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Assessment Detail
Candidate Barre Arale Mohamud
Assessment Name Management Accounting MOCK EXAM
Assessment Date 20 November 2016
Assessment End 19:02 GMT
Test Duration 46 minutes (120 minutes max)
Result Pass
Score 98.3%
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Question 1/60
Text Which form of accounting relates to the financial control procedures reflecting the
delegation of financial authority?
You answered C
Responsibility accounting
The correct answer was This was the correct answer
The incorrect answers
were
A
Management accounting
B
Procedural accounting
D
Financial accounting
Marks for this Question 1
Question 2/60
Text A production department’s accommodation costs comprise of three items: £10 000 per
month for rent, £500 per month for cleaning and maintenance and electricity costs of
£1 per unit of production. What is the overall cost behaviour for the department’s
accommodation costs?
You answered C
Semi-variable cost
were
A
Variable cost
B
Marginal cost
D
Semi-fixed cost

Question 3/60
Text Summarised information taken from an external source that covers a long time frame
is most likely to be required for decisions at which management level?
You answered C
Strategic
were
A
Operational
B
Tactical
D
Any level
Question 4/60
Text A company currently makes a component in-house at a cost of £18, A contractor has
offered to supply the component for £21. The company calculates that it would save
£1 000 a month in fixed costs if it discontinued in-house production. The company
requires 3 000 units a year. What would be the saving or additional cost of buying the
component externally rather than making it in-house?
You answered C
£3 000 saving
were
A
£6 000 additional cost
B
D

Question 5/60
Text A company manufactures bicycles. The budgeted output is 100 bicycles during each
accounting period. The standard cost of each bicycle includes the following:
• Materials: £50 (5kg of steel at £10 per kg)
The following information is available for a particular accounting period:
• 120 bicycles were made.
• 660kg of steel was bought at a total cost of £7 260
What are the materials price and usage variances?
You answered A
Materials price £660 adverse; Materials usage £600 adverse.
were
B
C
D
Materials price £660 adverse; Materials usage £1 600 adverse.
Question 6/60
Text Which of the following IS a reason why traditional systems of absorption costing are
often considered inadequate today?
You answered D
Absorption costing is designed to account for situations where most of the costs are
related to direct labour and materials.
were
A
Absorption costing is designed to account for a wide range of products.
B
Absorption costing is designed to account for situations where there are a high
proportion of non-volume related overheads.
C
Absorption costing focuses on calculating the costs of the activities and processes of
an organisation rather than the functions and departments.

Question 7/60
Text A company is preparing a materials purchases budget. It has a single product: Product
X – of which it intends to produce 2 000 units in month one and 2 500 units in month
two. Each unit of Product X requires 5kg of materials. Materials will cost £10 per kg in
month one and £12 per kg in month two. The company has an inventory of 500kg at
the beginning of month one which it intends to increase to 1 000kg at the end of month
one and month two.
What would be the budget for materials purchases in months one and two?
You answered B
£105 000 in month one and £150 000 in month two.
were
A
C
D
Question 8/60
Text A company is considering a request from a customer for a bespoke job at a special
price.
The job would require 1 000 units of material A and 500 units of material B. The
company has none of material A in stock and would have to purchase it at a cost of £5
a unit. 1 000 units of material B are in stock due to over-buying at £4 a unit on a
previous contract. The company does not usually use material B but has received an
offer of £1 a unit from another company.
What are the relevant costs of the materials in deciding whether to accept the
contract?
You answered B
£5 500
were
A
£5 000
C
£7 000
D
£9 000

Question 9/60
Text A company operates a staff incentive payment scheme using the Halsey method
where the employee receives 50% of the time saved.
The formula is:
Bonus = time rate x (time allowed – time taken)/2
An employee works at a time rate of £10 per hour and takes six hours to complete
work for which seven hours is allowed.
What bonus would the employee earn?
You answered A
£5
were
B
£10
C
£20
D
£32

Question 10/60
Text A public library collected the following income from library fines during the year:
• April £250
• May £272
• June £285
• July £299
• August £230
• September £272
• October £299
• November £312
• December £155
• January £164
• February £223
• March £299
What is the mean average collected in library fines per month?
You answered B
£255
were
A
£250
C
£272
D
£299

Question 11/60
Text
Above is a scatter diagram showing the relationship between output and costs during
recent accounting periods.
Which classification BEST describes this cost?
You answered A
Fixed
were
B
Variable
C
Semi-variable
D
Semi-fixed (Stepped)

Question 12/60
Text A company manufactures Product X. The standard materials cost per unit is £15
based on using 5 kg of materials at £3 per kilogram. During an accounting period the
company manufactures 500 units and purchases and uses 2 600 kg of materials at a
cost of £7 540. What are the materials variances?
You answered A
Price variance £260 favourable. Usage variance £300 adverse.
were
B
Price variance £250 favourable, Usage variance £290 adverse.
C
Price variance £40 adverse. Usage variance £100 adverse.
D
Price variance £260 favourable. Usage variance £100 adverse.
Question 13/60
Text A company budgets to produce 10 000 units of a product in a period. Fixed production
overheads are budgeted at £350 000.
Actual output achieved in the period is 11 000 units, but actual fixed production
overheads are £400 000.
What was the level of over or under absorption of overheads?
You answered C
£15 000 under absorbed
were
A
B
£35 000 over absorbed
D

Question 14/60
Text A company adopts standard costing and has calculated the following variances for the
last quarter:
Materials price variance £500 F
Materials usage variance £750 A
Labour rate variance £250 F
Labour efficiency variance £300 A
Variable overhead expenditure £600 A
Variable overhead efficiency £200 A
All other variances were nil.
If budgeted profit was £10 000, what was the actual profit for this quarter?
You answered A
£8 900
were
B
£9 100
C
£10 800
D
£11 100

Question 15/60
Text
Above is a breakeven chart.
What level of sales revenue will be received at the breakeven point?
You answered C
£20 000
were
A
Nil
B
£10 000
D
£30 000

Question 16/60
Text A company is producing a cash budget. Credit sales are £4 000 in April, £4 200 in May
and £4 100 in June. Of the receivables, 40% pay in month of purchase with the rest
paying the following month. Depreciation is £500 per month. Purchases are £3 000 in
April, £3 2 00 in May and £3 400 in June with two months credit used.
What would be the net cash flow budget for June?
You answered D
£1 160 inflow
were
A
£200 inflow
B
£660 inflow
C
£700 inflow

Question 17/60
Text A company manufactures three products.
The annual output of each product is as follows:
• Product A 7 000
• Product B 8 000
• Product C 4 000
The following information is available:
Product A Product B Product C
Sales price £110 £150 £300
Direct labour £30 £45 £75
Direct materials £20 £30 £40
Direct labour hours 2 3 5
Machine hours 3 4 5
Production runs 20 25 50
Orders 30 40 70
Material movements 60 80 90
Overheads are as follows:
Cost Machine
£560 000 Processing orders
£420 000 Materials handling
£460 000 Setting up
There are 280 000 machine hours a year.
Using activity based costing, what would be the profit per unit for Product B?
You answered B
£19.50
were
A
£15.50
C
£23.50
D
£27.50

Question 18/60
Text A company has introduced a new product and the time workers took to make it has
been recorded. The first unit took 18 minutes and the next 15 units took 73.2 minutes.
What is the learning curve rate for the new product?
You answered D
75%
were
A
67%
B
70%
C
71%
Question 19/60
Text A company has identified that it has three customer groups which each purchase the
same product – the difference in the amount paid reflects the various discounts that
they have negotiated.
Group 1 Group 2 Group 3
Selling price per unit £0.50 £0.75 £0.60
Units sold 100 000 50 000 75 000
Number of deliveries 25 4 5
The cost per delivery has been calculated at £250.
Which group of customers generates the LOWEST total profit?
You answered B
Group 2
were
A
Group 1
C
Group 3
D
All generate an equal level of profit.

