FINAL Revision S2 PDF

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ACCT2112 Management Accounting Final Exam • Examplify (Examsoft) online examination (close-book) • Date/Time/Venue: Please Check Final Exam Timetable • Duration & working time: 2 hours • Format/Structure • 60 Multiple-Choice Questions [100 marks] • Theoretical questions: 45%; practical questions: 55% Questions

Marks For Each Question

Total Marks

29

1

29

22

2

44

9

3

27

Total Marks

100

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Final Exam Consultation Timetable 1. Wednesday 11 Nov 2-4pm Venue:

BUSN: TBA; Tutor: Derek 2. Thursday 12 Nov 11-1pm Venue: online; Tutor: Kiky

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Which chapters are covered in the exam? • Chapter 6: Master Budget & Responsibility Accounting • Chapter 7: Flexible Budget, Direct-Cost Variances &

Management Control • Chapter 8: Flexible Budget, Overhead Cost Variances & Management Control • Chapter 9: Inventory Costing & Capacity Analysis • Chapter 10: Determining How Cost Behave • Chapter 11: Decision Making and Relevant Information

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Lecture Materials/Topics Chapter 6: Master Budget & Responsibility Accounting • What is a master budget? • Budgeting cycle • Advantages of budgets • Participative budgeting (budgetary participation) • Budgetary slack • The operating budget/financial budget • Responsibility accounting/centers • Cash budget • Sensitivity analysis • Budgeting in multinational companies

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Lecture Materials/Topics

Chapter 7: Flexible Budget, Direct-Cost Variances & Management Control • Static budgets and flexible budgets • Static budget variances • Flexible-budget variances and sales-volume variances • Price variance and efficiency variance for direct costs (i.e., direct

material & direct labor) • Journal entries

• Non-Examinable Topics: • Benchmarking and variance analysis (pp. 287-289) • Appendix: Mix and Yield Variances for Substitute Inputs (pp. 291-294)

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Lecture Materials/Topics Chapter 8: Flexible Budget, Overhead Cost Variances & Management Control • Variable overhead cost variances: • Spending variance and efficiency variance

• Fixed overhead cost variances: • Spending variance and production-volume variance

• Journal entries

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Lecture Materials/Topics Chapter 9: Inventory Costing & Capacity Analysis • Variable costing and absorption costing • Prepare income statements under absorption costing and • • • •

variable costing Reconciliation of operating incomes Throughput Costing Denominator-level capacity concepts and fixed-cost capacity analysis Choosing a Capacity Level

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Lecture Materials/Topics Chapter 10: Determining How Cost Behave • Basic assumptions used in cost behavior estimation • Quantitative Analysis Methods: • High-Low method • Regression analysis method • Cost Estimation Methods: • Industrial engineering • Conference • Account Analysis

• Nonlinear Cost Functions

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Lecture Materials/Topics Chapter 11: Decision Making and Relevant Information • The concept of relevance • Differentiate relevant from irrelevant costs and revenues in

decision situations • Beware of two potential problems in relevant-cost analysis • Various decision situations: • Accept or reject a special order • Insourcing or outsourcing (Make or buy) decision • Add or drop a service, product, or department • Product-Mix Decisions with Capacity Constraints • Bottleneck, Theory of Constraints, and Throughput-Margin Analysis

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Request for Deferred Exam Please contact:

UWA Business School

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Sample MCQs 1. A budgeting approach in which managers prepare their own budget estimates is known as a. b. c. d.

budgetary slack. budgetary participation. master budget. flexible budget.

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Sample MCQs 1. A budgeting approach in which managers prepare their own budget estimates is known as a. b. c. d.

budgetary slack. budgetary participation. master budget. flexible budget.

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Sample MCQs 2. A favorable efficiency variance for direct manufacturing labour indicates that a. less direct manufacturing labour-hours were used during production than planned for actual output. b. more direct manufacturing labour-hours were used during production than planned for actual output. c. a lower wage rate than planned was paid for direct labour. d. a higher wage rate than planned was paid for direct labour.

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Sample MCQs 2. A favorable efficiency variance for direct manufacturing labour indicates that a. less direct manufacturing labour-hours were used during production than planned for actual output. b. more direct manufacturing labour-hours were used during production than planned for actual output. c. a lower wage rate than planned was paid for direct labour. d. a higher wage rate than planned was paid for direct labour.

