ACCA

Management Accounting Mock Exam 1

Answers
(Duration: 3 hours)

LSAM

Paper F2

Mock Exam - 1 (Answers)

ANSWER 1
B False The definition given is that of a flexed budget.

ANSWER 2
D

ANSWER 3
C {[Buffer inventory + (EOQ 2)] = [700 units + (1500 units 2)] = 4,350 Annual holding cost per component} 3.00

ANSWER 4
B

ANSWER 5
C

ANSWER 6
C High level = number of units: 48 Low level = number of units: 23 Difference = 25 units Total cost 7,100 Total cost 5, 200 Difference in costs 1,900

Therefore variable cost per unit = 1,900 25 units = 76 Fixed costs = 7100 (76 48 units) = 3,452

ANSWER 7
D

ANSWER 8
B

ANSWER 9
C

LondonSAM

F2 - Management Accounting

Mock Exam - 1 (Answers)

ANSWER 10
B The process should be: Calculate contribution per unit of scarce resources. Calculate the contribution per unit of the scarce resource. Rank the products. Allocate the scarce resource.

ANSWER 11
C

ANSWER 12
C The employee took 45 hours to perform 99 operations. The standard time allowed per operation is 45 minutes, giving a standard time of (99 [45/60]) = 74.25 hours to perform 99 operations. The time saved is therefore (74.25-45) = 29.25 hours. The bonus payable will be: (time taken/time allowed) time saved hourly rate = (45/74.25) 29.25 8.20 = 145.36

The gross wage for that week will therefore be (45 hours

8.20) + 145.36 = 514.36

ANSWER 13
D

ANSWER 14
A Overheads absorbed for the period Overheads incurred for the period Total overheads under-absorbed = 4.50 3,850 labour hours = 17,325 = 18,225 = 900

ANSWER 15
C

ANSWER 16
B

ANSWER 17
A

LondonSAM

F2 - Management Accounting

Mock Exam - 1 (Answers)

ANSWER 18
A

ANSWER 19
B

ANSWER 20
A

ANSWER 21
C EOQ = ((2 $30 (5,000 4))/0.192) = 2,500 units

ANSWER 22
C BEP (revenue) = $120,000 0.4 = $300,000 BEP (units) = $300,000 $40 = 7,500 units

ANSWER 23
D Actual activity Breakeven activity = 1,850 units 1,350 units = 500 units

ANSWER 24
A Contribution per unit = $35 ($8 + $8.50 + $3.50) = $15 Total contribution = $15 Less = Fixed costs Marginal profit 6,100 units sold $91,500 ($30,000) $61,500

ANSWER 25
B Marginal costing profit Add: OAR included in closing stock $4 Absorption profit for the month 400 units $61,500 $1,600 $63,100

LondonSAM

F2 - Management Accounting

Mock Exam - 1 (Answers)

ANSWER 26
A The machine has to be retained for use on other contracts, therefore no cost.

ANSWER 27
B The material is no longer in use within the firm. Opportunity cost = 2.00 per unit.

ANSWER 28
A

ANSWER 29
A 250 units of Product B with all of material M1 (2,500 kgs) 9 units of Product B with all of material M2 (1,350 kgs) = 10 kgs per unit = 9 kgs per unit

ANSWER 30
A A B C D Total contribution (0 Total contribution (70 Total contribution (40 Total contribution (120 11) + (150 11) + (40 11) + (70 11) + (0 15) = 2,250 15) = 1,370 15) = 1,490 15) = 1,320

ANSWER 31
D Fully completed units Partially completed 50 units Total 60% completion 300 units 30 units 330 units

ANSWER 32
B Normal output = 12,000 10% Actual Output Abnormal gain 12,000 10,800 11,050 250 kgs

LondonSAM

F2 - Management Accounting

Mock Exam - 1 (Answers)

ANSWER 33
B

Average cost per kg

(48,000 30,000 42,000) - (1,200 1) 12,000 - 1,200

= $11 per kg

ANSWER 34
A

ANSWER 35
B Input Normal output Actual output Total = 4,000 litres = 4,000 0.95 = Finished goods WIP 3,800 2,900 800 _____ 3,700

Abnormal loss = 3,800 3,700 = 100 litres

ANSWER 36
C As the closing work-in-progress is 60% complete, the number of equivalent units is: 2,900 + 100 + 60% 800 = 3,480

ANSWER 37
D Abnormal loss is valued at the same cost as good output. Value = 100 ($3.32 + 2.20) = $552

ANSWER 38
C Value of closing work-in-progress = 800 $3.32 + 480 $2.20 = $3,712

ANSWER 39
A Output value = 2,900 $5.52 = $16,008

LondonSAM

F2 - Management Accounting

Mock Exam - 1 (Answers)

ANSWER 40
D Direct materials: 10,000 + 6,000 Direct labour: (800 4) + (400 5) 4) Production overhead: (800 Total production cost Total cost (+ 20% for admin) % 100 (75) ___ 25 ___ 41,600 (31,200) ______ 10,400 ______ 4) + (400 16,000 5,200 4,800 26,000 31,200

ANSWER 41
B

ANSWER 42
C A service industry is an industry not involved in agriculture, mining, construction or manufacturing.

ANSWER 43
B Overheads incurred Over-absorption Therefore overheads absorbed 72,000 2,375 74,375

OAR =

74,375 = 4.25 17,500

68,000 = 16,000 hours 4.25

OAR =

ANSWER 44
D Finished foods (Widgets) 48,000 units to produce + increase in stocks of 1,500 units = 49,500 units 49,500 units @ 2kgs per unit = 99,000 kgs Add increase n stocks of raw materials = 1,750 kgs Total material purchases budget 100,750 kgs

LondonSAM

F2 - Management Accounting

Mock Exam - 1 (Answers)

ANSWER 45
B The number of labour hours used to produce 5,000 units is 9,550, and these have cost $52,525. If we had paid the standard cost of $6 an hour, this would have cost $57,300, which gives us a favourable labour rate variance of $4,775.

ANSWER 46
C We should have used 10,000 hours to produce 5,000 units. Instead, we have only used 9,950 hours. This is a favourable hour saving of 450 hours, which at the standard hourly rate of $6, gives a favourable labour efficiency rate of $2,700.

ANSWER 47
B

ANSWER 48
B

OAR =

650,000 = 5.20 per labour hour 125,000

665,000 122,500 hours 5.20 = 637,000

Actual overheads incurred Overheads absorbed

There is an under-absorption (adverse variance) of 665,000 665,000 = 28,000

ANSWER 49
A

ANSWER 50
A The question stated that there were just three possible outcomes for profit in a decision situation. The requirement asked for the most likely level of profits, that is the one of the three possibilities with the highest probability of occurring. The probability of a $28,500 profit was 0.40 ($11,400 / $28,500) and that of a $18,000 profit was 0.45 ($8,100 / $18,500).

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F2 - Management Accounting