F2 MOCK 8 QUESTIONS

1. The following data of a film relates to last month.

Budgeted production (units) 12,000
Actual production (units) 11,000
Actual sales (units) 10,500
Profit using marginal costing $70,000
The fixed overhead absorption rate was $5 per unit.
What would the profit for last month have been if absorption costing was
used?
o $72,500
o $67,500
o $65,000
o $75,000

2. The retailer sales 50,000 units of a particular product and demand is even
throughout the year. The cost of placing is order is $5. The cost of holding one unit
of the product for one year is estimated at $2. The retailer uses the economic order
quantity model to determine the order size for this product?
What is the total annual cost of ordering and holding this product?
$

3. A firm purchases a liquid in bulk for $15 per litre. The liquid is then packaged
for sale in 20 litre containers. It is expected that 20% of the liquid that is input to
packaging will be wasted through spillage.
What is the standard cost of the liquid in each 20litre container?
o $360
o $300
o $250
o $375
4. Which of the following would lead to an increase in the gross profit
percentage of a retailer?
(1) A 5% increase in selling prices whilst purchase prices remain constant
(2) A 5% increase in selling prices accomplished by an 8% increase in purchase
prices
o Neither 1 nor 2
o 1 only
o Both 1 and 2
o 2 only

5. Which of the following statements is correctly explain why it is important

for an organization to use non financial measures when assessing
performance?
(1) Not all outputs can be measured in financial terms
(2) Improvement on non-financial measures is likely to boost financial measure too
o Both statement
o 1 only
o Neither statement
o 2 only

6. Which of the following are advantage of a flexible budget?

(1) Useful for control purposes as it is based on the original budgeted level of
activity
(2) Facilitates control by recognising different cost behaviour patterns
(3) Budgeted and actual figures reflect the same level of activity
o 1 and 2 only
o 1, 2 and 3
o 3 only
o 2 and 3 only
7. The concept of economy, efficiency and effectiveness are used in performance
measurement.

Which of the following describe the concept of efficiency?

o Inputs purchased compared with outputs produced
o Output produced compared with objectives achieved
o Money spent compared with inputs purchased
o Money spent compared with objectives achieved

8. A firm uses standard marginal costing. Last period the actual contribution was
$270,000. The following variances were recorded.

Sales volume contribution variances $10,000 adverse

Sales price variances $5000 favourable

No other variances arose last period

What was the budgeted contribution for the period?

o $280,000
o $260,000
o $265,000
o $275,000
9. The following refers to a process for a period.

Cost per equivalent unit

Material Conversion cost
$2.50 $3.00

At the end of the period there are 1,000 partially completed units. These units are
100% complete for materials and 40% complete for conversion costs. There was
no opening work-in-progress (WIP).

What is the total value of WIP at the end of the period?

o $5,500
o $4,300
o $3,700
o $2,200

10. Staff working to assemble products are paid $10 per hour, and any hours over
35 per week are paid at the rate of $15 per hour. Last week, an employee was paid
for 42 hours, including three hours during which he was idle due to machinery
breakdown.

How much of the employee's wages for last week would be treated as an
indirect cost?
o $65
o $105
o $30
o $35
11. What is the BEST description of an organization's mission statement?

o A statement of profit targets for the coming year

o An outline of the reason for the organization's existence
o An evaluation if alternative courses of corporate action
o A quantification of the organization's corporate objectives

12. A product has a standard selling price of $80 per unit and a standard
contribution of $18 per unit. In the last period the sales volume contribution
variance was $3,600 adverse. The management accountant calculates that if the
company had used standard absorption costing the sales volume profit variance
would have been $2,000 adverse.

What is the standard absorption cost per unit?

o $8
o $62
o $70
o $52

13. The following data relates to a process

Input 1,000 unit at a cost of $2,700

Output 860 units
Normal loss 10% of input
No inventory is held

What is the cost per unit of the process output?

