ANSWER 6
C
High level = number of units: 48 Total cost Ј7,100
Low level = number of units: 23 Total cost Ј5, 200
Difference = 25 units Difference in costs Ј1,900
Therefore variable cost per unit = Ј1,900 ч 25 units = Ј76
Fixed costs = Ј7100 – (Ј76 48 units) = Ј3,452
ANSWER 7
D
ANSWER 8
B
ANSWER 9
C
Mock Exam - 1 (Answers)
LondonSAM 1 F2 - Management Accounting
ANSWER 10
B
The process should be:
Calculate contribution per unit of scarce resources.
Calculate the contribution per unit of the scarce resource.
Rank the products.
Allocate the scarce resource.
ANSWER 11
C
ANSWER 12
C
The employee took 45 hours to perform 99 operations. The standard time allowed per
operation is 45 minutes, giving a standard time of (99 [45/60]) = 74.25 hours to perform 99
operations. The time saved is therefore (74.25-45) = 29.25 hours.
The bonus payable will be:
(time taken/time allowed) time saved hourly rate = (45/74.25) 29.25 Ј8.20 = Ј145.36
The gross wage for that week will therefore be (45 hours Ј8.20) + Ј145.36 = Ј514.36
ANSWER 13
D
ANSWER 14
A
Overheads absorbed for the period = €4.50 3,850 labour hours =€ 17,325
Overheads incurred for the period = €18,225
Total overheads under-absorbed = €900
ANSWER 15
C
ANSWER 16
B
ANSWER 17
A
Mock Exam - 1 (Answers)
LondonSAM 2 F2 - Management Accounting
ANSWER 18
A
ANSWER 19
B
ANSWER 20
A
ANSWER 21
C
EOQ = ((2 $30 (5,000 4))/0.192) = 2,500 units
ANSWER 22
C
BEP (revenue) = $120,000 ч0.4 = $300,000
BEP (units) = $300,000 ч$40 = 7,500 units
ANSWER 23
D
Actual activity – Breakeven activity = 1,850 units – 1,350 units = 500 units
ANSWER 24
A
Contribution per unit = $35 – ($8 + $8.50 + $3.50) = $15
Total contribution = $15 6,100 units sold $91,500
Less = Fixed costs ($30,000)
Marginal profit $61,500
ANSWER 25
B
Marginal costing profit $61,500
Add: OAR included in closing stock $4 400 units $1,600
Absorption profit for the month $63,100
Mock Exam - 1 (Answers)
LondonSAM 3 F2 - Management Accounting
ANSWER 26
A
The machine has to be retained for use on other contracts, therefore no cost.
ANSWER 27
B
The material is no longer in use within the firm. Opportunity cost = Ј2.00 per unit.
ANSWER 28
A
ANSWER 29
A
250 units of Product B with all of material M1 (2,500 kgs) = 10 kgs per unit
9 units of Product B with all of material M2 (1,350 kgs) = 9 kgs per unit
ANSWER 30
A
A Total contribution (0 11) + (150 15) = Ј2,250
B Total contribution (70 11) + (40 15) = Ј1,370
C Total contribution (40 11) + (70 15) = Ј1,490
D Total contribution (120 11) + (0 15) = Ј1,320
ANSWER 31
D
Fully completed units 300 units
Partially completed 50 units 60% completion 30 units
Total 330 units
ANSWER 32
B
Normal output = 12,000 – 10% 12,000 10,800
Actual Output 11,050
Abnormal gain 250 kgs
Mock Exam - 1 (Answers)
LondonSAM 4 F2 - Management Accounting
ANSWER 33
B
Average cost per kg =
12,000 - 1,200
(48,000 30,000 42,000) - (1,200 1)
= $11 per kg
ANSWER 34
A
ANSWER 35
B
Input = 4,000 litres
Normal output = 4,000 0.95 = 3,800
Actual output Finished goods 2,900
WIP __8_0_0_
Total 3,700
Abnormal loss = 3,800 – 3,700 = 100 litres
ANSWER 36
C
As the closing work-in-progress is 60% complete, the number of equivalent units is:
2,900 + 100 + 60% 800 = 3,480
ANSWER 37
D
Abnormal loss is valued at the same cost as good output.
Value = 100 ($3.32 + 2.20) = $552
ANSWER 38
C
Value of closing work-in-progress = 800 $3.32 + 480 $2.20 = $3,712
ANSWER 39
A
Output value = 2,900 $5.52 = $16,008
Mock Exam - 1 (Answers)
LondonSAM 5 F2 - Management Accounting
ANSWER 40
D
Direct materials: Ј10,000 + Ј6,000 Ј16,000
Direct labour: (800 Ј4) + (400 Ј5) Ј5,200
Production overhead: (800 Ј4) + (400 Ј4) Ј4,800
Total production cost £26,000
Total cost (+ 20% for admin) Ј31,200
% Ј
100 41,600
_(7_5_) (_3_1_,_2_0_0 )
__25_ _1_0_,4__0_0
ANSWER 41
B
ANSWER 42
C
A service industry is an industry not involved in agriculture, mining, construction or
manufacturing.
