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PPM 4-1

Question 01 (1 to 10)
Question 02 (11 to 20)
Question 03 (21 to 30)
Question 04 (31 to 40)
Question 05 (41 to 50)
Question 06 (51 to 60)
Question 07 (61 to 70)
Question 08 (71 to 80)
Question 09 (81 to 91)
Question 01 (1 to 10)

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No other characters, including commas, are accepted.

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1 / 10

1. For which of the following variances should a production manager usually be held responsible?

2 / 10

2. Which TWO of the following are arguments that variance analysis from a standard costing system is redundant in a total quality management environment?

3 / 10

3. Which TWO of the following statements are true in the context of a just in time (JIT) inventory system?

4 / 10

4. What is the purpose of a flexible budget?

5 / 10

5. Which of the following statements are true regarding activity-based budgeting (ABB)?

(1) The costs determined using activity-based costing (ABC) are used as a basis for preparing budgets.

(2) The aim of ABB is to control the number of units output rather than the costs themselves.

6 / 10

6. Which of the following is an advantage of non-participative budgeting as compared to participative budgeting?

7 / 10

7. Which TWO of the following are expected benefits from a beyond budgeting approach?

8 / 10

8. Which TWO of the following statements about budgets and standards are true?

9 / 10

9. Which of the following concerning a labour planning variance is true?

10 / 10

10. Which of the following provides the most suitable definition of the controllability principle in business?

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Question 02 (11 to 20)

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1 / 11

11. Which of the following is the LEAST likely reason why standard costs might not easily be applied to road haulage and distribution services?

2 / 11

12. Which of the following statement(s) is/are true regarding budgetary systems in the performance hierarchy?

(1) Developing new products in response to changes in technology is a budgeting activity that would fall within operational planning and control.

(2) Budgetary systems at strategic planning levels look at the business as a whole and define resource requirements.

3 / 11

13. Incremental budgeting can sometimes be an appropriate methodology for setting budgets. Which THREE of the following statements are true?

Incremental budgets could be appropriate when:

4 / 11

14. Which of the following is a common feature of a beyond budgeting approach?

5 / 11

15. Which TWO of the following statements correctly describe an attainable standard?

6 / 11

16. Are the following statements about zero-based budgeting true or false?

A. Short-term benefits could be emphasised over long-term benefits

7 / 11

B. Employees will focus on eliminating wasteful expenditure.

8 / 11

17. A standard product uses 3 kg of direct material costing $4 per kg. During the most recent month, 120 units of the product were manufactured. These required 410 kg of material costing $4.50 per kg. It is decided in retrospect that the standard usage quantity of the material should have been 3.5 kg, not 3 kg.

What is the favourable materials operational usage variance, if it is chosen to use planning and operational variances for reporting performance?

$  

9 / 11

18. Capacity levels used in setting standard absorption rates for production overheads are often related to performance standards.

To which performance standard is budgeted capacity often associated?

10 / 11

19. Which of the following statement(s) is/are true regarding feed-forward control budgetary systems?

(1) Feed-forward control systems have an advantage over other types of control in that it establishes how effective planning was.

(2) Feed-forward control occurs while an activity is in progress.

11 / 11

20. Which of the following best describes an incremental budgeting system?

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Question 03 (21 to 30)

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              For example: -10234.35

No other characters, including commas, are accepted.

Navigating between questions

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1 / 10

21. The following information is given about standard and actual material costs during one month for a production process.

Material              Standard cost             Actual cost             Standard mix              Actual mix

per kg                        per kg                                                              kg

A                                   3.00                            3.50                           10%                            820

B                                  2.50                             2.75                           20%                         1,740

C                                   4.00                            3.50                           30%                         2,300

D                                  5.25                             5.00                           40%                         2,640

7,500

What was the favourable materials mix variance?

$  

2 / 10

22. RST uses an activity-based budgeting system. It manufactures three products, budgeted details of which are set out below:

Product R                  Product S                 Product T

Budgeted annual production (units)                   75,000                      120,000                     60,000

Batch size (units)                                                       200                              60                              30

Machine set-ups per batch                                        5                                 3                                9

Purchase orders per batch                                        4                                  2                                2

Processing time per unit (minutes)                         3                                  4                                4

Three cost pools have been identified. Their budgeted costs for the year ending 30 September 20X3 are as follows:

Machine set-up costs                             $180,000

Purchasing of materials                          $95,000

Processing                                                $110,000

Which of the following is the budgeted machine set-up cost per unit of product S?