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Sample MCQs 3. When the high-low method is used to estimate a cost function, the variable cost per unit is found by: a. performing regression analysis on the associated cost and cost driver database. b. subtracting the fixed cost per unit from the total cost per unit based on either the highest or lowest observation of the cost driver. c. dividing the difference between the highest and lowest observations of the cost driver by the difference between cost associated with the highest and lowest observations of the cost driver. d. dividing the difference between cost associated with the highest and lowest observations of the cost driver by the difference between the highest and lowest observations of the cost driver.

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Sample MCQs 3. When the high-low method is used to estimate a cost function, the variable cost per unit is found by: a. performing regression analysis on the associated cost and cost driver database. b. subtracting the fixed cost per unit from the total cost per unit based on either the highest or lowest observation of the cost driver. c. dividing the difference between the highest and lowest observations of the cost driver by the difference between cost associated with the highest and lowest observations of the cost driver. d. dividing the difference between cost associated with the highest and lowest observations of the cost driver by the difference between the highest and lowest observations of the cost driver.

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Sample MCQs 4. Which of the following should NOT be considered for every option in the decision-making process? a. b. c. d.

Relevant revenues. Relevant costs. Historical costs. Opportunity costs.

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Sample MCQs 4. Which of the following should NOT be considered for every option in the decision-making process? a. b. c. d.

Relevant revenues. Relevant costs. Historical costs. Opportunity costs.

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Sample MCQs 5. What is always the question to ask to determine if revenue or costs are relevant? a. b. c. d.

What is the time frame for achieving results? What difference will an action make? Who will be responsible? How much will it cost?

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Sample MCQs 5. What is always the question to ask to determine if revenue or costs are relevant? a. b. c. d.

What is the time frame for achieving results? What difference will an action make? Who will be responsible? How much will it cost?

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Sample MCQs 6.

Information pertaining to Brenton Corporation’s sales revenue is presented in the following table:

Cash sales …………………….. Credit sales …………………… Total sales

February $160,000 300,000 $460,000

March $150,000 400,000 $550,000

April $120,000 280,000 $400,000

Management estimates that 5% of credit sales are not collectible. Of the credit sales that are collectible, 60% are collected in the month of sale and the remainder in the month following the sale. Cost of purchase of inventory each month is 70% of the next month’s projected total sales. All purchases of inventory are on account; 25% are paid in the month of purchase, and the remainder is paid in the month following the purchase. Brenton’s budgeted total cash receipt in April are a. b. c. d.

$448,000. $437,000. $431,600. $328,000.

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• Q6 Solution: Brenton’s budgeted total cash receipt in April are a. b. c. d.

$448,000. $437,000. $431,600. $328,000. (2 marks)

Cash receipt From April cash sales From April credit sales [0.60 ($280,000 x 0.95)] From March credit sales [0.40 ($400,000 x 0.95)] Total collection:

$120,000 159,600 152,000 $431,600

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Sample MCQs 7.

XYZ Company sells product A at a selling price of $40 per unit. XYZ’s cost per unit based on the full capacity of 500,000 units is as follows: Direct materials …………………………………………………… Direct labour ………………………………………………………. Indirect manufacturing (60% of which is fixed) …………………..

$6 3 10

A one-time-only special order offering to buy 50,000 units was received from an overseas distributor. The only other costs that would be incurred on this order would be $4 per unit for shipping. XYZ has sufficient existing capacity to manufacture the additional units. In negotiating a price for the special order, XYZ should consider that the minimum selling price per unit should be a. b. c. d.

$17 $19 $21 $23

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• Q7 Solution:

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Sample MCQs 8.

Information on Pruitt Company’s direct-material costs for the month of July 2015 was as follows: Actual quantity purchased ………………………………………… Actual unit purchase price ………………………………………… Materials purchase-price variance - unfavourable (based on purchases) …………………………………………………………. Standard quantity allowed for actual production …………………. Actual quantity used ………………………………………………. For July 2015, the direct-materials efficiency variance is a. b. c. d.

$7,950 (U) $5,500 (F) $5,400 (F) $5,400 (U)

30,000 uni $2.75 $1,500 24,000 uni 22,000 uni

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• Q8 Solution: For July 2015, the direct-materials efficiency variance is a. b. c. d.

