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BA2
Fundamentals of management accounting Questions and Answers

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Viewing page 12 out of 12 pages

Viewing questions 111-120 out of questions

Questions # 111:

A company operates an integrated standard cost accounting system. The standard price of raw material A is $20 per litre. At the start of period 1, the inventory of 500 litres of raw material A was valued at $20 per litre. During period 1, 100 litres of raw material A were purchased at an actual price of $21 per litre. During period 2, 550 litres of raw material A were issued to Job 789.

In respect of the above events, which TWO of the following statements are correct? (Choose two.)

Options:

The raw material inventory at the end of period 1 should include 100 litres valued at $21 per litre.

An adverse material price variance should be recorded in the statement of profit or loss for period 1.

The raw material inventory at the end of period 2 should be valued at $20 per litre.

An adverse material price variance should be recorded in the statement of profit or loss for period 2.

The first 500 litres of raw material A issued should be debited to the Job 789 account at $20 per litre, and the remaining 50 litres at $21 per litre.

Answer

D, E

Questions # 112:

The following data are available for a company that produces and sells a single product.

The company’s opening finished goods inventory was 2,500 units.

The fixed overhead absorption rate is $8.00 per unit.

The profit calculated using marginal costing is $16,000.

The profit calculated using absorption costing and valuing its inventory at standard cost is $22,400.

The company’s closing finished goods inventory is:

Options:

3,300 units

1,700 units

3,900 units

8,900 units

Answer

Questions # 113:

Which of the following would NOT require taking into account the time value of money?

Options:

Deciding to make a long-term investment in a project on the basis of its payback period.

Selecting an investment project on the basis that it has a positive net present value (NPV).

Calculating the present value of a five-year annuity.

Taking a long-term investment decision on the basis of the project’s internal rate of return (IRR).

Answer

Explanation

[Reference: https://www.acowtancy.com/textbook/acca-fm/d1-investment-appraisal-techniques/npv/notes, , , ]

Questions # 114:

The following data relate to the latest period.

Question # 114

A statement is to be prepared that reconciles the difference between the flexible budget profit and the actual profit.

Which TWO of the following will appear on this statement? (Choose two.)

Options:

A favourable labour rate variance.

A favourable sales volume contribution variance.

An adverse sales price variance.

An adverse labour efficiency variance.

An adverse material price variance.

Answer

C, D

Questions # 115:

A project is about to be launched. Two of the three possible outcomes and their associated probabilities are as follows:

Question # 115

The remaining possible outcome is a $70,000 gain.

What is the correct calculation of the expected value of the project?

Options:

($30,000 + $70,000 - $25,000) / 3

($30,000 + $70,000 - $25,000) x (0.7 + (1.0 - (0.2 + 0.7)) + 0.2)

($30,000 x 0.7) + ($70,000 x (1.0 - (0.2 + 0.7))) + ($25,000 x 0.2)

($30,000 x 0.7) + ($70,000 x (1.0 - (0.2 + 0.7))) - ($25,000 x 0.2)

Answer

Questions # 116:

A new product requires an investment of $200,000 in machinery and working capital. The total sales volume over the product’s life will be 5,000 units. The forecast costs per unit throughout the product’s life are as follows:

Question # 116