3 / 10

23. The following statements have been made about flexible budgets.

(1) Flexible budgets enable proper comparisons to be made between actual and expected revenues and costs.

(2) In every variance reporting system with flexible budgets that compares budgeted and actual profit, there must be a sales volume variance.

Which of the above statements is/are true?

4 / 10

24. Which of the following best describes a master budget?

5 / 10

25. Which TWO of the following statements regarding zero-based budgeting are correct?

6 / 10

26. The time taken to produce the first unit produced was 100 hours. The time for the second unit was 90 hours.

What is the learning rate (to the nearest %)?

                                %

7 / 10

27. Which of the following best describes a ‘basic standard’ within the context of budgeting?

8 / 10

28. The following statements have been made about standard mix and yield variances.

(1) Mix and yield variances enable management to resolve problems with the quality of production output.

(2) Persistent adverse mix variances may have an adverse effect on sales volume variances and direct labour efficiency variances.

Which of the above statements is/are true?

9 / 10

29. A company operates in export and import markets, and its operational cash flows are affected by movements in exchange rates, which are highly volatile. As a result, the company has great difficulty in establishing a budgeting system that is reliable for more than three months ahead.

Which of the following approaches to budgeting would be most appropriate for this company’s situation?

10 / 10

30. The following statements have been made about the application of standard costing systems. (1) Standard costing systems are compatible with a Total Quality Management approach to operations.

(2) Standard costing systems are less commonly used in an industry that operates in a rapidly changing environment.

Which of the above statements is/are true?

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Question 04 (31 to 40)

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No other characters, including commas, are accepted.

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1 / 10

31. A company makes and sells three products. Budgeted and actual results for the period just ended were as follows.

Product                     Budgeted                   Budgeted profit                      Actual                  Actual profit

sales                              per unit                               sales                       per unit

Units                                   $                                     Units                             $

E                                      800                                   10                                     700                               8

F                                    1,000                                   6                                    1,200                              6

G                                     600                                   12                                      350                             16

2,400                                                                          2,250

What was the adverse sales quantity variance?

$  

2 / 10

32. Co uses rolling budgeting, updating its budgets on a quarterly basis. After carrying out the last quarter’s update to the cash budget, it projected a forecast cash deficit of $400,000 at the end of the year. Consequently, the planned purchase of new capital equipment has been postponed. Which of the following types of control is the sales manager’s actions an example of?

3 / 10

33. Total production costs for 900 units of output are $58,200 and total production costs for 1,200 units are $66,600.

The variable cost per unit is constant up to a production level of 2,000 units per month, but a step up of $6,000 in the monthly total fixed cost occurs when production reaches 1,100 units per month.

 

What is the total cost for a month when 1,000 units are produced?

$  

4 / 10

34. Which of the following statement(s) is/are true regarding different types of budgets?

(1) A flexible budget can be used to control operational efficiency.

(2) Incremental budgeting can be defined as a system of budgetary planning and control that measures the additional costs that are incurred when there are unplanned extra units of activity.

(3) Rolling budgets review and, if necessary, revise the budget for the next quarter to ensure that budgets remain relevant for the remainder of the accounting period.

5 / 10

35. Sparkle Paints Co manufactures and sells paints. Business Unit A of the company makes a paint called Lulu. Lulu is made using three key materials: X, Y and Z.

At the end of period 1, a total material cost variance of $4,900 adverse was correctly recorded for Lulu.

The following information relates to Lulu for period 1:

Material             Standard cost per litre ($)           Actual cost per litre ($)           Actual usage (litres)

X                                             63                                                 62                                            1,900

Y                                             50                                                 51                                            2,800

Z                                             45                                                 48                                            1,300

The standard ratio of mixing material X, material Y and material Z is 30:50:20.

The material price variance for Lulu has been correctly calculated as $4,800 adverse.

What is the total material yield variance for Lulu for period 1?

6 / 10

36. A definition of zero-based budgeting is set out below, with two blank sections.

“Zero-based budgeting: a method of budgeting which requires each cost element ___________, as though the activities to which the budget relates _______________.”

Which combination of two phrases correctly completes the definition?

Blank 1                                                                                     Blank 2

A. to be specifically justified                              could be out-sourced to an external supplier

B. to be set at zero                                                were being undertaken for the first time

C. to be set at zero                                                could be out-sourced to an external supplier

D. to be specifically justified                              were being undertaken for the first time

7 / 10

37. High World is a company which manufactures mobile phone handsets. From its past experiences, High World has realised that whenever a new design engineer is employed, there is a learning curve with a 75% learning rate which exists for the first 15 jobs.

