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

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?

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?

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?  

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

Which of the following methods of costing describes target costing?  

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? 

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?  

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?

The percentage probability that a student will score more than 90 marks in an accounting exam is 2.28%. The marks scored from the accounting exam follow a standard normal distribution with a mean mark of 70.

What is the standard deviation for the distribution?

A company rents its factory for $90,000 per annum. This year 60,000 units have been manufactured in the factory utilising 75% of its total capacity. Next year the plan is to manufacture 100,000 units by using the existing factory at full capacity and by renting just sufficient additional capacity. The additional capacity is available at the same rental cost per square metre as the existing factory.

What is the budgeted total rental cost for next year?  

The following statements refer to qualities of good information:

(1) It should be clear and unambiguous to the recipient

(2) It should be relevant to the needs of the recipient

(3) It must be 100% accurate before the recipient uses it 

Which of the above statements are correct?

A company uses absorption costing with a predetermined hourly fixed overhead absorption rate. The following situations arose last month:

(1) Actual hours worked were less than the budgeted hours used to set the predetermined absorption rate

(2) Actual overhead expenditure exceeded budgeted expenditure

Which of the following statements is correct?

The following statements are about the gradient of a straight line:

(1) The gradient of a straight line is the point at which the line crosses the y-axis

(2) On a graph which shows a semi-variable cost the variable cost per unit can be determined using the gradient of the line

Which of the above statements are TRUE?

Flexed budgets for the cost of cleaning in a hotel depend on the number of beds occupied. The following information is available for different levels of occupancy:

In June 76% of beds were occupied.

What should the cleaning costs be for June?  

A factory consists of two production cost centres (T and V) and one service cost centre (W). The total allocated and apportioned overhead for each centre is as follows:

T ($) - 22,000

V ($) - 54,000

W ($) - 80,000

The service cost centre overhead is reapportioned to the production cost centres based on the number of employees. The number of employees in each cost centre is as follows:

 T - 50

V - 30

W - 20

After the reapportionment of service cost centre overhead what is the total overhead for production cost centre T?  

Which of the following statements about motivation are correct?  

1. All employees are motivated by money

2. All employees should be motivated by the employer to work towards the mission of the organisation

An organisation is using regression analysis to establish the relationship between two variables (x and y). It is using six pairs of data for the analysis. The linear equation for the relationship is of the form:

y = a + 0.69x

Preliminary calculations have established that x = 90 andy = 180.

What is the value of a in the equation?    

What are the purposes of having strategic, tactical and operational objectives?  

(1) To comply with government legislation

(2) To ensure goal congruence

(3) To ensure that the objectives arising from the mission statement are quantified and fed down to the entire business

Identify whether each of the following statements could be considered to be a mission.

Yes .......... No

1. To create cutting edge product designs

2. To increase long-term shareholder wealth

An electronics company uses 50,000 components at an even rate during the year. It determined the economic order quantity to be 4,000 components, which is the order level placed each time with the supplier of the components. The company holds a buffer inventory of 1,000 components. The annual cost of holding one component in inventory is $4.

What is the total annual cost of holding inventory of the component?

 The number of daily complaints to a local government office has a standard deviation of 7 and the coefficient of variation is 20%.

What is the mean number of daily complaints?

A hotel has 120 identical bedrooms. It uses labour efficiency percentages to compare the performance of four groups of workers (A, B, C and D) employed to clean the bedrooms. The standard time to clean a bedroom is 40 minutes.

The following data for last week are available:

Which group of workers was the most efficient last week?  

Z Co has long-term loan liabilities of $324,000 and shareholders' funds of $402,000.

What is Z Co's capital gearing ratio?  

On 1 June there were 3,600 units of inventory component H valued at a price of $5 each. The following receipts and issues were recorded during June:

Using the first-in first-out (FIFO) method, what is the total value of the units issued on 25 June?

Is each of the following statements about aspects of budget administration true or false?

1. A budget manual is a set of instructions governing aspects of the preparation of budgets

2. One of the responsibilities of the budget committee is to prepare the annual budgets

The following details have been extracted from the accounts of B Co for the quarter ending 30 June.

What is the quick ratio for the quarter ended 30 June?  

Which TWO of the following are most likely to use batch costing? 

1. A movie making company

2. A bakery

3. An oil refinery

4. A footwear manufacturer

A company uses an overhead absorption rate of $24 per machine hour which was calculated using 80,000 budgeted machine hours for the period. During the same period actual total overhead expenditure was $2,100,000 and 84,000 machine hours were recorded on actual production.

What was the total overhead under or over absorbed in the period?

31  Which TWO of the following are key characteristics of big data?

1. Variety

2. Viability

3. Volume

4. Visibility

Last month a company which uses standard costing purchased a larger quantity of materials than was budgeted. The supplier gave the company a discount on the company's standard purchase price for materials. The company used highly skilled labour paid at a rate above the standard wage rate to process all the materials purchased last month. The workforce took less time than the standard time allowed but used more material than standard in the production.

Were the direct materials variances for last month adverse or favorable?      

1. Usage variance

2. Price variance

A company operates a process in which no losses are incurred. It uses the weighted average valuation method. The process account for last month was as follows:

What was the degree of completion of the 8,000 units in the closing work-in-progress?  

An organisation operates a process that creates two joint products (T and V).  Product T has a selling price of $20 per litre and product V has a selling price of $60 per litre.  Last month joint costs of $600,000 were incurred and the completed production was as follows:

The organisation uses the sales value method of apportioning joint costs.

How much of the joint costs were apportioned to product V last month?  

Last month the opening inventory of a company was 2,000 units and the closing inventory was 4,500 units.  Using absorption costing this closing inventory was valued at $29,250.  Using marginal costing last month's profit was $25,000 and using absorption costing it was $34,000.  

What was the variable production cost per unit last month?

Dancer Co wishes to buy a new packaging machine. Two alternatives are available; Machine A and Machine B.  Both have an expected life of three years.  Dancer Co's management accountant has begun to prepare the following spreadsheet to evaluate the two machines but he has not yet completed it.  The data entered to date is correct.  

Machine B has a purchase cost of $10,000 and an expected scrap value in three years time of $4,000.  It will generate a contribution of $7,000 per annum before incurring production overheads (including straight line depreciation) of $3,000 per year. 

 In addition maintenance costs of $1,200 per year will be payable each year in advance.  All costs and revenues, apart from the purchase cost and maintenance costs may be assumed to occur at the end of the year.

Dancer Co's cost of capital is 10% per year.  In the spreadsheet, t0 represents the date of the initial investment, t1 represents the first anniversary of this date etc.

What is the net present value (NPV) of Machine A (to the nearest $)?

Dancer Co wishes to buy a new packaging machine. Two alternatives are available; Machine A and Machine B.  Both have an expected life of three years.  Dancer Co's management accountant has begun to prepare the following spreadsheet to evaluate the two machines but he has not yet completed it.  The data entered to date is correct.  

Machine B has a purchase cost of $10,000 and an expected scrap value in three years time of $4,000.  It will generate a contribution of $7,000 per annum before incurring production overheads (including straight line depreciation) of $3,000 per year. 

 In addition maintenance costs of $1,200 per year will be payable each year in advance.  All costs and revenues, apart from the purchase cost and maintenance costs may be assumed to occur at the end of the year.

Dancer Co's cost of capital is 10% per year.  In the spreadsheet, t0 represents the date of the initial investment, t1 represents the first anniversary of this date etc.

What is the non-discounted payback period of Machine A (to the nearest one decimal place)?

Dancer Co wishes to buy a new packaging machine. Two alternatives are available; Machine A and Machine B.  Both have an expected life of three years.  Dancer Co's management accountant has begun to prepare the following spreadsheet to evaluate the two machines but he has not yet completed it.  The data entered to date is correct.  

Machine B has a purchase cost of $10,000 and an expected scrap value in three years time of $4,000.  It will generate a contribution of $7,000 per annum before incurring production overheads (including straight line depreciation) of $3,000 per year. 

 In addition maintenance costs of $1,200 per year will be payable each year in advance.  All costs and revenues, apart from the purchase cost and maintenance costs may be assumed to occur at the end of the year.

Dancer Co's cost of capital is 10% per year.  In the spreadsheet, t0 represents the date of the initial investment, t1 represents the first anniversary of this date etc.

1. What value should be entered in cell C10?

2. What value should be entered in cell B11?  

Dancer Co wishes to buy a new packaging machine. Two alternatives are available; Machine A and Machine B.  Both have an expected life of three years.  Dancer Co's management accountant has begun to prepare the following spreadsheet to evaluate the two machines but he has not yet completed it.  The data entered to date is correct.  

Machine B has a purchase cost of $10,000 and an expected scrap value in three years time of $4,000.  It will generate a contribution of $7,000 per annum before incurring production overheads (including straight line depreciation) of $3,000 per year. 

 In addition maintenance costs of $1,200 per year will be payable each year in advance.  All costs and revenues, apart from the purchase cost and maintenance costs may be assumed to occur at the end of the year.

Dancer Co's cost of capital is 10% per year.  In the spreadsheet, t0 represents the date of the initial investment, t1 represents the first anniversary of this date etc.

Does each of the following advantages apply to the NPV method, the non-discounted payback method, both of these methods or neither of these methods? 

1. It takes into account the time value of money

2. It is cash flow based

3. It considers the effect on reported profits

4. It selects projects that quickly recoup their initial investment  

Dancer Co wishes to buy a new packaging machine. Two alternatives are available; Machine A and Machine B.  Both have an expected life of three years.  Dancer Co's management accountant has begun to prepare the following spreadsheet to evaluate the two machines but he has not yet completed it.  The data entered to date is correct.  

Machine B has a purchase cost of $10,000 and an expected scrap value in three years time of $4,000.  It will generate a contribution of $7,000 per annum before incurring production overheads (including straight line depreciation) of $3,000 per year. 

 In addition maintenance costs of $1,200 per year will be payable each year in advance.  All costs and revenues, apart from the purchase cost and maintenance costs may be assumed to occur at the end of the year.

Dancer Co's cost of capital is 10% per year.  In the spreadsheet, t0 represents the date of the initial investment, t1 represents the first anniversary of this date etc.

Product A is one of the products that are manufactured by a company. The following direct cost standards were set, for each batch of 50 units of Product A, for the period just ended:

Variable production overheads were absorbed at a standard rate of $3.70 per direct labour hour.

Fixed production overheads were absorbed at a standard rate per machine hour using the following budgeted data for the factory:

Budgeted fixed production overheads - $51,000

Budgeted machine hours - 1,700

Each batch of Product A requires 8 machine hours.

40 batches of Product A were manufactured in the period just ended and the following direct resources were used:

Material X - 416 kg

Material Y - 195 litres

Labour - 838 hours

1. What was the standard total variable production cost per unit of Product A (to two decimal places)?

2. What was the standard fixed production overhead cost per unit of Product A (to two decimal places)?

3. What was the labour efficiency variance?

Dancer Co wishes to buy a new packaging machine. Two alternatives are available; Machine A and Machine B.  Both have an expected life of three years.  Dancer Co's management accountant has begun to prepare the following spreadsheet to evaluate the two machines but he has not yet completed it.  The data entered to date is correct.  

Machine B has a purchase cost of $10,000 and an expected scrap value in three years time of $4,000.  It will generate a contribution of $7,000 per annum before incurring production overheads (including straight line depreciation) of $3,000 per year. 

 In addition maintenance costs of $1,200 per year will be payable each year in advance.  All costs and revenues, apart from the purchase cost and maintenance costs may be assumed to occur at the end of the year.

Dancer Co's cost of capital is 10% per year.  In the spreadsheet, t0 represents the date of the initial investment, t1 represents the first anniversary of this date etc.

Product A is one of the products that are manufactured by a company. The following direct cost standards were set, for each batch of 50 units of Product A, for the period just ended:

Variable production overheads were absorbed at a standard rate of $3.70 per direct labour hour.

Fixed production overheads were absorbed at a standard rate per machine hour using the following budgeted data for the factory:

Budgeted fixed production overheads - $51,000

Budgeted machine hours - 1,700

Each batch of Product A requires 8 machine hours.

40 batches of Product A were manufactured in the period just ended and the following direct resources were used:

Material X - 416 kg

Material Y - 195 litres

Labour - 838 hours

Do each of the following fixed production overhead variances occur in a standard marginal costing system?

Yes No

1. Expenditure

2. Volume

3. Efficiency

4. Capacity

Dancer Co wishes to buy a new packaging machine. Two alternatives are available; Machine A and Machine B.  Both have an expected life of three years.  Dancer Co's management accountant has begun to prepare the following spreadsheet to evaluate the two machines but he has not yet completed it.  The data entered to date is correct.  

Machine B has a purchase cost of $10,000 and an expected scrap value in three years time of $4,000.  It will generate a contribution of $7,000 per annum before incurring production overheads (including straight line depreciation) of $3,000 per year. 

 In addition maintenance costs of $1,200 per year will be payable each year in advance.  All costs and revenues, apart from the purchase cost and maintenance costs may be assumed to occur at the end of the year.

Dancer Co's cost of capital is 10% per year.  In the spreadsheet, t0 represents the date of the initial investment, t1 represents the first anniversary of this date etc.

Product A is one of the products that are manufactured by a company. The following direct cost standards were set, for each batch of 50 units of Product A, for the period just ended:

Variable production overheads were absorbed at a standard rate of $3.70 per direct labour hour.

Fixed production overheads were absorbed at a standard rate per machine hour using the following budgeted data for the factory:

Budgeted fixed production overheads - $51,000

Budgeted machine hours - 1,700

Each batch of Product A requires 8 machine hours.

40 batches of Product A were manufactured in the period just ended and the following direct resources were used:

Material X - 416 kg

Material Y - 195 litres

Labour - 838 hours

Which of the following variances is/are required in order to reconcile the budgeted profit for a period with the standard profit on actual sales for the same period?

(1) Sales volume revenue variance

(2) Selling price variance

(3) Sales volume profit variance

(4) Total cost variance

Donner Co operates for 365 days per year and makes all of its sales on credit.  A summary of its current financial information is given below.  

    Calculate the following based upon Donner Co's summarised financial information.  All figures should be to one decimal place.        

1. Return on capital employed (ROCE) - ...... %

2. Asset turnover ratio (based upon capital employed) - ..... times

3. Receivables collection period - ....... days

4. Capital gearing (debt to equity) - ...... %

5. Interest cover ratio - .... times          

Donner Co operates for 365 days per year and makes all of its sales on credit.  A summary of its current financial information is given below

.  

The performance of Donner Co's closest rival, Competitor A, together with the industry average in their sector is given below.

Competitor A - Industry Average

1. ROCE (%) - 35.0 - 40.0

2. Asset turnover ratio based upon capital employed - 2.0 - 3.0

3. Receivables collection period - 70 - 65

4. Capital gearing (debt to equity) (%) - 75.0 - 50.0

5. Interest cover ratio - 2.0 - 5.0

6. Current ratio - 1.5 - 2.0

Based on the figures above, are the statements about Competitor A true or false?  

1. Its capital gearing is riskier than the industry average

2. It has a smaller operating profit margin than the industry average

3. Its liquidity position is worse than the industry average

4. If its operating profit were 30% lower it would make a net loss