F2 (MA/FMA) – Chapter 10 – PART D – CBE MCQs – ACCA

These are ACCA F2 (MA/FMA) Management Accounting MCQs for Part-D of the Syllabus “Budgeting”.

These multiple-choice questions (MCQs) are designed to help ACCA F2 (MA) students to better understand the exam format. We aim to instill in students the habit of practicing online for their CBE exams. By doing so, students can reduce exam stress and prepare more effectively.

INFORMATION ABOUT THESE MCQs Test

Course: ACCA – Associations of Chartered Certified Accountants
Fundamental Level: Knowledge, FIA – Foundation in Accounting
Subject: Management Accounting
Paper: F2 – MA/FMA
Chapter: Budgeting, and The budgetary process
Chapter Number: 10 of the Practice and Exam Kit
Syllabus Area: D – Budgeting
Questions Type: CBE MCQs
Exam Section Type: Section A

Benefits of Practicing Online on AGlobalBox.com

  1. Authentic Exam Experience:
    Practicing online allows ACCA students to experience an environment closely resembling the actual exam. The MCQs on our platform are designed to mirror the format, difficulty level, and question types found in ACCA exams. This familiarity helps students become more comfortable and confident when facing the real exam.
  2. Comprehensive Question Bank:
    We provided comprehensive question banks covering various topics across the syllabus. By practicing online, students gain access to a wide range of MCQs that thoroughly test their knowledge and understanding in each area.
  3. Enhanced Learning and Retention:
    The interactive nature of online practice enhances learning and improves information retention. Students can actively engage with the MCQs, select answers, and receive immediate results. This approach aids in reinforcing concepts and identifying areas that require further study, thereby maximizing learning outcomes.
  4. Time Management Skills:
    Practicing online helps students develop essential time management skills required for ACCA exams. By adhering to time limits while answering MCQs, students learn to allocate their time effectively and improve their speed and accuracy. This skill is invaluable for completing the actual exam within the given time constraints.
  5. Performance Tracking and Progress Evaluation:
    Students can monitor their results, track their strengths and weaknesses, and identify areas that need improvement.

Number of the Questions

There are 14 Questions in this F2 MCQ Test that cover Chapter 10a; Budgeting of ACCA F2 (MA/FMA) Management Accounting Module.

Time

This MCQs test is not time-bound. Take your time and solve them without stress. Pay proper attention and focus. Do not rush or hesitate.

Result

Students will get their F2 CBE MCQ result after they finish the entire test. They will also be able to see the score in percentage, correct and incorrect answers, as well as explanations for the incorrect questions.

Types of Questions

MCQs: Choose one from the given options.
Multiple choice: Choose all answers that seem correct or incorrect, as per the requirement of the question. Keep your eye on the wording “(select all those which are correct/ or incorrect)”.
Dropdown: Select from the list provided.
Type numbers: Type your answer in numbers as per the requirement of the question.


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34

F2 - Chapter 10 - Part A - MCQs

Course: ACCA - FIA
Subject:
F2 (MA/FMA) Management Accounting
Chapter: 10 - Budgeting, and The budgetary process
Syllabus Area: D - Budgeting
Exam Section: Section A
Questions type: MCQs
Time: No Time Limit

INSTRUCTIONS

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REQUEST

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1 / 39

An accountant wishes to use the following spreadsheet to calculate budgeted production units.

A B C D
1 Jul Aug Sep
2 units units units
3  Sales 1,000 2,000 3,000
4  Opening inventory finished goods 100 200 300
5  Production

Which formula should be entered in cell B5?

2 / 39

A company plans to sell 24,000 units of product R next year. Opening inventory of R is expected to be 2,000 units and PQ Co plans to increase inventory by 25 per cent by the end of the year.

How many units of product R should be produced next year?

______ units

3 / 39

Extracts from a company's budget are as follows:

August September
Production units 12,600 5,500
Fixed production overhead cost incurred $9,440 $7,000

The standard variable production overhead cost per unit is $5. Variable production overhead is paid 70 per cent in the month incurred and 30 per cent in the following month.

Fixed production overhead cost is paid in the month following that in which it is incurred and includes depreciation of $2,280 per month.

What is the payment for total production overhead cost shown in the cash budget for September?

4 / 39

Budgeted sales of X for December are 18,000 units. At the end of the production process for X, 10% of production units are scrapped as defective. Opening inventories of X for December are budgeted to be 15,000 units and closing inventories will be 11,400 units. All inventories of finished goods must have successfully passed the quality control check.

What is the production budget for X for December?

_______ units

5 / 39

A company manufactures a single product, M. Budgeted production output of product M during August is 200 units. Each unit of product M requires 6 labour hours for completion and PR Co anticipates 20 per cent idle time. Labour is paid at a rate of $7 per hour.

What is the direct labour cost budget for August?

6 / 39

The following spreadsheet shows the calculation of a company’s profit.

A B
1 $
2 Sales revenue 20,000
3 Variable production costs 5,000
4 Fixed production costs 3,000
5 Gross profit 12,000
6 Variable selling costs 1,000
7 Fixed selling costs    500
8 Profit 10,000

Which formula would calculate contribution?

7 / 39

The following extract is taken from the production cost budget of S Co.

Production (units) 2,000 3,000
Production cost ($) 11,100 12,900

What is the budget cost allowance for an activity level of 4,000 units?

8 / 39

Each unit of product Zeta requires 3 kg of raw material and 4 direct labour hours. Material costs $2 per kg and the direct labour rate is $7 per hour.

The production budget for Zeta for April to June is as follows.

April May June
Production units 7,800 8,400 8,200

Wages are paid 75% in the month of production and 25% in the following month.

What is the figure to be included in the cash budget for May in respect of wages?

$_______

9 / 39

  A B C D F G
1 Jan Feb Mar Apr May
2 Sales 15,000 13,400 16,100 17,200 15,300
3 Cost of sales 11,090 10,060 12,040 13,000 11,100
4 Gross profit 3,910 3,340 4,060 4,200 4,200
5 Expenses 1,500 1,500 1,500 1,500 1,500
6 Net profit 2,410 1,840 2,560 2,700 2,700
7
8 Net profit %

What would be the formula for March net profit?

10 / 39

If a company has no production resource limitations, in which order would the following budgets be prepared?

  1. Material usage budget
  2. Sales budget
  3. Material purchase budget
  4. Finished goods inventory budget
  5. Production budget
  6. Material inventory budget

11 / 39

Each unit of product Echo takes five direct labour hours to make. Quality standards are high, and 8% of units are rejected after completion as sub-standard. Next month's budgets are as follows.

Opening inventories of finished goods 3,000 units
Planned closing inventories of finished goods 7,600 units
Budgeted sales of Echo 36,800 units

All inventories of finished goods must have successfully passed the quality control check.

What is the direct labour hours budget for the month?

12 / 39

Budgeted costs and revenues for an output level of 4,000 units are given below. It is known that after an output level of 5,000 units there is a step up in fixed costs of $1,000:

$ per unit
Selling price 30
Variable cost 18
Fixed cost 4
Profit   8  

What is the flexed budget profit at an output level of 6,000 units?

13 / 39

What does the statement 'sales is the principal budget factor' mean?

14 / 39

Misty Co's budgetary control report for last month is as follows:

Fixed budget Flexed budget Actual results
$ $ $
Direct costs 61,100 64,155 67,130
Production overhead 55,000 56,700 54,950
Other overhead 10,000 10,000 11,500
126,100 130,855 133,580

What was the expenditure variance for last month?

15 / 39

When preparing a production budget, what does the quantity to be produced equal?

16 / 39

Misty Co's budgetary control report for last month is as follows:

Fixed budget Flexed budget Actual results
$ $ $
Direct costs 61,100 64,155 67,130
Production overhead 55,000 56,700 54,950
Other overhead 10,000 10,000 11,500
126,100 130,855 133,580

What was the volume variance for last month?

17 / 39

  A B C D F G
1 Jan Feb Mar Apr May
2 Sales 15,000 13,400 16,100 17,200 15,300
3 Cost of sales 11,090 10,060 12,040 13,000 11,100
4 Gross profit 3,910 3,340 4,060 4,200 4,200
5 Expenses 1,500 1,500 1,500 1,500 1,500
6 Net profit 2,410 1,840 2,560 2,700 2,700
7
8 Net profit %

What would be the formula for March net profit?

18 / 39

The following spreadsheet shows a profit centre's variances against budget for a period. Some figures have been omitted (omitted figures are labelled ????).

A B C D E
1 Fixed budget Flexed budget Actual Variance
2 Sales/production units 1,200 1,500 1,500 300
3 $ $ $  $
4 Sales revenue 60,000 75,000  74,000 -1,000
5 Direct material 21,600      ??? 24,000      ???
6 Direct labour 14,400 18,000 22,000 -4,000
7 Contribution 24,000      ??? 28,000      ???
8 Fixed costs 17,000 17,000 16,500     500
9 Profit   7,000 13,000 11,500       na

What figure should appear in cell E5?

19 / 39

BDL plc is currently preparing its cash budget for the year to 31 March 20X8. An extract from its sales budget for the same year shows the following sales values.

$
March 60,000
April 70,000
May 55,000
June 65,000

40% of its sales are expected to be for cash. Of its credit sales, 70% are expected to pay in the month after sale and take a 2% discount; 27% are expected to pay in the second month after the sale, and the remaining 3% are expected to be bad debts.

What is the value of sales receipts to be shown in the cash budget for May 20X7?

20 / 39

What does a master budget comprise?

21 / 39

X department is a division of W Plc. X department usually has a quarterly wages cost of $4,500,000. Quarterly material costs are usually around $2,000,000. W Plc made a central decision to award all employees a wages increase of 2%.

Which of the following variances for the latest quarter are worth investigating?

  1. Direct material price variance $400 (A)
  2. Labour rate variance $90,000 (A)
  3. Sales volume variance $4,000,000 (F)

22 / 39

The standard cost card for a company’s only product is given below:

$ per unit
Selling price 118
Direct labour 4 hours at $20 per hour 80
Direct material 3 kg at $7 per hour 21
Fixed production overhead 5
Profit 12

For a period, budgeted production and sales were 8,000 units, whilst actual production and sales were 6,000 units.

What is the flexed budget profit?

23 / 39

The following details have been extracted from the payables' records of X Co:

Invoices paid in the month of purchase 25%
Invoices paid in the first month after purchase 70%
Invoices paid in the second month after purchase 5%

Purchases for July to September are budgeted as follows:

July $250,000
August $300,000
September $280,000

For suppliers paid in the month of purchase, a settlement discount of 5% is received.

What is the amount budgeted to be paid to suppliers in September?

24 / 39

QT Co manufactures a single product and an extract from their flexed budget for production costs is as follows.

Activity level
Customer 80% 90%
$ $
Direct material 2,400 2,700
Labour 2,120 2,160
Production overhead 4,060 4,080
8,580 8,940

What would the total production cost allowance be in a budget flexed at the 83% level of activity? (to the nearest $)

25 / 39

Budgeted production in a factory for next period is 4,800 units. Each unit requires five labour hours to make. Labour is paid $10 per hour. Idle time represents 20% of the total labour time.

What is the budgeted total labour cost for the next period?

26 / 39

Which of the following control actions could be taken to help eliminate an adverse direct labour efficiency variance?

  1. Employ more highly skilled labour
  2. Ensure stricter supervision of labour workers
  3. Ask employees to work paid overtime

27 / 39

A company manufactures a single product. In a computer spreadsheet the cells F1 to F12 contain the budgeted monthly sales units for the twelve months of next year in sequence, with January sales in cell F1 and finishing with December sales in F12. The company policy is for the closing inventory of finished goods each month to be 10% of the budgeted sales units for the following month.

Which of the following formulae will generate the budgeted production (in units) for March next year?

28 / 39

Which of these statements is untrue?

29 / 39

An extract from a company's sales budget is as follows:

$
October 224,000
November 390,000
December 402,000

Ten per cent of sales are paid for immediately in cash. Of the credit customers, 30 per cent pay in the month following the sale and are entitled to a one per cent discount. The remaining customers pay two months after the sale is made.

What is the value of sales receipts shown in the company's cash budget for December?

30 / 39

In a situation where there are no production resource limitations, which TWO of the following items of information must be available for the production budget to be completed?

31 / 39

Which of the following BEST describes the purpose of a flexible budget?

32 / 39

Each unit of product Alpha requires 3 kg of raw material. Next month's production budget for product Alpha is as follows.

Opening inventories:
   Raw materials 15,000 kg
   Finished units of Alpha 2,000 units
Budgeted sales of Alpha 60,000 units
Planned closing inventories:
   Raw materials 7,000 kg
   Finished units of Alpha 3,000 units

How many kilograms of raw materials should be purchased next month?

______ kgs

33 / 39

The following details have been extracted from the receivables collection records of C Co.

Invoices paid in the month after sale 60%
Invoices paid in the second month after sale 25%
Invoices paid in the third month after sale 12%
Bad debts 3%

Invoices are issued on the last day of each month.
Customers paying in the month after sale are entitled to deduct a 2% settlement discount. Credit sales values for June to September are budgeted as follows.

June July August September
$35,000 $40,000 $60,000 $45,000

What is the amount budgeted to be received from credit sales in September?

34 / 39

Which of the following statements are true?

  1. A flexed budget allows businesses to evaluate a manager's performance more fairly
  2. A fixed budget is useful for defining the broad objectives of the organisation
  3. Relying on fixed budgets alone would usually give rise to massive variances

35 / 39

  A B C D F G
1 Jan Feb Mar Apr May
2 Sales 15,000 13,400 16,100 17,200 15,300
3 Cost of sales 11,090 10,060 12,040 13,000 11,100
4 Gross profit 3,910 3,340 4,060 4,200 4,200
5 Expenses 1,500 1,500 1,500 1,500 1,500
6 Net profit 2,410 1,840 2,560 2,700 2,700
7
8 Net profit %

The formula =C2-C3 will give the contents of which cell in the drop down list?

36 / 39

The following statements relate to fixed budgets and flexible budgets.

  1. If production levels far exceed those anticipated, relying on a fixed budget is likely to result in massive variances
  2. Flexible budgets assist management control by providing dynamic, comparable information
  3. Flexible budgets are always superior to fixed budgets

Which statements are true?

37 / 39

The quantity of material in the material purchases budget is greater than the inferred from quantity of material in the material usage budget.

Which of the following statements can be this situation?

38 / 39

Each unit of product Zeta requires 3 kg of raw material and 4 direct labour hours. Material costs $2 per kg and the direct labour rate is $7 per hour.

The production budget for Zeta for April to June is as follows.

April May June
Production units 7,800 8,400 8,200

Raw material opening inventories are budgeted as follows.

April May June
3,800 kg 4,200 kg 4,100 kg

The closing inventory budgeted for June is 3,900 kg.
Material purchases are paid for in the month following purchase.

What is the figure to be included in the cash budget for June in respect of payments for purchases?

39 / 39

Which of the following may be considered to be objectives of budgeting?

  1. Co-ordination
  2. Communication
  3. Expansion
  4. Resource allocation

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