A new design engineer has just completed their first job in five hours.

Note. At the learning rate of 75%, the learning factor (b) is equal to –0·415.

How long would it take the design engineer to complete the sixth job?

8 / 10

38. Which of the following statement(s) regarding the drawbacks of activity-based budgeting (ABB) is/are true?

(1) It is not always useful or applicable, as in the short term many overhead costs are not controllable and do not vary directly with changes in the volume of activity for the cost driver. (2) ABB will not be able to provide useful information for a total quality management programme (TQM).

9 / 10

39. The following statements have been made about standard mix and yield variances.

(1) Mix variances should be calculated whenever a standard product contains two or more direct materials.

(2) When a favourable mix variance is achieved, there may be a counterbalancing adverse yield variance.

Which of the above statements is/are true?

10 / 10

40. Which one of the following best defines standard costing in a system of budgeting?

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Question 05 (41 to 50)

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1 / 10

41. In which TWO of the following ways might a budgetary control be a disincentive to management to achieve targeted performance?

2 / 10

42. Which of the following correctly describes a standard hour?

3 / 10

43. When considering setting standards for costing, which of the following would NOT be appropriate?

4 / 10

44. The following table shows the number of clients who attended a particular accountancy practice over the last four weeks and the total costs incurred during each of the weeks:

Week               Number of clients             Total cost ($)

1                                  400                               36,880

2                                  440                               39,840

3                                  420                               36,800

4                                  460                               40,000

Applying the high low method to the above information, which of the following could be used to forecast total cost ($) from the number of clients expected to attend (where x = the expected number of clients)?

5 / 10

45. The following cost information relates to product OP, which is produced in a continuous process from several different materials.

$

Actual quantity of materials at standard price                                                     19,960

Actual quantity of materials at actual price                                                          23,120

Actual yield at standard materials cost                                                                  20,800

Standard yield from actual input of materials at standard cost                        19,552

What is the favourable materials yield variance for the period?

$  

6 / 10

46. The management accountant of a business has identified the following information:

Activity level                             800 units              1,200 units

Total cost                                   $16,400                 $23,600

The fixed costs of the business step up by 40% at 900 units.

What is the variable cost per unit?

7 / 10

47. The first item of a new product took 2,000 hours to manufacture (at a labour cost of $15 per hour). A 90% learning curve was expected to apply, and it was decided to establish a standard time as the time required to manufacture the 50th item of the product, rounded to the nearest hour. The 50th item actually took 980 hours.

What is the labour efficiency variance for the 50th unit produced?

8 / 10

48. The time taken to produce the first batch of 50 units was 500 hours. The total time for the first 16 batches of 50 units was 5,731 hours.

What is the learning rate (to the nearest %)?

                                         %

9 / 10

49. A company sells two products X and Y. Product X sells for $30 per unit and achieves a standard contribution of $12 per unit, which is 40% of the selling price. Product Y, a new product, sells for $80 per unit and achieves a standard contribution of just $10 per unit, which is 12.5% of the selling price. Budgeted sales are 5,000 units of X and 3,000 units of Y.

However, the sudden cancellation of an advertising campaign for Product Y has meant that sales for the product will be well below budget, and there has been some price discounting in an attempt to obtain sales for the product. Sales of X were in line with the budget.

Which of the following sales variances, if calculated, would you expect to show a favourable variance for the period?

10 / 10

50. The following statements have been made about learning curves.

(1) Learning curves are easier to apply in companies with a high labour turnover than those with a lower rate of staff turnover.

(2) Learning rates are not affected by time gaps between the production of additional units of a product.

Which of the above statements is/are true?

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Question 06 (51 to 60)

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1 / 10

51. The budgeted electricity cost for a business is $30,000 based upon production of 1,000 units. However, if 1,400 units were to be produced, the budgeted cost would rise to $31,600.

Using the high/low approach what would be the budgeted electricity cost if 2,100 units were to be produced (to the nearest $)?

$  

2 / 10

52. For which of the following reasons is zero-based budgeting (ZBB) often considered more suitable for public sector service organisations than for private sector companies?

3 / 10

53. The time taken to produce the first batch of 50 units was 400 hours, but the labour budget is subject to a learning effect where the learning rate is 90%. The rate of pay for labour is $12 per hour.

The business had received and satisfied an order for 600 units, but it has now received a second order for another 800 units.

