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CPA MA Dumps

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Total 80 questions

Management Accounting Questions and Answers

Question 1

Which of the following items can berecognizedas intangible assets in an entity’s financial statements?

i) Internally generated goodwill

ii) Purchased goodwill

iii) Reputation

Options:

A.

(i) only

B.

(ii) only

C.

(iii) only

D.

(i), (ii) and (iii)

Question 2

Which of the following statements about accounting concepts and the characteristics of financial information is correct?

Options:

A.

The concept of substance over form means that the legal interpretation of a transaction must be reflected in financial statements, regardless of the economic substance.

B.

The historical cost concept means that only items capable of being measured in monetary terms can berecognizedin financial statements.

C.

It may sometimes be necessary to exclude information that is relevant and reliable from financial statements because it is too difficult for some users to understand.

D.

A specific disclosure requirement of an IAS does not need to be satisfied if the information is immaterial.

Question 3

Devin Co sells a single product at a selling price of $85. Direct costs are $38 per unit and overheads are $24 per unit. 60% of overheads represent the recovery of fixed costs. Both sales and production are budgeted to be 50,000 units.

How many units are sold at the breakeven point (to the nearest unit)?

Options:

A.

14,724

B.

19,251

C.

25,532

D.

31,304

Question 4

Bush has been asked by his bank to produce a budgeted income statement for the six months ending on 31 March 2014. He forecasts that monthly sales will be $3,000 for October, $4,500 for each of November and December, 2013 and $5,000 per month from January 2014 onwards.

Selling price is fixed to generate a margin on sales of 33.33%.

Overhead expenses (excluding depreciation) are estimated at $800 per month. He plans to purchase non-current assets on 1st October costing $5,000, which will be paid for at the end of December and are expected to have a five-year life, at the end of which they will possess a nil residual value.

The budgeted net profit for the six months ending 31 March 2014 is:

Options:

A.

$3,200

B.

$3,700

C.

$3,950

D.

$8,200

Question 5

Which of the following comments about sales price is correct?

Options:

A.

Market penetration will normally be achieved by a low price on initial entry to the market

B.

Market skimming will lead to a constant price throughout the product’s life

C.

Cost plus pricing will lead to profit beingmaximized

D.

A target cost price will generate profit immediately following market entry

Question 6

The annual salary paid to a business's financial accountant would best be described as:

Options:

A.

A variable cost.

B.

A fixed production cost.

C.

Part of prime cost.

D.

A fixed administrative cost.

Question 7

A division manufacturing a single product which sells for $325 has the following unit cost structure:

$

Direct materials95

Directlabor78

Variable overheads56

Share of fixed costs45

Total cost274

In the coming period, the budgeted production volume is 10,000 units.

What is the budgeted breakeven sales volume (to the nearest unit)?

Options:

A.

1,385 units

B.

4,688 units

C.

8,824 units

D.

10,000 units

Question 8

Quastir Co manufactures a single product which sells for $48.80 per unit. At this selling price, theprofitper unit is $5.35, after apportionment of the $65,000 of fixed costs. The budgeted production and sales volume is 20,000 units.

What is the margin of safety, expressed in units (to the nearest unit)?

Options:

A.

7,559

B.

7,850

C.

12,150

D.

12,441

Question 9

Which of the following statements about activity based costing (ABC) is/are correct?

(i) All product costs will be lower under ABC than under absorption costing.

(ii) ABC can provide information to assist in controlling costs.

Options:

A.

(i) only

B.

(ii) only

C.

(i) and (ii)

D.

Neither (i) nor (ii)

Question 10

Henlow plc manufactures two products, Click and Flick. It intends to produce 2,000 units of each product in the next year to meet the sales budget.

Each Click requires 2 kg of material Z and 1 kg of material Y and each Flick requires 3 kg of material Z and 4 kg of material Y.At present there are 200 kg of Z and 500 kg of Y in inventory.

Henlow plc intends to increase the inventory levels of these materials by the end of the year to 600 kg of Z and 800 kg of Y.

Material Z costs $4 per kg and material Y costs $5 per kg.

What is the total materials purchase for the next year?

Options:

A.

$86,900

B.

$90,000

C.

$93,100

D.

$96,400

Question 11

The directors of Sec Co are carrying out an impairment review of the company’s non-current assets for the financial statements for the year to 31 October 2010. They have the following information about a particular asset:

Carrying amount (at 1 November 2009)$380,000

Depreciation charge for year to 31 October 2010$76,000

Market value$285,000

Expected costs of selling$20,000

Value in use$250,000

What carrying value should be included in the statement of financial position at 31 October 2010?

Options:

A.

$250,000

B.

$265,000

C.

$285,000

D.

$304,000

Question 12

Hera Co is developing a new product using a target costing approach. The initial assumption was that a sales volume of 200,000 units could be achieved at a selling price of $25 per unit.

However, market research indicates that to achieve the sales volume of 200,000 units, the selling price should be $23·50.

Hera wishes to obtain an average profit margin of 20% on sales.

The following data have been estimated for the product:

Direct material$10·45 per unit

Hourly production volume20 units

Directlaborcost$64 per hour

Variable overheads$82 per hour (absorbed on a directlaborhour basis)

Fixed costs to produce 200,000 units are estimated to be $680,000.

What reduction in the cost per unit is required in order to achieve the target cost per unit?

Options:

A.

$0.38

B.

$1.15

C.

$1.88

D.

$2.35

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Total 80 questions