Question 20/60
Text Managers need knowledge of cost behaviour for a number of reasons. Which of the
following activities need knowledge of cost behaviour? Select ALL that apply.
A. Budgeting and production planning
B. Performance evaluation
C. Preparation of final accounts
D. Break even analysis and short term decision making
You answered C
A, B and D
were
A
A, B and C
B
B, C and D
D
All of them
Question 21/60
Text A company has produced the following materials usage budget:
Month 1 Month 2 Month 3 Month 4
25 000 kg 32 500 kg 33 500 kg 34 000 kg
There will be no opening inventory and the company is planning to introduce a policy
of holding 15% of the following month’s materials requirement as closing stock from
the end of Month 1 onwards.
The price of the materials in Month 1 is expected to be £5 per kg and this is expected
rise by £1 a month.
Calculate the materials purchases for Month 3.
You answered B
£235 025
were
A
£234 500
C
£240 125
D
£245 200

Question 22/60
Text A bicycle factory uses absorption costing. Its budgeted annual overheads total
£100 000 and they are apportioned on the basis of direct labour hours at a rate of £1
an hour. During the year 130 000 hours are worked and actual overheads are
£110 000. What is the level of under or over absorption of overheads?
You answered C
were
A
B
D
Question 23/60
Text Starting at the highest level, what are the three levels of managerial decision making?
You answered A
Strategic, Tactical and Operational.
were
B
Tactical, Operational and Programmed.
C
Strategic, Operational and Tactical.
D
Strategic, Tactical and Programmed.

Question 24/60
Text A municipal authority is preparing a capital budget for the construction of ten new
houses that it intends to let to tenants. The following information is available:
• The land will be purchased in 2016/17 for £500 000
• Each house will cost £100 000 to construct. Five will be built in 2016/17 and five in
2017/18
• Fees will be payable at 12% of construction cost
• Tax will be payable at 20% of construction cost
What will be the total capital budget required for 2016/17?
You answered B
£1 160 000
were
A
£1 000 000
C
£1 320 000
D
£1 820 000
Question 25/60
Text A hospital uses incremental budgeting. In one year the hospital’s budget included
£200 000 for capital charges. During the year additional equipment has been
purchased and so capital charges are expected to increase by 5% in the following
year. General inflation is expected to be 2%.
When preparing the following year’s budget what will be value for capital charges
BEFORE the adjustment for inflation is made?
You answered B
£210 000
were
A
£200 000
C
£204 000
D
£214 200

Question 26/60
Text A college has a financial year that runs from April to March and is preparing its budget
for 2016/17 using incremental budgeting on a fixed price basis. The date on which
prices are fixed is 1 November.
It has the following 2015/16 budgets for utilities:
• Electricity: £11 990
• Gas: £14 120
• Water: £8 350
The following price indices are available:
1 November 2013 1 November 2014 1 November 2015
Electricity 100 102.5 105.1
Gas 100 103.4 107.5
Water 100 104.8 109.5
What would be the total budget for these three items for 2016/17?
You answered C
£35 698
were
A
£34 460
B
£35 641
D
£36 924
Question 27/60
Text A company manufactures wooden furniture. The manufacturing process produces
sawdust that the company can either dispose of at a cost of £1 per kg or it can bag it at
a cost of £3 per kg and sell it for £6 per kg. During a particular month 100kg of
sawdust was produced. What would be the value to the company of the sawdust?
You answered C
£300
were
A
Nil
B
£100
D
£600