The value of b is = –0.152

What will be the labour cost for the second order? (to the nearest $)

$  

4 / 10

54. Which TWO of the following points state why it is generally regarded to be more difficult to set standards for service function costs than for manufacturing costs?

5 / 10

55. The following are management accounting techniques:

(1) Actual versus flexed budget calculations.

(2) Variance analysis.

(3) Trend of costs analysis.

Which of the above techniques could be used by a company to control costs?

6 / 10

56. What is an attainable standard?

7 / 10

57. Which of the following statements is/are true regarding standard costing and total quality management (TQM)?

(1) They focus on assigning responsibility solely to senior managers.

(2) They work well in rapidly changing environments.

8 / 10

58. A budget that is continuously updated by adding a further accounting period (a month or quarter) when the earlier accounting period has expired is known as which of the following?

9 / 10

59. The times taken to produce each of the first four batches of a new product were as follows: Batch number Time taken

1                                100 minutes

2                                 70 minutes

3                                 59 minutes

4                                 55 minutes

What was the rate of learning closest to? (1 d.p)

                                         %

10 / 10

60. Jill Co has recently developed a new product. The nature of Jill Co’s work is repetitive, and it is usual for there to be an 80% learning effect when a new product is developed. The time taken for the first unit was 22 minutes.

How long would it take to make the fourth unit?

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Question 07 (61 to 70)

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    • One full stop as a decimal point if required
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              For example: -10234.35

No other characters, including commas, are accepted.

Navigating between questions

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    part(s) in Section B
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1 / 10

61. A business is expanding rapidly and buying its material in a variety of countries in a variety of currencies. It has an exclusive supply delivery contract whereby the same logistics expert makes all deliveries into its warehouses on a cost-plus basis. It pays all delivery charges on a per unit basis.

Which THREE of the following are valid explanations of an adverse material price variance measured to include delivery costs as part of the cost per kg delivered?

2 / 10

62. An organisation has recorded a favourable labour rate planning variance for the year of $40,000. On investigation it has discovered that, whilst actual labour rates were $60 per hour, a revised standard rate for labour should have been $70 per hour for the actual hours worked of 20,000. What was the original planned labour rate per hour for the year (to the nearest $)?

$  

3 / 10

63. Blossom Limited was the subject of the following press story:

“Blossom is proud to announce that it has managed to maintain its market share despite an overall increase in the market size by 10%.” However, the sales director when challenged, by this journalist recently admitted having been forced to reduce prices by $1.50 per bunch on average on a budget volume of 12,000 bunches. All is not as rosy as it seems in Blossom’s garden!” If the standard variable cost of a blossom bunch of flowers is $20 and the standard contribution gained is $5.

What is the adverse sales price variance (to the nearest $)?

$  

4 / 10

64. Which of the following statements are true regarding material price planning variances?

(1) The publication of material price planning variances should always lead to automatic updates of standard costs.

(2) The causes of material price planning variances do not need to be investigated by managers at any level in the organisation.

5 / 10

65. Which of the following statement(s) regarding the use of standard costs in rapidly changing environments is/are true?

(1) Variance analysis results will take into account important criteria such as customer satisfaction or quality of production.

(2) Achieving standards is suitable in most modern manufacturing environments.

6 / 10

66. The business has separate managers for production, material purchase and machine maintenance.

The following are potential causes of a material usage variance; which of the THREE reasons could properly explain an adverse usage variance and at the same time indicate poor performance of the production manager.

7 / 10

67. Product YH consists of a mix of three materials, H, I and J. The standard material cost of a unit of YH is as follows:

$

Material H          5 kg at $4 per kg                    20

Material I            2 kg at $12 per kg                 24

Material J            3 kg at $8 per kg                   24

During March, 3,000 units of YH were produced, and actual usage was:

Material H          13,200 kg

Material I            6,500 kg

Material J            9,300 kg

What was the materials yield variance for March?

8 / 10

68. Veggie makes salads. The standard plate of salad has 30 g of lettuce (L), 50 g of peppers (P) and 80 g of beetroot (B). The standard prices of the three ingredients are $0.2/kg, 0.4/kg and 0.8/kg respectively. The actual prices were $0.22/kg, $0.38/kg and $0.82/kg.

Mr. Veggie has been experimenting and so in July he changed the mix of vegetables on the plate thus: 1,500 plates contained 62,000 grams of lettuce, 81,000 grams of peppers and 102,000 grams of beetroot.