$7,950 (U) $5,500 (F) $5,400 (F) $5,400 (U) (2 marks)

$82,500 1,500 $81,000

Actual price: 30,000 × $2.75 Minus unfavourable price variance Materials at standard $81,000 ÷ 30,000 units = $2.70 standard price per unit Actual quantity Standard quantity Efficiency variance

22,000 units 24,000 units 2,000 units x $2.70 = 5,400 (F)

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Sample MCQs The following data apply to questions 9 to 10. Information for Garner Company’s direct-labour costs for the month of September 2015 was as follows: Actual direct-labour hours Standard direct-labour hours Total direct-labour payroll Direct-labour efficiency variance—favourable 9.

34,500 hours 35,000 hours $241,500 $ 3,200

What is Garner’s direct-labour price (or rate) variance? a. b. c. d.

$21,000 favorauble. $21,000 unfavourable. $17,250 unfavourable. $20,700 unfavourable. (2 marks)

10.

What is Garner’s direct-labour flexible budget variance? a. b. c. d.

$21,000 favourable. $21,000 unfavourable. $17,500 unfavourable. $20,700 unfavourable. (2 marks)

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• Q9 Solution: 9.

What is Garner’s direct-labour price (or rate) variance? a. b. c. d.

$21,000 favorauble $21,000 unfavourable $17,250 unfavourable $20,700 unfavourable

Actual direct labor cost Standard 34,500 hours × $6.40* Price variance

$241,500 $220,800 $ 20,700 U

Note: Standard rate = $3,200÷(35,000 – 34,500) = $6.40*

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• Q10 Solution:

10.

What is Garner’s direct-labour flexible budget variance? a. b. c. d.

$21,000 favourable $21,000 unfavourable $17,500 unfavourable $20,700 unfavourable

Direct Labour Flexible Budget Variance = Price variance + Efficiency Variance = $20,700 (U) + $3,200 (F) = $17,500 (U)

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Sample MCQs 11. Crandle Manufacturers Inc. is approached by a potential customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The company has excess capacity. The following per unit data apply for sales to regular customers: Variable costs: Direct materials Direct labor Manufacturing support Marketing costs Fixed costs: Manufacturing support Marketing costs Total costs Markup (50%) Targeted selling price

$130 110 125 65 175 85 690 345 $1,035

What is the full cost of the product per unit? A) $430 B) $1,035 C) $690 D) $345

(3 marks)

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• Q11 Solution:

What is the full cost of the product per unit? A) $430 B) $1,035 C) $690 D) $345 • Explanation: Full cost = $130 + $110 + $125 + $65 + $175 +

$85 = $690

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Sample MCQs 12. Swan Textiles Inc. produces and sells a decorative pillow for $98.00 per unit. In the first month of operation, 2,200 units were produced and 1,800 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes: Variable manufacturing costs Variable marketing costs Fixed manufacturing costs Administrative expenses, all fixed Ending inventories: Direct materials WIP Finished goods

$22.00 per unit $3.90 per unit $14 per unit $19.50 per unit -0-0400 units

What is the operating income using variable costing? A) $129,780 B) $69,480 C) $104,580 D) $56,080

(3 marks)

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• Q12 Solution:

What is the operating income using variable costing? A) $129,780 B) $69,480 C) $104,580 D) $56,080 Explanation: Total sales = $98.00 x $1,800 = $176,400 Total variable costs = ($22.00 x $1,800) + ($3.90 x $1,800) = $46,620 Contribution margin = $176,400 - $46,620 = $129,780 The fixed costs component = (2,200 units × ($14 + $19.50) = $73,700 Therefore, the operating income under variable costing = $129,780 $73,700 = $56,080

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Sample MCQs 13. First Class, Inc., expects to sell 26,000 pool cues for $14 each. Direct materials costs are $2, direct manufacturing labor is $4, and manufacturing overhead is $0.89 per pool cue. The following inventory levels apply to 2019:

Direct materials Work-in-process inventory Finished goods inventory

Beginning inventory 31,000 units 0 units 1,800 units

Ending inventory 31,000 units 0 units 3,300 units

On the 2019 budgeted income statement, what amount will be reported for cost of goods sold? A) $189,475 B) $179,140 C) $168,805 D) $201,877 (3 marks)

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• Q13 Solution:

On the 2019 budgeted income statement, what amount will be reported for cost of goods sold? A) $189,475 B) $179,140 C) $168,805 D) $201,877 Explanation: The cost per unit is $6.89 ($2 + $4 + $0.89). Therefore, the total cost of goods sold is $179,140 ($6.89 × 26,000)....