The fixed production overhead absorption rate is £4 per unit.. The following receipts and issues have been made with regards to materials for the last month: What is the value of the clo
Trang 1Information for
Management
PART 1
FRIDAY 5 DECEMBER 2003
QUESTION PAPER
Time allowed 3 hours
This paper is divided into two sections
Section A ALL 25 questions are compulsory and MUST be
answered
Section B ALL FIVE questions are compulsory and MUST be
answered
Formulae Sheet, Present Value and Annuity Tables are on
pages 13, 14 and 15
Trang 2Section A – ALL 25 questions are compulsory and MUST be attempted
Please use the Candidate Registration Sheet provided to indicate your chosen answer to each multiple choice question.
Each question within this section is worth 2 marks.
1 A cost is described as staying the same over a certain activity range and then increasing but remaining stable over a revised activity range in the short term
What type of cost is this?
A A fixed cost
B A variable cost
C A semi-variable cost
D A stepped fixed cost
2 The following quarterly adjustments have been calculated using the multiplicative model for time series analysis:
What would be the adjustment for quarter 4 to two decimal places?
A 0·83
B 0·91
C 1·10
D 1·20
3 A company which uses marginal costing has a profit of £37,500 for a period Opening stock was 100 units and closing stock was 350 units
The fixed production overhead absorption rate is £4 per unit
What is the profit under absorption costing?
A £35,700
B £36,500
C £38,500
D £39,300
4 The following could relate to contract costing:
(i) Work is for a period of long duration
(ii) Progress payments are amounts paid for the contract throughout the course of the contract
(iii) Architects’ certificates are provided to establish the amount of work certified
Which of the above are correct?
A (i) and (ii) only
B (i) and (iii) only
C (ii) and (iii) only
D (i), (ii) and (iii)
Trang 35 A company values stocks using the weighted average value after each purchase The following receipts and issues have been made with regards to materials for the last month:
What is the value of the closing stock using this weighted average method?
A £1,012·50
B £976·50
C £962·50
D £925·00
6 Sydney wishes to make an investment on a monthly basis starting next month for five years The payments into the fund would be made on the first day of each month
The interest rate will be 0·5% per month Sydney needs a terminal value of £7,000
What should be the monthly payments into the fund to the nearest £?
A £75
B £86
C £100
D £117
7 A company has the following budget for the next month:
Finished Product
Materials
What is the material purchases budget for the month?
A 20,900 kg
B 21,100 kg
C 21,500 kg
D 21,700 kg
Trang 48 The following could relate to optical mark readers:
(i) Specialist pens are always required for use
(ii) Data entry is quick
(iii) Computers carry out most of the work
Which of the above would be considered to be advantages of using optical mark readers?
A (i) and (ii) only
B (i) and (iii) only
C (ii) and (iii) only
D (i), (ii) and (iii)
9 Which of the following would be best described as a short term tactical plan?
A Reviewing cost variances and investigate as appropriate
B Comparing actual market share to budget
C Lowering the selling price by 15%
D Monitoring actual sales to budget
10 A company incurs the following costs at various activity levels:
Total cost Activity level
Using the high-low method what is the variable cost per unit?
A £25
B £30
C £35
D £40
11 An investment gives the following results:
Net present value Discount rate
£000
What is the estimated internal rate of return to the nearest whole percentage?
A 12%
B 13%
C 14%
D 17%
Trang 512 A company uses process costing to establish the cost per unit of its output.
The following information was available for the last month:
Opening stock 300 units, 100% complete for materials and 70%
complete for conversion costs Closing stock 450 units, 100% complete for materials and 30%
complete for conversion costs The company uses the weighted average method of valuing stock
What were the equivalent units for conversion costs?
A 9,505 units
B 9,715 units
C 9,775 units
D 9,985 units
13 Which of the following is correct with regard to expected values?
A Expected values provide a weighted average of anticipated outcomes
B The expected value will always equal one of the possible outcomes
C Expected values will show whether the decision maker is risk averse, risk seeking or risk neutral
D The expected value will never equal one of the possible outcomes
Trang 614 The following graph has been established for a given set of constraints:
The objective function (OF) for the company has also been plotted on the graph and the feasible region is bounded
by the area ABCD
At which point on the graph will profits be maximised?
A
B
C
D
15 The following information has been obtained for sales of two products for a three year period:
What is the Paasche quantity index for 2002?
A 0·86
B 0·89
C 1·19
D 1·20
300
200
100
0
y
x
OF A
D
Trang 716 A company has just secured a new contract which requires 500 hours of labour.
There are 400 hours of spare labour capacity The remaining hours could be worked as overtime at time and a half
or labour could be diverted from the production of product X Product X currently earns a contribution of £4 in two labour hours and direct labour is currently paid at a rate of £12 per normal hour
What is the relevant cost of labour for the contract?
A £200
B £1,200
C £1,400
D £1,800
17 The following statements relate to performance evaluation methods:
(i) Residual income is not a relative measure
(ii) The return on investment figure is a relative measure
(iii) Residual income cannot be calculated for an individual project
Which of the above are correct?