ANSWER 43
B
Overheads incurred Ј72,000
Over-absorption Ј2,375
Therefore overheads absorbed £74,375
OAR =
17,500
Ј74,375 = Ј4.25
OAR =
4.25
68,000 = 16,000 hours
ANSWER 44
D
Finished foods (Widgets)
48,000 units to produce + increase in stocks of 1,500 units = 49,500 units
49,500 units @ 2kgs per unit = 99,000 kgs
Add increase n stocks of raw materials = 1,750 kgs
Total material purchases budget 100,750 kgs
Mock Exam - 1 (Answers)
LondonSAM 6 F2 - Management Accounting
ANSWER 45
B
The number of labour hours used to produce 5,000 units is 9,550, and these have cost
$52,525. If we had paid the standard cost of $6 an hour, this would have cost $57,300, which
gives us a favourable labour rate variance of $4,775.
ANSWER 46
C
We should have used 10,000 hours to produce 5,000 units. Instead, we have only used 9,950
hours. This is a favourable hour saving of 450 hours, which at the standard hourly rate of $6,
gives a favourable labour efficiency rate of $2,700.
ANSWER 47
B
ANSWER 48
B
OAR =
125,000
Ј650,000 = Ј5.20 per labour hour
Actual overheads incurred Ј665,000
Overheads absorbed 122,500 hours Ј5.20 = Ј637,000
There is an under-absorption (adverse variance) of Ј665,000 – Ј665,000 = Ј28,000
ANSWER 49
A
ANSWER 50
A
The question stated that there were just three possible outcomes for profit in a decision
situation. The requirement asked for the most likely level of profits, that is the one of the three
possibilities with the highest probability of occurring. The probability of a $28,500 profit was
0.40 ($11,400 / $28,500) and that of a $18,000 profit was 0.45 ($8,100 / $18,500).
Mock Exam - 1 (Answers)
LondonSAM 7 F2 - Management Accounting
ACCA
Management
Accounting
Mock Exam 1
Answers
(Duration: 3 hours) LSAM
ANSWER 1
B – False
The definition given is that of a flexed budget.
ANSWER 2
D
ANSWER 3
C
{[Buffer inventory + (EOQ ч2)] Annual holding cost per component}
= [700 units + (1500 units ч 2)] €3.00
= €4,350
ANSWER 4
B
ANSWER 5
C
ANSWER 6
C
High level = number of units: 48 Total cost Ј7,100
Low level = number of units: 23 Total cost Ј5, 200
Difference = 25 units Difference in costs Ј1,900
Therefore variable cost per unit = Ј1,900 ч 25 units = Ј76
Fixed costs = Ј7100 – (Ј76 48 units) = Ј3,452
ANSWER 7
D
ANSWER 8
B
ANSWER 9
C
Mock Exam - 1 (Answers)
LondonSAM 1 F2 - Management Accounting
ANSWER 10
B
The process should be:
Calculate contribution per unit of scarce resources.
Calculate the contribution per unit of the scarce resource.
Rank the products.
Allocate the scarce resource.
ANSWER 11
C
ANSWER 12
C
The employee took 45 hours to perform 99 operations. The standard time allowed per
operation is 45 minutes, giving a standard time of (99 [45/60]) = 74.25 hours to perform 99
operations. The time saved is therefore (74.25-45) = 29.25 hours.
The bonus payable will be:
(time taken/time allowed) time saved hourly rate = (45/74.25) 29.25 Ј8.20 = Ј145.36
The gross wage for that week will therefore be (45 hours Ј8.20) + Ј145.36 = Ј514.36
ANSWER 13
D
ANSWER 14
A
Overheads absorbed for the period = €4.50 3,850 labour hours =€ 17,325
Overheads incurred for the period = €18,225
Total overheads under-absorbed = €900
ANSWER 15
C
ANSWER 16
B
ANSWER 17
A
Mock Exam - 1 (Answers)
LondonSAM 2 F2 - Management Accounting
ANSWER 18
A
ANSWER 19
B
ANSWER 20
A
ANSWER 21
C
EOQ = ((2 $30 (5,000 4))/0.192) = 2,500 units
ANSWER 22
C
BEP (revenue) = $120,000 ч0.4 = $300,000
BEP (units) = $300,000 ч$40 = 7,500 units
ANSWER 23
D
Actual activity – Breakeven activity = 1,850 units – 1,350 units = 500 units
ANSWER 24
A
Contribution per unit = $35 – ($8 + $8.50 + $3.50) = $15
Total contribution = $15 6,100 units sold $91,500
Less = Fixed costs ($30,000)
Marginal profit $61,500
ANSWER 25
B
Marginal costing profit $61,500
Add: OAR included in closing stock $4 400 units $1,600
Absorption profit for the month $63,100
Mock Exam - 1 (Answers)
LondonSAM 3 F2 - Management Accounting
ANSWER 26
A
The machine has to be retained for use on other contracts, therefore no cost.
ANSWER 27
B
The material is no longer in use within the firm. Opportunity cost = Ј2.00 per unit.
ANSWER 28
A
ANSWER 29
A
250 units of Product B with all of material M1 (2,500 kgs) = 10 kgs per unit
9 units of Product B with all of material M2 (1,350 kgs) = 9 kgs per unit
ANSWER 30
A
A Total contribution (0 11) + (150 15) = Ј2,250
B Total contribution (70 11) + (40 15) = Ј1,370
C Total contribution (40 11) + (70 15) = Ј1,490
D Total contribution (120 11) + (0 15) = Ј1,320
ANSWER 31
D
Fully completed units 300 units
Partially completed 50 units 60% completion 30 units
Total 330 units
ANSWER 32
B
Normal output = 12,000 – 10% 12,000 10,800
Actual Output 11,050
Abnormal gain 250 kgs
Mock Exam - 1 (Answers)
LondonSAM 4 F2 - Management Accounting
ANSWER 33
B
Average cost per kg =
12,000 - 1,200
(48,000 30,000 42,000) - (1,200 1)
= $11 per kg
ANSWER 34
A
ANSWER 35
B
Input = 4,000 litres
Normal output = 4,000 0.95 = 3,800
Actual output Finished goods 2,900
WIP __8_0_0_
Total 3,700
Abnormal loss = 3,800 – 3,700 = 100 litres
ANSWER 36
C
As the closing work-in-progress is 60% complete, the number of equivalent units is:
2,900 + 100 + 60% 800 = 3,480
ANSWER 37
D
Abnormal loss is valued at the same cost as good output.
Value = 100 ($3.32 + 2.20) = $552
ANSWER 38
C
Value of closing work-in-progress = 800 $3.32 + 480 $2.20 = $3,712
ANSWER 39
A
Output value = 2,900 $5.52 = $16,008
Mock Exam - 1 (Answers)
LondonSAM 5 F2 - Management Accounting
ANSWER 40
D
Direct materials: Ј10,000 + Ј6,000 Ј16,000
Direct labour: (800 Ј4) + (400 Ј5) Ј5,200
Production overhead: (800 Ј4) + (400 Ј4) Ј4,800
Total production cost £26,000
Total cost (+ 20% for admin) Ј31,200
% Ј
100 41,600
_(7_5_) (_3_1_,_2_0_0 )
__25_ _1_0_,4__0_0
ANSWER 41
B
ANSWER 42
C
A service industry is an industry not involved in agriculture, mining, construction or
manufacturing.
ANSWER 43
B
Overheads incurred Ј72,000
Over-absorption Ј2,375
Therefore overheads absorbed £74,375
OAR =
17,500
Ј74,375 = Ј4.25
OAR =
4.25
68,000 = 16,000 hours
ANSWER 44
D
Finished foods (Widgets)
48,000 units to produce + increase in stocks of 1,500 units = 49,500 units
49,500 units @ 2kgs per unit = 99,000 kgs
Add increase n stocks of raw materials = 1,750 kgs
Total material purchases budget 100,750 kgs
Mock Exam - 1 (Answers)
LondonSAM 6 F2 - Management Accounting
ANSWER 45
B
The number of labour hours used to produce 5,000 units is 9,550, and these have cost
$52,525. If we had paid the standard cost of $6 an hour, this would have cost $57,300, which
gives us a favourable labour rate variance of $4,775.
ANSWER 46
C
We should have used 10,000 hours to produce 5,000 units. Instead, we have only used 9,950
hours. This is a favourable hour saving of 450 hours, which at the standard hourly rate of $6,
gives a favourable labour efficiency rate of $2,700.
ANSWER 47
B
ANSWER 48
B
OAR =
125,000
Ј650,000 = Ј5.20 per labour hour
Actual overheads incurred Ј665,000
Overheads absorbed 122,500 hours Ј5.20 = Ј637,000
There is an under-absorption (adverse variance) of Ј665,000 – Ј665,000 = Ј28,000
ANSWER 49
A
ANSWER 50
A
The question stated that there were just three possible outcomes for profit in a decision
situation. The requirement asked for the most likely level of profits, that is the one of the three
possibilities with the highest probability of occurring. The probability of a $28,500 profit was
0.40 ($11,400 / $28,500) and that of a $18,000 profit was 0.45 ($8,100 / $18,500).
Mock Exam - 1 (Answers)
LondonSAM 7 F2 - Management Accounting