Question 28/60
Text A company has recorded the following data for the last three months.
Month 1 Month 2 Month 3
Number of units
produced
12 000 10 000 11 200
Overhead costs 6 000 6 000 6 000
Raw materials costs 36 000 30 000 33 600
Salaries 18 000 18 000 18 000
Maintenance costs 3 000 2 500 3 000
All costs are either fixed or variable.
What would the equation be for the total monthly costs of units produced in the form of
y = a + bx?
You answered A
y = 24 000 +3.25x
were
B
y = 6 000 +2.5x
C
y = 18 000 + 2.5x
D
y = 30 000 +3.25x
Question 29/60
Text A flexible budget can be defined as:
You answered B
A budget that, by recognising different cost behaviour patterns, is designed to change
as the volume of activity changes.
were
A
A budget for a defined period of time that includes planned revenue, expenditure,
assets, liabilities and cash flow.
C
A budget that only includes variable production costs and excludes all other costs.
D
A budget that is reviewed monthly with forecast income and expenditure being revised
and rolled forward by a month.

Question 30/60
Text A building company uses the ‘first in, first out’ (FIFO) method to cost materials to jobs.
At the beginning of the accounting period it had no inventories of sand. On 1 April it
bought 1 000kg of sand for £10 000. On 15 May it bought a further 1 000kg of sand for
£12 000. At the end of May there was 1 500kg of sand held as inventory. On 1 June
600kg of sand was issued to job A.
What is the value of the sand issued to job A?
You answered B
£6 200
were
A
£6 000
C
£6 600
D
£7 200
Question 31/60
Text A company has established the following cost information.
Units produced Total costs (£)
1 000 7 000
1 500 9 500
2 000 12 000
1 700 10 130
1 300 8 230
Using the high-low method estimate the total costs for 1 200 units.
You answered D
£8 000
were
A
£7 500
B
£7 000
C
£8 500

Question 32/60
Text A company that manufactures cosmetics uses Chemical A and Chemical B to produce
Cosmetic X. The standard cost in materials of manufacturing 1kg of Cosmetic X is
750g of Chemical A at £0.50 per gram and 350g of Chemical B at £0.80 per gram
(some of the chemicals are lost in the process).
During an accounting period the company manufactures 10kg of Cosmetic X using
9 500g of Chemical A at £0.50 per gram and 2 600g of Chemical B at £0.80 per gram.
What is the materials mix variance?
You answered D
£375 favourable
were
A
£675 adverse
B
£300 adverse
C
£300 favourable

Question 33/60
Text A municipal authority is preparing an activity based budget for its finance department.
Three activities have been identified: Accountancy, Audit and Exchequer (income
collection, creditor payments and payroll).
The salaries for the senior management team are as follows:
• Director of Finance: £80 000
• Deputy Director of Finance: £60 000
• Assistant Director of Finance (Accountancy): £50 000
• Assistant Director of Finance (Audit & Exchequer): £50 000
• Total: £240 000.
The following information is also available from the staff time recording system:
• Director of Finance: 50% accountancy; 30% audit; 20% exchequer.
• Deputy Director of Finance: 80% accountancy; 10% audit; 10% exchequer.
• Assistant Director of Finance (Accountancy): 100% accountancy.
• Assistant Director of Finance (Audit & Exchequer): 70% audit; 30% exchequer.
How much of the salaries of the senior management team should be included in the
activity based budgets?
You answered A
Accountancy £138 000; Audit £65 000; Exchequer £37 000.
were
B
C
D

Question 34/60
Text A company has calculated that is has an adverse labour rate variance and a
favourable labour efficiency variance.
Which of the following explanations would explain these variances?
A. The labour used was more highly skilled than the standard meaning that they were
paid a higher rate but that they made the items more quickly than the standard.
B. The company offered a bonus scheme if work was completed more quickly than
the standard time
C. There was a lower learning curve achieved than in the standard
D. The company had bought lower quality materials which were more difficult to work
with.
You answered A
A and B
were
B
C and D
C
A and D
D
B and C