A (i) and (ii) only
B (i) and (iii) only
C (ii) and (iii) only
D (i), (ii) and (iii)
18 A company uses variance analysis to control costs and revenues.
Information concerning sales is as follows:
Budgeted selling price £15 per unit
Budgeted profit per unit £5 per unit
What is the sales volume profit variance?
A £500 favourable
B £1,000 favourable
C £1,000 adverse
D £3,000 adverse
19 A company has the following budgeted information for the coming month:
What is the budgeted break-even sales revenue?
A £125,000
B £350,000
C £375,000
D £450,000
Trang 820 An investment has the following cash inflows and cash outflows:
Time Cash flow per annum
£000
What is the net present value of the investment at a discount rate of 8%?
A (£2,416)
B £7,046
C £6,981
D £2,351
21 Which of the following is correct?
A When considering limiting factors the products should always be ranked according to contribution per unit sold
B If there is only one scarce resource linear programming should be used
C In linear programming the point furthest from the origin will always be the point of profit maximisation
D The slope of the objective function depends on the contributions of the products
22 A company has over absorbed fixed production overheads for the period by £6,000 The fixed production overhead
absorption rate was £8 per unit and is based on the normal level of activity of 5,000 units Actual production was 4,500 units
What was the actual fixed production overheads incurred for the period?
A £30,000
B £36,000
C £40,000
D £42,000
23 A company uses process costing to value its output The following was recorded for the period:
Input materials 2,000 units at £4·50 per unit
Conversion costs £13,340
Normal loss 5% of input valued at £3 per unit
There were no opening or closing stocks
What was the valuation of one unit of output to one decimal place?
A £11·8
B £11·6
C £11·2
D £11·0
Trang 924 Which of the following are correct with regard to regression analysis?
(i) In regression analysis the n stands for the number of pairs of data
(ii) ∑x2is not the same calculation as ( ∑x)2
(iii) ∑xy is calculated by multiplying the total value of x and the total value of y
A (i) and (ii) only
B (i) and (iii) only
C (ii) and (iii) only
D (i), (ii) and (iii)
25 The following information relates to labour costs for the past month:
Production time 15,000 hours
Production units 5,000 units
Total hours worked 14,000 hours There was no idle time
What were the labour rate and efficiency variances?
Rate variance Efficiency variance
(50 marks)
Trang 10Section B – ALL FIVE questions are compulsory and MUST be attempted
1 A business operates with two production centres and three service centres Costs have been allocated and apportioned
to these centres as follows:
Information regarding how the service centres work for each other and for the production centres is given as:
Information concerning production requirements in the two production centres is as follows:
Required:
(a) Using the reciprocal method calculate the total overheads in production centres 1 and 2 after reapportionment of the service centre costs. (7 marks)
(b) Using the most appropriate basis establish the overhead absorption rate for production centre 1 Briefly explain the reason for your chosen absorption basis. (3 marks)
(10 marks)
Work done for:
Production Centres Service Centres
Trang 112 Break-even charts and profit-volume charts are commonly associated with cost-volume-profit analysis (break-even analysis)
Required:
(a) (i) Sketch a break-even chart and indicate where the break-even point would be for a single product firm
Clearly label the axes and indicate the following lines:
– total revenue;
– variable cost;
– fixed costs; and – total cost
(ii) How would contribution be established from your chart in (a)(i)? (6 marks)
(b) (i) Sketch a profit-volume chart and indicate where the break-even point would be for a single product firm
Clearly label the axes and indicate the profit line and fixed costs.
(ii) How would contribution be established from your chart in (b)(i)? (4 marks)
[Note: no specific numbers are required.]
(10 marks)
3 A company has obtained the following information regarding costs and revenue for the past financial year:
Original budget:
Standard cost per unit:
£
Fixed production overheads 8
–––
22 –––
Actual results:
Fixed production overheads £95,000
There were no opening stocks
Required:
(a) Produce a flexed budget statement showing the flexed budget and actual results Calculate the variances between the actual and flexed figures for the following:
– sales;
– materials;
– labour; and
Trang 124 A business currently orders 1,000 units of product X at a time It has decided that it may be better to use the Economic Order Quantity method to establish an optimal reorder quantity
Information regarding stocks is given below:
Current annual total stock costs are £183,000, being the total of the purchasing, ordering and holding costs of product X
Required:
(b) Using your answer to (a) above calculate the revised annual total stock costs for product X and so establish the difference compared to the current ordering policy. (4 marks)
(c) List ways in which discounts might affect this Economic Order Quantity calculation and subsequent stock
(10 marks)
5 A company manufactures a single product, product Y It has documented levels of demand at certain selling prices for this product as follows:
Required:
Using a tabular approach calculate the marginal revenues and marginal costs for product Y at the different levels
of demand, and so determine the selling price at which the company profits are maximised
(10 marks)
Demand Selling price per Cost per unit
unit
Trang 13Formulae Sheet
Laspeyres’ price index =
Paasche price index =
Laspeyres’ quantity index =
Paasche quantity index =
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