$
14. Which TWO of the following statements are correct in relation to a
manufacturing company operating an absorption costing system?
o Indirect cost of production are absorbed into a product's cost through a
predetermined overhead absorption rate
o Closing inventory is valued at variable production cost per unit
o Only fixed production costs are included in absoption rates
o Overhead absorption rates for a single standard product can be calculated by
dividing total production overhead by the number of units produced

15. For which of the following items of overhead cost would floor area be a
suitable basis of apportionment?

(1) Lighting
(2) Depreciation
(3) Rent

o 1, 2 and 3 only
o 1 and 3 only
o 2 and 3 only
o 1 and 2 only

16. Which TWO of the following are correct?

o Financial accounting facilitates the assessment of the performance and the
financial position of an organization
o Management accounting has to conform to legal requirements
o Financial accounting information covers a defined period whereas
management accounting is not confined by accounting periods
o Information about assets and liabilities is only included in financial accounts
and is not relevant to management accounting
17. In one example of correlation, low values of X are associated with high values
of Y and high values of X are associated with low values of Y. There is not an
exact relationship between the X and Y variables.
Are each of the following types of correlation demonstrated by this example?

Yes No
Positive correlation ○ ○
Partial correlation ○ ○

18. Which TWO of the following are most likely to be classified as measures of
process efficiency within a balanced scored card approach to performance
measurement of a manufacturing company?
o Quality rejects as a percentage of total production
o Training days per employee
o Standard hours of output compared with actual hours worked
o Percentage of turnover attributable to new products

19. A company has calculated that there is a clear relationship between output and
cost data and that the correlation coefficient is 0.8.

What is the coefficient of determination for the data?

20. Which of the following is a measure of resource utilisation for a bus

transport service?
o Average revenue per passenger
o Percentage of arrival on time
o Number of passengers per journey
o Number of passenger complaints
21. An investment will yield a cash inflow of $500 per year forever, starting in one
year's time, and a cash outflow of $200 each years, starting in one year's time.
At an interest rate of 10% per annum, what is the percent value of the
investment's net cash flows (to the nearest $100)?
o $3,800
o $3.600
o $5,000
o $1,800

22. Consider the following statements about the normal distribution:

(1) The total area under the standard normal distribution curve is 1.
(2) In any normal distribution, the mean and the median are the same

Are each of the statements true or false?

True False
Statement 1 ○ ○
Statement 2 ○ ○

23. Which TWO of the following are advantages of marginal costing over
absorption costing?
o The true behaviour of costs is reflected more accurately
o It helps ensure that selling prices cover total costs
o Product costs are not distorted by arbitrary overhead absorption methods
o The accruals concept is applied fully
24. A sampling method involves selecting one definable subsection of the
population as a sample. The subsection is taken to be representative of the
population in question.
Which method of sampling is being used?
o Cluster
o Systematic
o Quota
o Stratified

25. Product X requires 1.2 standard direct labours hours per unit manufactured. An
efficiency ratio of 80% is to be budgeted for period 6. Budgeted sales and
production of product X in period 6 are.

Sales 19,200 units

Production 18,700 units

What is the direct labour hours budget for production X in period 6?

Hours

26. Which of the following statements relating to budget preparation would be

regarded as an advantage of participative budgeting?

(1) Utilises knowledge of personnel most familiar with the budget area
(2) Budgetary stack may be introduced
(3) Operational managers commitment to organizational objectives in increased

o 2 and 3
o 1 and 3
o 1 only
o 1 and 2
27. The following are extracts of the result for a period:

Direct labour variances from standard

Rate $12,000 Adverse
Total $4,000 Favourable

What was the labour efficiency variances?

o $8,000 Favourable
o $8,000 Adverse
o $16,000 Adverse
o $16,000 Favourable

28. What is the correct journal entry to record direct wages charged to
production?
Dr Work-in-progress account Cr wages control account
Dr Work-in-progress account Cr wages control account
Dr wages control account Cr production overhead control account
Cr production overhead control account Cr wages control account