Question 35/60
Text A company carries out a chemical process and in the month of June the following
costs were incurred:
Materials – 10 000 kg
£24 000 Labour and overheads costs
Actual output during the month was 9 700 kg.
The normal loss from the chemical process is 5% giving an expected output in June of
9 500kg. Any scrap can be sold for £2 per kg.
What is the net value of the abnormal gain recorded in the company’s income
statement?
You answered A
£420
were
B
£440
C
£820
D
£840
Question 36/60
Text An individual never leaving the office before 18.00 because all staff stay until 18.00
despite their contracted hours being 09.00 to 17.00 is an example of which type of
control?
You answered A
Social control
were
B
Self-control
C
Administrative control
D
Output control

Question 37/60
Text A company sells a single product and the following are expected in the next three
months:
Sales Purchases Expenses
Month 1 £550 000 £200 000 £25 000
Month 2 £500 000 £225 000 £25 000
Month 3 £600 000 £240 000 £25 000
All sales are on credit and collections have the following pattern:
• During the month of sale 80% (a 5% discount is given for payment in this period)
• One month later 10%
• 10% of sales are never collected
Payment for purchases is made in the month of purchase in order to take advantage of
a 10% prompt settlement discount, calculated on the gross purchases figure shown
above.
Expenses are paid for in the month in which they are incurred and include depreciation
of £1 000.
What would be the budgeted net cash inflow for Month 3?
You answered C
£266 000
were
A
£231 000
B
£255 000
D
£290 000

Question 38/60
Text A company operates a standard costing system. During the year the following sales
data is recorded:
• Actual Price: £4.90
• Standard Price: £5
• Actual Quantity Sold: 1 100
• Standard Quantity: 1 000
• Standard Profit: £1
What are the sales price variance and sales volume variance?
You answered A
Sales Price Variance £110A; Sales Volume Variance £100F
were
B
C
D

Question 39/60
Text
A company produces sacks of sugar which contain a mean weight of 15kg. A sample
of sandbags contain the following weights:
14.5 14.9 15 15.1 15.5
Using the above formula, what is the standard deviation for this sample (to 2 decimal
places)?
You answered D
0.36
were
A
0.10
B
0.13
C
0.32
Question 40/60
Text A company manufactures a single product. Its variable costs are £8 a unit and fixed
costs are £4 a unit. During September it manufactures 1 000 units. There were 100
units in stock at the start of the period and 200 at the end of the period.
What is the cost of sales using marginal costing and absorption costing?
You answered A
Marginal costing £7 200; Absorption costing £10 800.
were
B
C
D

Question 41/60
Text A bespoke job would require three types of materials:
Material A
• 1 000 units are required and there are currently no units in inventory.
• Current replacement cost is £5 per unit.
Material B
• 1 000 units are required and there are currently 600 units in inventory which cost £3
per unit.
• It is used regularly by the firm and any units used on this job would need to be
replaced to meet other production demand.
• Current replacement cost is £4 per unit
Material C
• 500 units are required and there are currently 700 units in inventory as a result of
overbuying. They were purchased for £5 per unit
• There is no other use for Material C within the firm but it could be sold as scrap for
£2 per unit.
• Current replacement cost is £6 per unit.
What is the relevant cost for materials for this job?
You answered B
£10 000
were
A
£12 000
C
£9 400
D
£9 000

Question 42/60
Text A company is deciding whether or not to enter the market for two new products,
Product X and Product Y.
The company has a policy that all products must make a profit of at least 40% of the
selling price.
Market research has indicated that customers would be willing to pay £15 for product
X and £10 for product Y.
The following information is also available:
Product X Product Y
Direct costs £8 £4
Overheads £2 £1
Based on financial factors only and following their policy what should the company do?
You answered B
Make Product Y only
were
A
Make Product X only
C
Make both products.
D
Make neither product.