What is the cost difference between the actual mix and the standard mix (to the nearest cent)?

$  

9 / 10

69. The finance director of Paint Mixers Ltd has produced the table below showing the variance results for the first three months of the year:

January                             February                            March

Material price variance                 $3,000 adverse                 $2,000 adverse              $1,000 adverse

Material mix variance                   $2,000 adverse                   $750 adverse               $100 favourable

Material yield variance                 $4,000 adverse                 $2,000 adverse              $50 favourable

Which of the following interpretations of the variances analysis exercise above is NOT correct?

10 / 10

70. Tokyo Limited has had a mixed year. Its market share has improved 2% to 20% but the overall market had contracted by 5% in the same period. The budgeted sales were 504,000 units and standard contribution was $12 per unit.

What is the level of actual sales?

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Question 08 (71 to 80)

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1 / 10

71. Which of the following statements is/are true regarding the materials yield variance?

(1) An adverse total yield variance would suggest that less output has been achieved for a given input, i.e., that the total input in volume is more than expected for the output achieved.

(2) A favourable total mix variance will usually result in an adverse material yield variance.

2 / 10

72. Which of the following statement(s) is/are true regarding planning and operational variances? (1) Planning and operational variances are calculated when it is necessary to assess a manager on results that are within his/her control.

(2) Revised standards are required because variances may arise partly due to an unrealistic budget, and not solely due to operational factors.

3 / 10

73. Which of the following statements is/are true regarding the material mix variance?

(1) A favourable total mix variance would suggest that a higher proportion of a cheaper material is being used instead of a more expensive one.

(2) A favourable total mix variance will usually result in a favourable material yield variance.

4 / 10

74. A business advisor had planned to use 3 hours of labour on 700 client services in June. Labour is paid $40 per hour.

In June there were actually 900 services provided. Total labour hours were 3,240 and the actual labour rate was $42 per hour.

The advisor has since discovered that, due to a change in legislation that meant extra client responsibilities, the budget should have provided for 3 ½ hours of labour per service.

What is the adverse planning labour efficiency variance for June (to the nearest $000)?

$  

5 / 10

75. LY Ltd mixes three materials to produce a chemical TUV. The following extract from a standard cost card shows the materials to be used in producing 100 kg of chemical TUV:

kg                                            $

Material X            50            $10 per kg           500

Material Y            40             $5 per kg            200

Material Z            20             $9 per kg            180

––––                                       ––––

110                                         880

During October, 23,180 kg of TUV were produced using the following materials:

kg

Material X            13,200

Material Y              7,600

Material Z              5,600

––––––

26,400

––––––

What is the total material mix variance?

6 / 10

76. A company has a process in which the standard mix for producing 9 litres of output is as follows:

$

4.0 litres of D at $9 per litre                          36.00

3.5 litres of E at $5 per litre                          17.50

2.5 litres of F at $2 per litre                            5.00

Total                                                                  58.50

 

 

A standard loss of 10% of inputs is expected to occur. The actual inputs for the latest period were:

$

4,300 litres of D at $9.00 per litre             38,700

3,600 litres of E at $5.50 per litre              19,800

2,100 litres of F at $2.20 per litre                4,620

Total                                                               63,120

Actual output for this period was 9,100 litres.

What is the total material mix variance?

7 / 10

77. You have been provided with the following information relating to three products:

Product A                        Product B                       Product C

Demand (units)                             1,000                                2,000                               3,000

Selling price                                      $15                                   $20                                   $30

Profit per unit                                    $2                                      $5                                     $2

Actual sales for the year showed the following results.

Product A                        Product B                         Product C

Units sold                                       1,100                               2,050                                2,800

Sales value                                  $17,050                           $38,950                            $86,800

Profit                                             $3,080                            $10,455                             $6,160

What is the sales quantity variance?

8 / 10

78. Operation D, in a factory, has a standard time of 15 minutes. The standard rate of pay for operatives is $10 per hour. The budget for a period was based on carrying out the operation 350 times. It was subsequently realised that the standard time for Operation D included in the budget did not incorporate expected time savings from the use of new machinery from the start of the period. The standard time should have been reduced to 12 minutes.

Operation D was actually carried out 370 times in the period in a total of 80 hours. The operatives were paid $850.

The operational labour efficiency variance was:

9 / 10

79. Plastic Co uses recycled plastic to manufacture shopping baskets for local retailers. The standard price of the recycled plastic is $0.50 per kg and standard usage of recycled plastic is 0.2 kg for each basket. The budgeted production was 80,000 baskets.

