Paper F2 Answers 2
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Management
Accounting
Mock Exam 2
Answers
(Duration: 3 hours) LSAM
ANSWER 1
C
OAR = $176,400/3,600 = $49
$
Amount absorbed = $49 5,400 = 264,600
Actual overhead (_2_5_0_,_4_0_0 )
Over absorbed __1_4_,_2_0_0
ANSWER 2
D
Process account
Units Units
Materials (100% complete) 10,000 CWIP 1,000
Normal loss 200
Output 8,000
______ Abnormal loss ___8__00_
_1_0_,0__0_0 _1_0_,0__0_0
ANSWER 3
B – False
A principal budget factor is a factor which limits the activities of the organisation.
ANSWER 4
B
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 $29,000 profit
was.0.25 and that of a $20,000 profit was 0.4.
ANSWER 5
B
ANSWER 6
B
Budgeted hours =
$32
$216,000 = 6,750 hours
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ANSWER 7
B – False
It is a method of attributing total production cost centre overheads to a cost unit, not total
costs.
ANSWER 8
A
ANSWER 9
A
ANSWER 10
C
{[Buffer inventory + (EOQ ÷ 2)] Annual holding cost per component}
= [800 units + (1,600 units ÷ 2)] €3.50 = €5,600
ANSWER 11
A
Normal time = 936 – 108 = 828 hours
Number of employees = 23
ANSWER 12
C
Direct labour charge is all hours (including overtime) at normal rate: 936 $6.20 = $5,803.20
ANSWER 13
B
ANSWER 14
A
ANSWER 15
A
Assembly Finishing Maintenance
Allocated o/hs 90,000 100,000 10,000
Maintenance __6_,0__0_0 ___4_,_0_0_0 (_1_0_,_0_0_0 )
_9_6_,0__0_0 _1_0_4_,_0_0_0 ______–
OAR for Assembly department = £96,000/10,000 machine hours = £9.60
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ANSWER 16
D
Output(kg) Sales value ($) Apportionment of
joint costs ($)
Product A 2,000 24,000 (24/96) 7,500
Product B 4,000 _7_2_,0_0_0_ (72/96) _2_2_,5_0_0_
_9_6_,0_0_0_ _3_0_,0_0_0_
ANSWER 17
C
($30 2,000) + ($30 1,600) + ($50 2,200) = $218,000
ANSWER 18
C
All stocks are increasing, so absorption costing profits will be higher by:
($30 2,00) + ($30 100) + ($50 200) = $19,000
ANSWER 19
C
Units Total costs
High 52 £7,000
Low 25 £5,500
Difference 27 £1,500
Therefore, Variable costs =
27units
£1,500 = £55.56 per unit
By substitution, we find FC = £4,111.
ANSWER 20
C
ANSWER 21
C
Y = a + bx
330/11 = a + (0.69171 440)/11
30 = a +27.66 so a = 2.33
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ANSWER 22
B
ANSWER 23
A
Total hours worked, and paid = 3,300/0.75 = 4,400 hours
Hourly rate = $36,300/4,400 = $8.25
ANSWER 24
A
ANSWER 25
D
Total costs = $30
Profit margin = 25%, therefore cost = 75%
Price = $30 ÷ 0.75 = $40
ANSWER 26
C
ANSWER 27
D
Overheads incurred 186,000
Actual absorption
5,000
175,000 6,000 210,000
_______
Over-absorbed 24,000
ANSWER 28
B
ANSWER 29
B
Marginal costing profit 180,000
Plus
( 15,000 – 25,000) $6 _(_6_0_,_0_00_)
Equals absorption costing profit _1_2_0_,_0_0_0
ANSWER 30
A
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ANSWER 31
B
The original cost of $49,000 is a past cost, or sunk cost, and is therefore irrelevant. The
material would not be re-worked, since its value would only increase by $5,000 ($17,500 -
$12,500) for a cost of $7,500.
The relvant cost of using the material on the job is, therefore, the opportunity cost of the scrap
sale foregone, i.e. £12,500.
ANSWER 32
C
ANSWER 33
C
ANSWER 34
D
Material required to meet maximum demand:
6000 (13÷4) + 8,000 (19÷4) = 57,500 litres
Material available = 55,000 litres. Therefore, material is a limiting factor.
Labour required to meet maximum demand:
6000 (35÷7) + 8,000 (28÷7) = 62,000 hours
Labour available = 58,000 hours. Therefore, labour is a limiting factor.
