MA - Mock 1 (2023)

Three activities associated with budgeting are as follows:

(1) Preparing the master budget

(2) Determining the principal budget factor

(3) Flexing the budget in line with the actual level of activity

What is the correct sequence for these activities ?

• 1, then 3, then 2

• 1, then 2, then 3

• 2, then 3, then 1

• 2, then 1, then 3

A company manufactures and sells a single product.  At the end of the manufacturing process all units are inspected and 20% are rejected and scrapped.  Next year the budgeted sales are 192,000 units and the inventory of finished units will increase by 2,000 units.

What is next year's budgeted production (in units) which will be subject to inspection?  

• 2,42,000

• 2,32,400

• 2,42,500

• 2,40,500

Which TWO of the following statements about fixed and flexible budgets are true?

(a) Comparison of a fixed budget with the actual results is useful for budgetary control purposes

(b) Preparing flexible budgets requires knowledge of cost behaviour

(c) Flexible budgeting assumes that most costs are semi-variable 

(d) Fixed budgets are useful for monitoring fixed costs

• (b) & (d)

• (d) & (b)

• (a) & (b)

• (c) & (d)

Which of the following statements about payback is TRUE?  

• A change in the cost of capital will affect the payback  

• Payback is useful as an initial screening device

• Payback is technically superior to NPV

• Payback takes into account the time value of money

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T Co usually has a quarterly labour cost of $2,500,000. Material costs (mainly copper) were $3,000,000 in January to March. The worldwide cost of copper has increased in the second quarter by 15%. Overheads were $45,000,000 in January to March.

Which TWO of the following variances for April to June are worth investigating as the reasons for the variance are unknown?

(a) Overhead expenditure variance of $4,000,000 adverse

(b) Sales volume variance of $3,000,000 favourable

(c) Total direct labour variance of $400 adverse

(d) Materials price variance of $450,000 adverse

• (a) & (c)

• (a) & (b)

• (C) & (b)

• (a) & (d)

Which TWO of the following are true of imposed budgeting?  

(a) It reduces deliberate overestimation of costs and underestimation of revenues in a budget

(b) It increases operational managers' commitment to organisational objectives

(c) Top management prepare a budget with little or no input from operating staff

(d) It is most effective in large organizations

• (a) & (b)

• (a) & (c)

• (b) & (c)

• (b) & (d)

The following statements refer to different types of planning in a large organisation:

(1)

Strategic planning is concerned with both quantitative and qualitative matters

(2)

Tactical planning is concerned with setting long term objectives

(3)

Operational planning is concerned with a time horizon starting one year from now

Which of these statement(s) is/are correct?  

• 1 only

• 1 & 2

• 2 & 3

• 2 only

A company used government produced data that showed the economy grew by 4.6% in the last year.

Which of the following describes the data used by the company?

• Secondary and discrete

• Primary and continuous

• Primary and discrete

• Secondary and continuous

Which of the following statements about big data analytics in organisations is/are TRUE?

(1)

It will provide a deeper understanding of customer behaviour and purchasing preferences

(2)

It will require investment in technology to manage the volume and speed of information accumulated

• 1 only

• 2 only

• Both 1 & 2

• Neither 1 nor 2

Which of the following defines the prime cost of a product?

• The cost of making the first unit of a product

• The total production cost of a product

• The material cost of a product

• The total direct costs of a product