BA2 Practice Exam Questions and Answers

A company’s management accountant wishes to calculate the present value of the cost of renting a delivery vehicle. There will be five annual rental payments of $5,000, the first of which is due immediately. The company’s discount rate is 12%.

Which TWO of the following are valid ways to calculate the present value of the rental payments? (Choose two.)

The following data are available for a company that produces and sells a single product.

The company’s opening finished goods inventory was 2,500 units.

The fixed overhead absorption rate is $8.00 per unit.

The profit calculated using marginal costing is $16,000.

The profit calculated using absorption costing and valuing its inventory at standard cost is $22,400.

The company’s closing finished goods inventory is:

A sales manager has analysed a sample of 350 sales transactions from the latest period. The manager wishes to investigate:

how many customers made their purchase online using the internet and how many purchased by telephone.

how many were new customers and how many were placing repeat orders.

The following table shows the results of the analysis.

If the pattern of sales occurs next period, the probability of a particular sale being a repeat order placed online is closest to:

A project is about to be launched. Two of the three possible outcomes and their associated probabilities are as follows:

The remaining possible outcome is a $70,000 gain.

What is the correct calculation of the expected value of the project?

In a company that manufactures many different products on the same production line, which TWO of the following would NOT be classified as indirect production costs? (Choose two.)

Which THREE of the following are included in the Global Management Accounting Principles? (Choose three.)

An organisation produces and sells a single product. The organisation’s management accountant has reported the following information for the most recent period.

Which TWO of the following statements are valid? (Choose two.)

Which of the following is a relevant cost?

The following is an extract from a budgetary control report for the latest period:

The budget variance for prime cost is:

The possible returns and associated probabilities of two independent projects are as follows:

It has been decided that both projects are to be launched.

Which TWO of the following statements are correct? (Choose two.)

Which of the following statements relating to risk and uncertainty is correct?

Which of the following statements regarding variances is valid?

A company manufactures three products using the same direct labour which will be in short supply next month. No inventories are held. Data for the three products are as follows:

The fixed costs are all committed costs and cannot now be altered for the next month.

Place the labels against the correct product to indicate the order of priority for manufacture that will maximise the profit for the next month.

Data for the latest period for a company which makes and sells a single product are as follows:

There were no budgeted or actual changes in inventories during the period.

The sales volume contribution variance for the period was:

A company that uses standard costing wishes to reconcile the difference between the profit for a period calculated using absorption costing with that calculated using marginal costing.

Which TWO of the following will NOT help with this reconciliation? (Choose two.)

The concept of the time value of money:

In responsibility accounting, costs and revenues are grouped according to:

The forecast costs per unit for a new product are as follows:

The company uses marginal cost plus pricing and all products are required to achieve a 40% margin.

What would be the selling price per unit?

Based upon extensive historical evidence, a company’s daily sales volume is known to be normally distributed with a mean of 1,728 units and a standard deviation of 273 units.

What is the probability that, on any one day, the sales volume will be at least 1,300 units?

Which of the following would NOT require taking into account the time value of money?

In the process account, the accounting treatment of the value of the abnormal gain is:

Apex Plc has budgeted to sell 8,000 units of A in the year. Opening inventory of A is estimated at 1,000 units and the company plans to reduce inventory levels of all products by 15%.

What will be the production budget (in units) for the year?

Refer to the exhibit.

The budget for ORG for the month of September contained the following data:

During the month the actual number of units produced was 1,550. The management accounts showed a direct labour rate variance of $200 adverse and direct labour efficiency variance of $150 adverse.

The actual direct labour hours in the month was:

GB Limited operates a standard costing system. During the month 18,500 labour hours were worked at a standard cost of $6 per hour. The labour efficiency variance was $8,700 favourable.

How many standard hours were produced?

Refer to the exhibit.

A company is considering purchasing a machine that will have a useful life of three years after which time it will be sold. Relevant cash flows relating to the purchase and operation of the machine are as follows.

The annual cost of capital is 14%.

The net present value of the investment in the machine is, to the nearest whole $:

The net present value (NPV) of an investment is as follows.

NPV at 14% = $6,320

NPV at 18% = ($4,600) negative

The internal rate of return (IRR) of the investment is closest to

The wages of a machine operator who is paid a guaranteed minimum wage plus a bonus for each unit produced would be described as

A.  

Refer to the Exhibit.

A company operates a batch costing system.

Production overhead costs are absorbed into the cost of batches using a direct labour hour rate. Other overhead costs are absorbed at a rate of 20% of total production cost. The company adds a mark-up of 10% to total cost in order to derive its selling prices.

