MA - Mock 2 (2023)

The following information is available for two projects. Only one project can be undertaken.

Which TWO of the following statements are TRUE?

(a) Project B should be accepted because it has the higher IRR

(b) Project A should be accepted because it has the higher NPV

(c) Ranking the projects based on discounted payback period would make project B seem more favourable

(d) At a cost of capital of 17% project B would have a zero NPV

• (a) & (b)

• (b) & (d)

• (c) & (d)

• (b) & (c)

Is each of the following statements about scatter diagrams true or false?

1. Scatter diagrams are graphs which show equations

2. The x-axis on a scatter diagram is used to represent the independent variable

• False & False

• True & True

• False & True

• True & False

A company uses standard marginal costing.  Last month when all sales were at the standard price, the standard contribution from the actual sales was $50,000 and the following variances arose:

What was the actual contribution for last month?

• $ 40,500

• $ 37,500

• $ 36,500

• $ 46,500

The operating statement used by an organisation to measure the performance of its divisions is structured as follows:

Which of the following would provide the best basis for measuring the performance of a manager of an investment centre?

• Divisional net profit

• Contribution

• Controllable operating profit

• Traceable divisional profit

A company uses standard costing. This year the standard labour cost of a product is $180.60 per unit. The standard labour rate is $86.00 per hour. Last month 2,200 hours were worked and there was an adverse labour efficiency variance of $8,600. This variance was caused entirely by new working practices introduced by the company. The full effect of the new working practices is to be incorporated into the new standard cost of the product for next year. In addition, a labour rate increase of 10% is to be built into the new standard cost.

What is the standard labour cost per unit of the product for next year?  

• $189.20

• $198.66

• $208.12

• $207.26

Which TWO of the following statements about responsibility centres are true?

(A) A cost which is not controllable by a junior manager may be controllable by a senior manager

(B) The performance of a profit centre is measured by its return on capital

(C) Managers of cost centres should be accountable for controllable costs only

(D) There are only two types of responsibility centre

• (A) & (C)

• (B) & (C)

• (A) & (B)

• (C) & (D)

Which of the following methods of costing describes target costing?  

• A method whose target is to reduce unit cost without impairing the value to the customer

• A method that targets selected business departments and aims to minimise their costs

• A method that sets a cost by subtracting a desired profit margin from a competitive market price

• A method that sets a target price by adding a desired profit margin to actual cost

A publishing company is researching the reading habits of the United Kingdom's population. It randomly selects a number of locations from around the United Kingdom and then interviews everyone who lives in these locations.

 

What is this approach to sampling known as? 

• Cluster sampling

• Quota sampling

• Stratified sampling

• Systematic sampling

A company manufactures and sells a single product. Next year the budgeted total fixed production costs are $300,000, the budgeted sales are 100,000 units and the budgeted production is 120,000 units. The budgeted profit for next year using absorption costing principles is $80,000.

What is the budgeted profit for next year using marginal costing principles?  

• $20,000

• $30,000

• $130,000

• $140,000

Lexie Co's projected revenue for 20X5 is $56,000 per month. All sales are on credit. Receivables' accounts are settled 50% in the month of sale, 45% in the following month, and 5% are written off as irrecoverable debts after two months.

What are the budgeted cash collections for March?

• $50,400

• $53,200

• $56,000

• $47,600