Question 43/60
Text A municipal authority operates an incremental budgeting system using the November
price base method to set the budgets. Their financial year is 1 April to 31 March.
The 2014/15 budget included £120 000 for salaries, £50 000 for rent and £10 000 for
electricity.
In December 2014 rent increased by 10% and it is expected to increase by a further
5% in December 2015.
Electricity prices increased by 5% in April 2014 and are expected to increase by a
further 5% each year from this point.
Due to financial pressures staff have not received any pay increases since October
2013 but due to successful campaigning by the trade unions a pay rise of 7% has
been agreed for all staff from 1 July 2015.
What should be the budgets for 2015/16 be?
You answered C
Salaries £120 000, Rent £50 000, Electricity £10 500
were
A
B
D
Question 44/60
Text A diagram where the problem is noted in the centre and different categories of cause
are then established, then for each category reasons for failure are sought is a
description of which type of diagram?
You answered B
Cause and effect diagram
were
A
Breakeven chart
C
Venn diagram
D
Pie chart

Question 45/60
Text A college provides training for accountancy, legal and engineering businesses. It uses
customer profitability analysis to assess the profitability of providing training to each
group of customers.
Three cost drivers have been identified as follows:
• Staff based expenditure: £50 per hour of staff time.
• Premises based expenditure: £60 per m2 of floorspace used.
• Student based expenditure: £900 per student enrolled.
The following data is available regarding accountancy training:
• Floorspace used: 200m2
• Students enrolled: 70
• Staff time per month: 140 hours
What would be the annual total cost for the accountancy training?
You answered B
159 000
were
A
156 000
C
161 000
D
163 000

Question 46/60
Text A Finance Director is considering investing surplus cash and is using the co-efficient of
variation to decide which of four investment options to take.
• Option A – mean return 9%; standard deviation 4%.
• Option B – mean return 12%; standard deviation 8%.
• Option C – mean return 8%; standard deviation 3%.
• Option D – mean return 15%; standard deviation 15%.
The Finance Director would like to choose the option with least risk. Which option
would this be?
You answered A
Option A
The correct answer was C
Option C
were
A
Option A
B
Option B
D
Option D
Question 47/60
Text A batch used 2 000 kg of a material which cost £10 per kg.
90 hours labour were spent in Department A where the employees were paid at £12
per hour and 40 hours were spent in department B where employees are paid at £10
per hour. Overheads are absorbed at the rate of £2.50 per labour hour.
175 units were produced
Calculate the total absorption cost of the batch and each unit produced.
You answered A
Total cost of batch £21 805, cost per unit £124.60
were
B
C
D

Question 48/60
Text A housing association’s asset management budgets for 2015/16 include the following:
• Responsive Repairs: £1 500 000
• Works to Voids: £800 000
• Planned Maintenance: £3 200 000
Budget monitoring reports show a 10% underspend on responsive repairs that is
expected to continue to the year end. The Asset Manager decides to use virement to
increase the budget for planned maintenance.
What would be the budget for planned maintenance?
You answered C
£3 350 000
were
A
£3 050 000
B
£3 200 000
D
£3 520 000
Question 49/60
Text Budgets should be designed and managed in a way that encourages constructive
behaviour from managers.
Which of the following actions support this aim?
A. Discouraging virement to ensure budgets are fully spent
B. Providing a statement of the overall direction of the organization
C. Focussing on a narrow range of fixed targets
D. Rewarding staff for achieving performance based targets
You answered D
B and D
were
A
A and B
B
B and C
C
C and D

Question 50/60
Text A company is carrying out key factor analysis on its products. The following data is
available for the costs of producing one unit of product A:
• Price: £80
• Materials: 10kg at £3 per kg
• Skilled labour: half an hour at £20 per hour
• Unskilled labour: 2 hours at £8 per hour
• Fixed overheads £12
The limiting factor is unskilled labour.
What is the contribution per limiting factor?
You answered B
12
were
A
1
C
24
D
56
Question 51/60
Text A company has budgeted overheads of £36 000 a year and plans to manufacture 100
bicycles a month. It uses absorption costing to absorb overheads. In October it actually
manufactures 110 bicycles and actual overheads are £3 500. What would be the level
of under or over absorption of overheads?
You answered A
£200 under absorbed
were
B
£500 under absorbed
C
£300 over absorbed
D
£200 over absorbed