Budgeted production overheads for the period are $44,000 and the budgeted level of activity is 8,800 direct labour hours.

The following data are available for batch number 309:

The required selling price per unit (to two decimal places) is:

Each unit of product GM requires 4 labour hours to be produced. 25% of the units will be completed during overtime hours.

Sales of 24,000 units are planned and finished goods inventory is budgeted to rise by 2,000 units.

If the wage rate is £6 per hour and the overtime premium is 50%, what is the budgeted labour cost?

Refer to the Exhibit.

PJ Ltd has forecast that the relationship between total overheads and machine hours will be as follows:

If the budget is to be based on 4,000 machine hours, the variable overhead absorption rate will be:

*per machine hour.

Give your answer to 2 decimal places.

In a manufacturing company which produces a range of products, the production manager's salary would be classified as

A.  

The principal budget factor can be defined as:

In an integrated cost and financial accounting system, the accounting entries for the payment of net wages to indirect production workers would be:

Refer to the exhibit.

WS operates an integrated accounting system. Transactions relating to production overheads for the month of May were as follows:

Indirect Material costs were $15,000

Indirect Labour Costs were $45,000

Production overheads of $58,000 were incurred during the period.

Depreciation of factory machinery amounted to $32,000.

Overheads costs absorbed by production using a standard absorption rate was $164,000 for the period.

What are the correct entries to record the absorption of production overheads for the period?

The correct set of entries to record the absorption of production overheads for the period is:

Refer to the Exhibit.

The following budgetary information is available for a department in a manufacturing company:

The production overhead absorption rate percentage, when the percentage on prime cost is used, is:

Refer to the Exhibit.

A company operates an absorption costing system. The management accounts show that fixed production overheads were over-absorbed in the period.

Which FOUR combinations could possibly have resulted in this situation?

Which ONE of the following would be the LEAST effective performance indicator for a distribution manager who is responsible for controlling the cost of the transport fleet?

Refer to the exhibit.

SP, a manufacturing company, uses a standard costing system. The standard variable production overhead cost is based on the following budgeted figures for the year:

During the month of September, 5,300 actual hours were worked and 5,600 standard hours of output were produced. Total variable production overhead costs in September were $8,600.

What was the total variable production overhead variance in September?

A company uses an integrated accounting system.

The accounting entries for the sale of goods on credit would b

E.  

CVP Limited manufactures a single product with a selling price of $25.60. Fixed costs are $122,880 per month and the product has a profit/volume ratio of 40%.

In a month when actual sales were $358,400, CVP's margin of safety in units was

Which of the following items would not be found in a cash budget?

The managing director of a small expanding company has a limited understanding of accounting and has asked you to explain the role of the management accountant in value creation.

Which ONE of the following is NOT a primary role of the management accountant?

Refer to the exhibit.

The budget for product Sentra for the month of August is given below:

Each unit of Sentra requires 4kg of raw materials.

The raw materials usage budget for the month of August is:

Refer to the exhibit.

Which type of cost do the following figures represent?

Which of the following are not examples of intangible and nonfinancial factors in decision making? (Select ALL that apply.)

Relevant costs for decision making are.

The total cost of a product is £200.

In order to achieve a profit margin of 20% of sales, the selling price would have to be:

Give your answer to 2 decimal places.

Refer to the exhibit.

The following details were recorded for product 'Moe' for period 2:

What was the direct labor efficiency variance?

A profit margin of 20% of sales is the same as a profit on total cost of:

Give your answer to 2 decimal places.

Which one of the following is NOT one of the main roles of the management accountant?

A standard hour is:

Put simply, the role of the management accountant it to_______.

The gradient of the line plotted on a profit/volume (PV) graph is determined by:

You are put in charge of a new, independent factory. The products you produce are cheap to produce but the profit margin is small. Maintaining low costs and maximum efficiency is key.

You are concerned that certain parts of the production line are producing excess waste and damaging profits.

Which type of cost centre would be most useful in this situation?

Refer to the exhibit.

A project is forecast to generate the following cash flows.

Using three decimal places in all discount factors, the net present value (NPV) for the project at a cost of capital of 14.5% is (to the nearest $)

Refer to the exhibit.

The budgetary control report for the latest period shows the following. Variances in brackets are adverse.

Which THREE of the following statements can definitely be inferred from this control report?

Which one of the global principles of management accounting should be tailored to the knowledge of the decision maker?

Refer to the exhibit.

The following data relate to two activity levels of an enquiry-handling centre:

The amount of fixed overheads is: