F2 – (MA) – MCQ’s Quiz – #2 | ACCA

1. In its first year of operations a company produced 100,000 units of a producttand sold 80,000 units at $9 per unit. It earned a marginal costing profit of $200,000. It calculates that its fixed production overhead per unit is $5.

What profit would it have earned under an absorption costing system?

2. A firm with current assets of $40 million and current liabilities of $20 million buys $5 million of inventory on credit which increases its inventory level to $10 million.

What will the effect be on its current ratio?

3. Which of the following are benefits of using activity based costing?

(i) It recognises that overhead costs are not always driven by the volume of production
(ii) It does not result in under or over absorption of foxed overheads
(iii) It avoids all arbitrary cost apportionments
(iv) It is particularly useful in single product businesses

4. A company budgeted to sell 5,000 units of a product in November at a standard price of $30 per unit and to earn a profit of $25,000. It actually sold 6,000 units at $28 per unit and earned a profit of $32,000.

What was the favourable sales volume profit variance for November?

5. Which of the following could be included in a time series based sales forecast?

(Select all those which are correct)

6.

What is the sales volume profit variance?

7. A firm has used linear regression analysis to establish the relationship between total cost and activity in units.

What does the slope of the regression line represent?

8. A company uses production labour hours to absorb its fixed production overheads. A strike by its workforce results in a loss of 30% of the period's budgeted production labour hours.

Which of the following variances will occur as a result of the loss in production labour hours?

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

What is this approach to sampling known as?

10. A firm with current assets of $40 million and current liabilities of $20 million buys $5 million of inventory on credit which increases its inventory level to $10 million.

What will the effect be on its quick (acid test) ratio?

11. Good quality saves money but the cost of quality can be analysed into cost of conformance and cost of non-conformance.

Which one of the following costs is classed as a quality-related appraisal cost?

12.

What is the sales price variance?

14. Which TWO of the following costs would be considered to be the responsibility of the manager of a profit centre?

(Select all those which are correct)

15. A division of a service company is aware that its recent poor performance has been attributable to a low standard of efficiency amongst the workforce, compared to rival firms. The company is adopting a balanced scorecard approach to setting performance targets. As part of its objective of closing the skills gap between itself and rival companies, the division's management has set a target of providing at least 40 hours of training each year for all its employees.

What does this performance target reflect?

16. An investment project has net present values as follows.

At a discount rate of 5%   --> $69,700 positive
At a discount rate of 14% --> $16,000 positive
At a discount rate of 20% --> $10,500 negative

Using the above figures what is the best approximation of the internal rate of return of the investment project?

17. A division has a capital employed of $2,000,000 and earns an operating profit of $600,000. It is considering a project that will increase operating profit by $20,000 but would increase its capital employed by $80,000. A rate of 15% is used to compute interest on capital employed.

What will be the effect on residual income and return on capital employed if the division accepts the project?

18. The following statements relate to spreadsheets.

Which statement is false?

19. In a period 12,250 units were made and there was a favourable labour efficiency variance of $11,250. If 41,000 labour hours were worked and the standard wage rate was $6 per hour, how many standard hours (to two decimal places) were allowed per unit?

20. A company has a single product with a selling price of $12 per unit, which is calculated as variable cost per unit, plus 20%. At an output level of 5,000 units it makes a loss of $8,000

What is the company's total fixed cost?