Question 52/60
Text A building company has used the theory of constraints to identify that their cement
mixer is a bottleneck.
• Throughput contribution per hour has been calculated as £12.
• Total factory cost is £80 per day.
• Total time available on the cement mixer is 8 hours per day
What is the throughput accounting (TA) ratio?
You answered B
1.2
were
A
1.0
C
1.4
D
1.6

Question 53/60
Text
A municipal authority has a building maintenance direct labour organisation with an in-
house window factory. The authority wants to calculate how expenditure on electricity
is affected by variations in the level of output of windows.
The correlation between two variables can be found using the formula above.
The following data has been gathered over the previous six months:
Period Output
(x)
Costs £000
(y)
xy x2 y2
1 120 11.2 1 344 14 400 125.44
2 130 12 1 560 16 900 144.00
3 150 13.3 1 995 22 500 176.89
4 120 11.9 1 428 14 400 141.61
5 180 15.1 2 718 32 400 228.01
6 170 13.7 2 329 28 900 187.69
Total 870 77.2 11 374 129 500 1 003.64
What is the correlation coefficient?
You answered C
0.97
were
A
0.91
B
0.94
D
0.99

Question 54/60
Text A company has identified the following overhead costs:
Cost
Processing orders £80 000
Materials handling £60 000
Setting up £90 000
Orders 40
Material movements 20
Production runs 80
A department uses 5 orders, 10 material movements and 10 production runs. How
much overhead would be allocated to it?
You answered B
£51 250
were
A
£41 071
C
£61 250
D
£71 071
Question 55/60
Text A company has been offered a one-off contract that will involve using a piece of
machinery that is no longer used. The machine was originally purchased for £15 000
but a new replacement would cost £25 000. It had been intended to sell the machine
for scrap for £5 000 but it now emerges that it could be sold to another company for
£10 000. What is the relevant cost of the machine in deciding whether to enter into the
one-off contract using relevant costing methods?
You answered B
£10 000
were
A
£5 000
C
£15 000
D
£25 000

Question 56/60
Text A company budgets to make 10 000 units of a product. Annual budgeted variable
costs are £120 000 and overheads are £20 000. At the end of an accounting period
the company has an inventory of 50 units. What would be the value of the inventory
using marginal costing and absorption costing methods?
You answered C
Marginal costing £600; Absorption costing £700.
were
A
B
D
Question 57/60
Text A company has annual fixed costs of £300 000 and sells a single product for £100 per
unit. The variable cost per unit consists of £60 for labour and £25 for materials. How
many units must the company sell to make a profit of £60 000?
You answered B
24 000 units
were
A
30 000 units
C
20 000 units
D
12 000 units

Question 58/60
Text A new management accountant in a food processing company finds that the following
costs are being charged to the production overhead account. Which of them should
NOT be charged to the production overhead account?
You answered A
Ingredients.
were
B
Rent for the building in which the food processing takes place.
C
The salary of the site manager.
D
Depreciation of the freezers in which ingredients are stored.
Question 59/60
Text A company uses standard costing and for one month have established the following
information:
• Materials price variance £7 000 F
• Actual cost of raw materials used £50 000
The standard cost of the raw materials is £15 per kg.
What quantity of raw materials were used in the month?
You answered D
3 800 kg
were
A
3 200 kg
B
3 333 kg
C
3 633 kg

Question 60/60
Text A canteen’s budget for 2015/16 for meals was £620 250. Inflation is estimated at 2%.
During 2016/17 it is estimated that 650 customers will require meals for 320 days at a
cost of £3.20 per meal. What should be the meals budget for 2016/17 applying zero-
based budgeting?
You answered D
£665 600
were
A
£632 655
B
£649 125
C
£652 400
End of Report 20/11/2016

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