29. Which of the following BEST describes what is meant by a frequency

distribution?
o A chart displaying only the occurrence of a particular event
o A graph displaying results by drawing a line between set points
o A measure of the number of times that various outcome occur in a sample
o A range of values between the highest and the lowest figures in a data set
30. The following is an exact from a company's operating statement
Actual Flexed budget fixed budget
$ $ $
Sales 900 1,000 1,000
Material 300 310 290
Discounts receivable 70 80 60

The company wants to calculate variances that will best enable it to control future
costs and to assess management performance.
Which of the following are the appropriate total variances for the company to
use?
 Sales $100 fav Material $10 fav Discounts received $10 adv
 Sales $100 adv Material $10 fav Discounts received $10 adv
 Sales $100 adv Material $10 adv Discounts received $10 fav
 Sales $100 fav Material $10 adv Discounts received $10 fav

31. The following data of a firm relates to last month:

Budgeted production (units) $12,000

Actual production (units) $11,000
Actual sales (units) $10,500
Profit using marginal costing (units) $70,000

The fixed overhead absorption rate was $5 per unit

What would the profit for last month have been if absorption costing was
used?
o $67,500
o $65,000
o $72,500
o $75,000
32. Which of the following is the BEST description of a cost driver used in
activity-based costing?
o A collection of costs apportioned to a particular activity
o A process used to apportion overheads to cost centres
o An activity which causes a change in the cost of that activity
o An overhead cost that varies with activity levels

33. Which TWO of the following are objectives of budgeting?

o To coordinates the activities of different parts of the organization
o To produce information for external financial reporting
o To set the long-term objectives of the organization
o To establish a system of control

34. Which of the following would be classified as production costs?

(1) Cleaning product used in the factory to clean machinery
(2) Wages of the supervisor of a service cost centre which exclusively supports the
production cost centres
(3) Depreciation of vehicles used for delivering products to customers

 1, 2 and 3
 1 only
 1 and 2 only
 2 and 3 only

35. In the context of the three E's used to assess value for money. What is the
meaning of effectiveness?
 Obtaining resources at minimum cost
 Attaining the desired objectives of the organization
 Maximising output from the given resources
 Minimising the resources needed for a given output
36. A company is about to make a decision on whether to purchase a new machine
in order to expand production feasibility study has already been conducted but not
yet paid for. The company uses net present value (NPV) to evaluate new
investments

Which of the following is relevant cost for calculating the NPV of the new
machine?
 Depreciation on the new machine
 Installation cost of the machine
 The cost of the feasibility study
 The finance director's current salary

37. Joint products JP1 and JP2 are manufactured in a process. Costs incurred in the
process in a period totalled $45,000 and are apportioned on the basis of total sales
revenue. Selling prices are $10 per kg for JP1 and $5 per kg for JP2 out put in the
period was

JP1 2,000kg
JP2 6,000kg
What was the apportionment of process costs in the period to JP2?
 $33,750
 $15,000
 $18,000
 $27,000
38. The following ratios have been budgeted for an investment centre with net
assests of $1.2m
Net assest turnover 3.5 times
Gross profit margin 36.5%
Non production cost to sales 27.9%
What is the budget operating profit for the investment centre?
 $427,200
 $28,667
 $371,520
 $118,667

39. Tavora co uses component Y at a rate of 200 units per month. The purchase
price of Y is $5 per unit and the cost of placing an order is $10. The annual holding
cost is 20% of the purchase price.

What is the economic order quantity for component Y (to the nearest whole
unit)?

40. A company has an adverse material usage variance and plans to take action to
take action to eliminate this variance as ---------months

Which of the following changes is LEAST likely to reduce the adverse

variance?
 Purchase of better quality material
 Improved mix of materials used
 Bulk buying of materials to gain a discount
 More training for workers
41. A firm uses flexible budgets. The fixed budget and actual result for last period
were as follows.
Fixed budget Actual result
Production (units) 6,000 5,800
Direct labour cost $60,000 $57,000

What was the labour total variance for the last period?
 $3,000 favourable
 $1,000 favourable
 $3,000 adverse
 $1,000 adverse

42. A firm recorded a profit of $50,000 under marginal costing when inventory
increased from 1,000 units at the start of the period to 1,400 units at the end of the
period.

