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| Section | Weight | Objectives |
|---|---|---|
| Topic 1: The Context of Management Accounting | 10% | - Purpose of Management Accounting
|
| Topic 2: Decision Making | 35% | - Investment and Strategic Decisions
|
| Topic 3: Costing | 25% | - Absorption and Marginal Costing
|
| Topic 4: Planning and Control | 30% | - Budgeting
|
A company's policy is to hold closing inventory each month equal to 10% of the next month's budgeted sales volume. The budgeted sales volumes of product Q for months 1 and 2 are 1,660 units and 2,300 units respectively.
The production budget for product Q for month 1 is:
Correct Answer: C 🗳️
A company makes and sells a range of products. The standard details per unit for one of these products, product X, are as follows.
To meet sales demand, the company must obtain 2,000 units of product X next month. There is sufficient labour capacity to produce 1,500 of these units in-house during normal time. However, any production above this level would require overtime working which would be paid at a premium of 50%.
The company can buy as many units of product X as it wishes next month from an external supplier at a price of $120 per unit.
What is the total financial benefit to the company of purchasing the appropriate number of units from the external supplier rather than producing them in-house?
Correct Answer: C 🗳️
Which TWO of the following are characteristics of Management Accounts? (Choose two.)
Correct Answer: B,D 🗳️
A confectionery manufacturer is considering adding a new product to the current range. Forecast data for the product are as follows.
Incremental fixed costs attributable to the new product are forecast to be $24,000 each period.
The forecast sales volume of 180 units is insufficient to achieve the target profit of $10,000 each period.
Which of the following statements is correct?
Correct Answer: C 🗳️
A company is considering investing $57,000 in a machine that will last for five years, after which time it will have no value. The machine will generate additional revenue of $190,000 each year. Annual running costs, including depreciation of $11,400 will amount to $168,400.
Assuming that all cash flows occur evenly, the payback period of the investment in the machine is closest to:
Correct Answer: A 🗳️
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