ANSWER 35
A
Breakeven sales revenue = Fixed costs ontribution to sales ratio
= $30,000 0.25 = $120,000
ANSWER 36
A
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ANSWER 37
B
ANSWER 38
C
ANSWER 39
C
Contribution = Profit + Fixed costs
ANSWER 40
B
AH AR = 9,550 $5.5 = 52,525
Rate variance 4,775 F
AH SR = 9,550 $6.0 = 57,300
ANSWER 41
C
Budgeted production
Traditional = 7,500 + 900 – 1,800 = 6,600
Modern = 12,000 + 1,200 – 2,400 = 10,800
Labour hours = (6,600 10) + (10,800 16) = 238,800
ANSWER 42
B
ANSWER 43
A
Sales contribution on actual sales $50,000
Less: Adverse total variable costs variance ($3,500)
Actual contribution $46,500
No adjustment is required for the favourable sales volume contribution variance, as it will
have already been added to the budgeted contribution to arrive at the standard contribution
from actual sales ($50,000) given in the question.
ANSWER 44
D
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ANSWER 45
A
For the first 10 hours of calls only the fixed line rental is charged therefore the answer cannot
be B or D, which show no costs until a number of hours have passed. Graph C shows a
variable cost is charged from nil to a maximum number of hours which is incorrect.
ANSWER 46
A
As the machine stands idle but must be retained, there is no future cash flow related to
keeping it for the contract. The relevant cost is zero.
ANSWER 47
B
Contribution per unit = $(300 – 234) = $66
Volume required =
66
3,000,000 500,000
= 53,030
ANSWER 48
B
Process account
Units $ Units $
Materials 2,000 8,000 Normal loss 200 350
Conversion 4,500 Output 1,700 11,475
_____ ______ Abnormal loss __1_0_0_ ___6__7_5
_2_,0_0_0_ _1_2_,5__0_0 _2_,0_0__0 _1_2_,5__0_0
Average cost = ($12,500 $350)/(2,000 200) = $6.75
ANSWER 49
D
Abnormal loss account
Units $ Units $
Abnormal loss 100 675 Scrap 100 175
___ 6_7_5_ P&L ___ 5_0_0_
1_0_0_ 6_7_5_ 1_0_0_ 6_7_5_
ANSWER 50
A
Idle time + General overtime = (15 hours $12) + ((10 hours – 4 hours) $6) = $216
Mock Exam - 2 (Answers)
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ACCA
Management
Accounting
Mock Exam 2
Answers
(Duration: 3 hours) LSAM
ANSWER 1
C
OAR = $176,400/3,600 = $49
$
Amount absorbed = $49 5,400 = 264,600
Actual overhead (_2_5_0_,_4_0_0 )
Over absorbed __1_4_,_2_0_0
ANSWER 2
D
Process account
Units Units
Materials (100% complete) 10,000 CWIP 1,000
Normal loss 200
Output 8,000
______ Abnormal loss ___8__00_
_1_0_,0__0_0 _1_0_,0__0_0
ANSWER 3
B – False
A principal budget factor is a factor which limits the activities of the organisation.
ANSWER 4
B
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 $29,000 profit
was.0.25 and that of a $20,000 profit was 0.4.
ANSWER 5
B
ANSWER 6
B
Budgeted hours =
$32
$216,000 = 6,750 hours
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ANSWER 7
B – False
It is a method of attributing total production cost centre overheads to a cost unit, not total
costs.
ANSWER 8
A
ANSWER 9
A
ANSWER 10
C
{[Buffer inventory + (EOQ ÷ 2)] Annual holding cost per component}
= [800 units + (1,600 units ÷ 2)] €3.50 = €5,600
ANSWER 11
A
Normal time = 936 – 108 = 828 hours
Number of employees = 23
ANSWER 12
C
Direct labour charge is all hours (including overtime) at normal rate: 936 $6.20 = $5,803.20
ANSWER 13
B
ANSWER 14
A
ANSWER 15
A
Assembly Finishing Maintenance
Allocated o/hs 90,000 100,000 10,000
Maintenance __6_,0__0_0 ___4_,_0_0_0 (_1_0_,_0_0_0 )
_9_6_,0__0_0 _1_0_4_,_0_0_0 ______–
OAR for Assembly department = £96,000/10,000 machine hours = £9.60
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ANSWER 16
D
Output(kg) Sales value ($) Apportionment of
joint costs ($)
Product A 2,000 24,000 (24/96) 7,500
Product B 4,000 _7_2_,0_0_0_ (72/96) _2_2_,5_0_0_
_9_6_,0_0_0_ _3_0_,0_0_0_
ANSWER 17
C
($30 2,000) + ($30 1,600) + ($50 2,200) = $218,000
ANSWER 18
C
All stocks are increasing, so absorption costing profits will be higher by:
($30 2,00) + ($30 100) + ($50 200) = $19,000
ANSWER 19
C
Units Total costs
High 52 £7,000
Low 25 £5,500
Difference 27 £1,500
Therefore, Variable costs =
27units
£1,500 = £55.56 per unit
By substitution, we find FC = £4,111.
ANSWER 20
C
ANSWER 21
C
Y = a + bx
330/11 = a + (0.69171 440)/11
30 = a +27.66 so a = 2.33
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ANSWER 22
B
ANSWER 23
A
Total hours worked, and paid = 3,300/0.75 = 4,400 hours
Hourly rate = $36,300/4,400 = $8.25
ANSWER 24
A
ANSWER 25
D
Total costs = $30
Profit margin = 25%, therefore cost = 75%
Price = $30 ÷ 0.75 = $40
ANSWER 26
C
ANSWER 27
D
Overheads incurred 186,000
Actual absorption
5,000
175,000 6,000 210,000
_______
Over-absorbed 24,000
ANSWER 28
B
ANSWER 29
B
Marginal costing profit 180,000
Plus
( 15,000 – 25,000) $6 _(_6_0_,_0_00_)
Equals absorption costing profit _1_2_0_,_0_0_0
ANSWER 30
A
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LondonSAM 4 F2 - Management Accounting
ANSWER 31
B
The original cost of $49,000 is a past cost, or sunk cost, and is therefore irrelevant. The
material would not be re-worked, since its value would only increase by $5,000 ($17,500 -
$12,500) for a cost of $7,500.
The relvant cost of using the material on the job is, therefore, the opportunity cost of the scrap
sale foregone, i.e. £12,500.
ANSWER 32
C
ANSWER 33
C
ANSWER 34
D
Material required to meet maximum demand:
6000 (13÷4) + 8,000 (19÷4) = 57,500 litres
Material available = 55,000 litres. Therefore, material is a limiting factor.
Labour required to meet maximum demand:
6000 (35÷7) + 8,000 (28÷7) = 62,000 hours
Labour available = 58,000 hours. Therefore, labour is a limiting factor.
ANSWER 35
A
Breakeven sales revenue = Fixed costs ontribution to sales ratio
= $30,000 0.25 = $120,000
ANSWER 36
A
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ANSWER 37
B
ANSWER 38
C
ANSWER 39
C
Contribution = Profit + Fixed costs
ANSWER 40
B
AH AR = 9,550 $5.5 = 52,525
Rate variance 4,775 F
AH SR = 9,550 $6.0 = 57,300
ANSWER 41
C
Budgeted production
Traditional = 7,500 + 900 – 1,800 = 6,600
Modern = 12,000 + 1,200 – 2,400 = 10,800
Labour hours = (6,600 10) + (10,800 16) = 238,800
ANSWER 42
B
ANSWER 43
A
Sales contribution on actual sales $50,000
Less: Adverse total variable costs variance ($3,500)
Actual contribution $46,500
No adjustment is required for the favourable sales volume contribution variance, as it will
have already been added to the budgeted contribution to arrive at the standard contribution
from actual sales ($50,000) given in the question.
ANSWER 44
D
Mock Exam - 2 (Answers)
LondonSAM 6 F2 - Management Accounting
ANSWER 45
A
For the first 10 hours of calls only the fixed line rental is charged therefore the answer cannot
be B or D, which show no costs until a number of hours have passed. Graph C shows a
variable cost is charged from nil to a maximum number of hours which is incorrect.
ANSWER 46
A
As the machine stands idle but must be retained, there is no future cash flow related to
keeping it for the contract. The relevant cost is zero.
ANSWER 47
B
Contribution per unit = $(300 – 234) = $66
Volume required =
66
3,000,000 500,000
= 53,030
ANSWER 48
B
Process account
Units $ Units $
Materials 2,000 8,000 Normal loss 200 350
Conversion 4,500 Output 1,700 11,475
_____ ______ Abnormal loss __1_0_0_ ___6__7_5
_2_,0_0_0_ _1_2_,5__0_0 _2_,0_0__0 _1_2_,5__0_0
Average cost = ($12,500 $350)/(2,000 200) = $6.75
ANSWER 49
D
Abnormal loss account
Units $ Units $
Abnormal loss 100 675 Scrap 100 175
___ 6_7_5_ P&L ___ 5_0_0_
1_0_0_ 6_7_5_ 1_0_0_ 6_7_5_
ANSWER 50
A
Idle time + General overtime = (15 hours $12) + ((10 hours – 4 hours) $6) = $216
Mock Exam - 2 (Answers)
LondonSAM 7 F2 - Management Accounting