Due to recent government incentives to encourage recycling, the standard price of recycled plastic was expected to reduce to $0.40 per kg. The actual price paid by the company was $0.42 per kg and 100,000 baskets were manufactured using 20,000 kg of recycled plastic.

What is the materials operational price variance?

10 / 10

80. Purple sells two types of squash ball, the type X and the type Y. The standard contribution from these balls is $4 and $5 respectively and the standard profit per ball is $1.50 and $2.40 respectively. The budget was to sell 5 type X balls for every 3 type Y balls.

Actual sales were 240,000 balls which is 20,000 balls higher than budgeted. The actual sales included 200,000 of the type X balls. Purple values its stock of balls at standard marginal cost. What is the value of the favourable sales quantity variance (to the nearest $)?

$  

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Question 09 (81 to 91)

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  • Please read all instructions. When you are finished click ‘Next’ to move to the next screen.

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  • When you answer a question, your answer will automatically be saved.
  • You can revisit questions and change your answers at any time during the exam.
  • The only permitted characters for numerical answers are:
    • Numbers
    • One full stop as a decimal point if required
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              For example: -10234.35

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Navigating between questions

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1 / 11

81. Which of the following is the name given to a method of budgeting where the budgets are prepared centrally and then imposed on the managers?

2 / 11

82. A company manufactures a specific clinical machine used in hospitals. The company holds a 2% share of the market and the total market demand has been constant at 250,000 machines for the last few years. The budgeted selling price for each machine is $10,000 and standard contribution is equivalent to 10% of the budgeted selling price.

An initial performance review of the company’s actual results showed a sales volume of 5,600 machines had been achieved. The total market demand for the machines, though, had risen to 300,000 units.

What is the market share variance for the clinical machines?

3 / 11

83. The following information shows the total overheads for a company over the last number of units produced in each of the months:

Month                                               Number of units                                      Total overheads

1                                                            19,200                                                     $885,120

2                                                            22,080                                                     $960,000

3                                                            21,600                                                     $936,000

4                                                            21,120                                                     $956,160

5                                                            20,160                                                     $883,200

Applying the high low method to the above information, which of the following equations could be used to forecast the total overheads from the number of units produced (where x is the number of units produced)?

4 / 11

84. Which of the following is not one of the aims of the budget process?

5 / 11

85. A profit centre manager claims that the poor performance of her division is entirely due to factors outside her control. She has submitted the following table along with notes from a market expert, which she believes explains the cause of the poor performance:

Category Budget this year Actual this year Actual last year Market expert notes
Sales volume (units) 500 300 400 The entire market has decreased by 25% compared to last year. The product will be obsolete in four years
Sales revenue $50,000 $28,500 $40,000 Rivalry in the market saw selling prices fall by 10%
Total material cost $10,000 $6,500 $8,000 As demand for the raw materials is decreasing, suppliers lowered their prices by 5%

After adjusting for the external factors outside the manager’s control, in which category/categories is/are there evidence of poor performance?

6 / 11

86. Which of the following is not a potential advantage of ‘bottom-up’ (or participative) budgeting?

7 / 11

87. A company operates a standard marginal costing system. Last month actual fixed overhead expenditure was 2% below budget and the fixed overhead expenditure variance was $1,250.

What was the actual fixed overhead expenditure for last month?

8 / 11

88. Tins’ monthly absorption costing variance analysis report includes a sales mix variance, which indicates the effect on profit of actual sales mix differing from the budgeted sales mix. The following data are available.

Product H                                           Product R

$               $                                         $                $

Selling price                                                               12                                                         11

Less Variable cost                                     6                                                          2

Fixed cost                                                   2                                                          3

–––           (8)                                     –––            (5)

–––                                                      –––

Standard net profit per unit                                     4                                                          6

–––                                                      –––

July sales (units)

Budget                                                                     3,000                                                  6,000

Actual                                                                      2,000                                                  8,000

Which one of the following best gives the favourable sales mix variance in July?

9 / 11

89. When a manufacturing company operates a standard marginal costing system, there are no fixed production overhead variances.

Is this statement true or false?

10 / 11

90. A company operates a standard costing system. The variance analysis for last month shows a favourable materials price variance and an adverse labour efficiency variance.

Which TWO of the following four statements, which make comparison with standards, are most consistent with the variance analysis?

11 / 11

91. Which of the following describes an ‘expected standard’ within the context of budgeting?

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