Under absorption costing the fixed production overhead absorption rate for the
period would be $12 per unit

What would be the profit for the period under absorption costing?

43. Which of the following comparisons is NOT an example of benchmarking?

 Actual results to budget results
 Performance of a function with those of experts in the field
 Results of one division with those of another
 Results of a company with those of a competitor
44. A bussiness uses 65,000 units of an item every year and work for 52 weeks per
year. There is a delay of three weeks between placing an order for the item and
receiving it.

What should be set as a recorder level to ensure that inventory arrives just as
it is needed?
Units

45. Which of the following are advantages of marginal costing compared with
absorption costing?

(1) Provide data that is useful for short term decision making
(2) The treatment of fixed over heads is simplified
 Both 1 and 2
 Neither 1 nor 2
 1 only
 2 only

46. The following statements are concerned with the bookkeeping entries in a
process account in the cost ledger?
Are the following statements relating to process costing true or false?
True False
Output from the process is a credit entry O O
Abnormal gain is a credit entry O O
47. Based on budget overheads of $22,000, an overhead absorption rate of $22 per
lobour hour was used last period. During the period actual overheads incurred were
$22,600 and actual labour hours were 1,120 hours.

Which entry will be made to record the total under or over absorption of
overheads for last period in the statement of profit or loss?
 Credit of $600
 Credit of $2,040
 Charge (debit) of $600
 Charge (debit) of $2,040

48. A company always maintains a positive cash balance

Which of the following statements relating to the company's liquidity ratios

is/are true?

(1) If the account payable payment period reduces, the acid test (quick) ratio will
increase
(2) The acid test (quick) ratio will never be higher than the current ratio
(3) If the inventory turnover period increases, the current ratio will reduce
 2 and 3
 1 only
 1 and 2
 3 only
49. The following information relates to a process for june 20×5

Opening Work-in-progress (WIP) 400 units (degree of completion 60%)

Total completed output for june 20×5 2,500 units
Closing WIP 300 units (degree of completion 40%)

There were no losses during the process

What are the equivalent units of production for june 20×5?

Units

50. For the purpose of cost forecasting a line is drawn on a scatter graph, after
plotting data for total costs on the year and units of activity on the x-axis.

What does the intersection of the line of best fit on the vertical axis represent?
 Variable costs per unit
 Total variable costs
 Fixed costs per unit
 Total fixed costs

51. Which of the following statements concerning the product lifecycle is/are
correct?

(1) Stages in the product lifecycle include growth, maturity, and decline
(2) The life cycle curve will be the same for every product
(3) The product life cycle concept is not relevant to pricing policy
 1 only
 2 and 3 only
 1, 2 and 3
 1 and 2 only
52. Which of the following are justifications for activity-based costing?

(1) Traditional absorption costing tends to apportion too great a proportion of

overheads to low volume products
(2) In advanced manufacturing technology environments direct labour may account
for a relatively small proportion of manufacturing costs
(3) In an advanced manufacturing technology environment, overhead are driven by
a variety of factors
 1, 2 and 3
 2 and 3 only
 1 and 3 only
 1 and 2 only

53. How would each of the following performance measures be classified?

Profitability Activity Liquidity
Working capital cycle O O O
Current ratio O O O
Residual income O O O
Production volume O O O

54. How is the efficiency ratio calculated?

 Actual hours worked/Budgeted hours
 Actual production hours /Actual output measures in standard hours
 Actual output measures in standard hours/Budgeted production hours
 Actual output measures in standard hours/Actual production hours
55. The standard cost of a product is to be reviewed. In the period used for the
review, labour efficiency was 110% when the standard for labour was 5.5 hours
per unit. It has been decided that this level of labour efficiency will be incorporated
into the revised standard hours of the product?

What are the revised standard labour hours per unit for the product?
 6.05
 5.00
 4.95
 5.50

56. A firm uses flexible budgets. The fixed budget for last period was based upon
100% activity and showed direct cost $50,000. The actual direct costs for the
period were compared with the fixed budget to show the following
Actual Variance
Direct costs $45,000 $4,500 (adverse)

What was the actual activity (as a %) for last period?

 99%
 90%
 91%
 81%

57. The following statements refer to overhead absorption using a ptedetermined

hourly rate
In each statement true or false?
 If actual hours multiplied by the predetermined hourly rate is less than the
actual expenditure there will be an over-absorption
 Any over-absorption calculated will be transferred to the statement of profit
or loss and will increase profit
58. Rent and rates are budgeted at $180,000 for the year, canteen costs at $30,000.
The following information available concerning the three departments of the
organization (X, Y and Z)
X Y Z TOTAL
Floor area (sq m) 30,000 50,000 20,000 100,000
Machine hours 20,000 30,000 10,000 60,000
Number of employees 120 200 180 500

What is the total amount of the above overheads apportioned to department

Z?
 $35,000
 $42,000
 $41,000
 $46,800

59. Which managerial process(es) is/are used at the end of the financial
period, when actual results are compared with budget and action taken?
(1) Planning
(2) Decision making
(3) Control
 3 only
 2 and 3
 1 and 2
 2 only

60. Which TWO of the following are examples of inventory holding costs?
 Losses from obsolescence
 Interest on capital
 Carriage inwards
 Cost of telephone calls to place order
61. Which of the following is the definition of dysfunctional decision making?
 Managers make decisions that are in their self interest but not in the best
interests of the organization
 Managers make decisions that are not accepted by their subordinates
 Managers make decisions that are both in their self interest and in the best
interests of the organization
 Managers make decision of departments outside their functional area of
responsibility

62. A management accountant has prepared a summarised list of the standard

production cost variances for a month as follows.
Total adverse variances $12,600
Total favourable variances $6,600
The actual profit after administration costs for the month was $115,600
Actual administration costs were $26,000 ($1,200 more than budgeted)
What was BUDGETED profit for the month?
 $108,400
 $110,800
 $122,800
 $120,400
63. The data below shows the frequency distribution for the number of products
returned in the last month
Frequency (f) Product returned (x)
10 4
20 7

Which TWO of the following equations are CORRECT?

 (∑fx/∑f)2 = 36.00
 ∑Fx2/∑f = 1,080.00
 (∑Fx/∑f )2 = 23.55
 ∑Fx2/∑f = 38.00
64. A firm uses a spreadsheet model to calculate certain costs. The following cells
are used for a particular application

Description Cells
Production volume in units B1
Total fixed production costs B2
Total production costs B3
Variable production cost per unit B4

Which of the following is the correct formula to be entered in cell B4?

 =B3-B2
 =B3/B1
 =(B3-B2)/B1
 =B1/(B3-B2)

65. Jobex Co uses job costing. Production costs, including absorbed overhead, of
$4,917 have been incurred to data on job ABC. A further $1,735 of direct costs,
including the cost of 82 direct labour hours, are expected to be required to
complete the job. Production overheads are absorbed at a rate of $9 per direct
labour hour
What is the expected total production cost of job ABC?
$

66. A company wishes to prepare two reports. The first report would relate to
changes in employee productivity over the previous month and the second report
would relate to changes in average receivable days over the last six months

Which sources will the company gather information from the two reports?
Internal sources External sources
Trade receivable O O
Employee productivity O O
67. The heights of the populations below follow a normal distribution with
(1) Population A having a mean height of 177cm and a standard deviation of 3cm
(2) Production A having a mean height of 175cm and standard deviation of 2cm
Which two of the following statements are correct?
 The proportion of population A with a height range of 178cm to 181cm is
the same as proportion of population B with a height range of 174cm to
176cm
 The proportion of population A taller than 180cm is the same as the
proportion of population B taller than 178cm
 The proportion of population A with a height range of 177cm to 180cm is
the same as proportion of population B with a height range of 173cm to
175cm
 The proportion of population A taller than 180cm is the same as the
proportion of population B shorter than 173cm