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Management Accounting Questions and Answers

Question 1

A bakery manager is deciding how many batches of birthday cakes to decorate each day.

Demand for the birthday cakes varies from 12 to 15 batches per day. Each batch decorated and sold earns a contribution of $40 but each batch unsold leads to loss of contribution of $15.

The payoff table below shows the total $ contribution from each of the possibilities:

Based on expected values, the number of batches of birthday cakes the bakery manager should decorate each day is:

Options:

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Question 2

Explain THREE benefits that organizations gain from using budgetary planning and control systems.

Select ALL the true statements.

Options:

The budget acts as a variable mechanism, with actual results being compared with budget.

Budgeting forces an organization’s management to look ahead and set performance targets.

The budget provides an external benchmark against which performance against which performance can be evaluated.

The budget ensures actions of different parts of the organization are coordinated are reconciled otherwise managers take actions for the benefit of their own part of organization that may not benefit the organization as a whole.

Another benefit of budgeting is to set targets to motivate managers and optimize their performance.

The budget is a useful device of influencing an operator’s thoughts and motivating operators to perform in line with the organization’s marketing budget.

It provides a standard which managers may be motivated to achieve. It can also encourage inefficiency and conflict between managers particularly if the budget is imposed from above, whereby it may act as a threat rather than as a challenge.

Question 3

You are a management accounting working for a car manufacturer. The company is publicly listed and has been around for many years.

The company produces 2 products. Car 1 and Car 2. Car 1 sells for £20,000 and Car 2 for £27,000.

Car 1 can be upgraded post production to the 1ZC model for £5,000 and Car 2 to the 2ZC model for £3,500.

Post production upgrade the 1ZC sells for £25,500 and the 2ZCfor £30,000.

The company sources all of its supplies for the same supplier and has access to a large workforce. As a result there are no bottlenecks or limiting factors to production.

Based on the information above the company should...

Options:

Upgrade both models

Upgrade Car 1 but not Car 2

Upgrade Car 2 but not Car 1

Keep both Cars as base models

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P1 Exam Dumps : Management Accounting

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Management Accounting Questions and Answers

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