1.Which ONE of the following describes the ABC resources consumption model?

1. The cost of the total resource consumption (activity demand) for a typical production period that is used as the standard against which actual cost is compared.
2. The identification of the activity-based resources supplied and production requirement (resource demand) position with a view to identifying the potential for future efficiency savings.
3. The quantity of resources consumed under planned (controlled) conditions during product design, development and total resource supply.
4. Cost driver quantity divided by the recovery rate used to establish a value for unused resource capacity.

2.Which ONE of the following describes overhead absorption rates (established and utilised by the traditional absorption costing system)?

a.The amount (per quantity of absorption basis) of indirect production overhead cost to be charged to cost centres and / or products.

b.The true, finished and accurate business cost of all products in an international multi-department and multi-product organisation.

c.The equitable apportionment of prime cost resources (e.g. direct labour) to production cost centres before allocation to individual products (or production batch).

d.The absorption bases divided between the total indirect production overhead cost applied to production departments and then products.

3.A specific inventory item costs 15.00 per metre. Annual demand has been estimated at 1,000 metres and holding cost is 0.60 (per unit per year). The cost of ordering is 3.00 per order. The economic order quantity (EOQ) for the inventory item (in metres) therefore, is:

1. 200 metres
2. 100 metres
3. 50 metres
4. 84 metres

Note: Economic order quantity (EOQ) formula:

EOQ = 2 x C₀ x D

--------------------

C_h

4.Which ONE of the following definitions describes a spreadsheet?

1. A data storage and distribution system available to entitled users with the help of the IS/IT support service function appropriately authorised, documented and subject to password protection permissions.
2. A hardware function updated wirelessly when business transactions take place using e-commerce and internet trading.
3. A data cell arrangement (rows and columns) used by businesses exclusive for the preparation of financial accounts and time-series analysis.
4. A software application where data input, data processing and information output appear in the same screen available for use and instant development by system users.
5. Examine the simultaneous equations below:

2a + 2b = 180

6a + b = 320

The solutions for variables p and j are:

1. a = 20: b = 50
2. a = 46: b = 44
3. a = 30: b = 30
4. a = 24: b = 35

6.The present value of 12,000 receivable at the end of each year for 3 years, discounted at 8% is:

1. 48,400
2. 35,265
3. 48,000
4. 30,925

2.Which ONE of the following statements is TRUE?

1. Sales ledger history and aged analyses will increase the average debtors' repayment period and increase the total amount of cash received.
2. Increasing the credit limit of customers will encourage early settlement and, hence, reduce sales volumes.
3. Offering early settlement discounts to customers may increase demand but will increase the requirement for sales ledger monitoring.
4. A benefit of offering early settlement discounts to customers is increased the cash inflows provided by cash discounts allowed.

1.Which of the following statements provides the most accurate definition of an activity-based costing system:

a.Has all but rendered the traditional absorption costing system redundant throughout the modern trading (and management) environment

b.Is a useful tool through which executive managers to select the costing system (e.g. ABC, marginal or absorption) that produces the lowest cost

c.Represents an alternative (or complimentary) costing system claiming to provide more accurate product costs and management information

d.Is a management representation of the dynamic commercial (trading) environment that is currently evident throughout northern Europe and the USA

2.Where a business uses a process costing system, the valuation of normal losses, where such losses have no re-sales value, is:

1. An estimated nominal value (e.g. 2 per kilo)
2. The unit value of good production
3. Cost plus recoverable value
4. Nil

3.The net present value of a capital investment project was established at 3,600 (positive NPV) using an 8% discount factor. With a 12% discount factor, the same project's net present value was -6,000 (negative NPV). The project's internal rate of return (IRR) therefore, is:

a. 9.50%

b. 10.00%

c. 9.00%

d. 10.50%

1.The net present value of a capital investment project was established at 6640 (positive NPV) using a 8% discount factor. With a 10% discount factor, the same project's net present value was -8591 (negative NPV). The project's internal rate of return (IRR) therefore, is:

1. 11.00%
2. 9.00%
3. 8.87%
4. 8.50%

2.Where business trading conditions are subject to seasonal variation:

1. An increasing (upward sloping) trend line will indicate that and future sales forecasts can be made with sales demand falling directly on the trend line using an extrapolation approach.
2. Sales quantities are always higher in summer (warm weather) months than in winter (cold weather) months.
3. Time series analysis, using the multiplicative model, suggests no direct causal link between time (dependent variable y) and sales demand (independent variable x).
4. Future sales demand (or other business factor) forecasting can be made using the trend line adjusted +/- for the calculated seasonal variation factor

3.Which ONE of the following statements is FALSE?

1. Communication, understanding and agreement of all the expected objectives, resources and responsibilities are fundamental aspects of importance to the budgeting process.
2. The achievement of sufficient investor returns is an important budget objective.
3. Budget objectives (targets) should be challenging but achievable using SMART analysis.

The final budget document will serve as a legal guarantee that the required profits will actually be earned by the company

1.A business commenced trading on 1^st July 2014 (i.e. 7 years ago at 30^th June 2021) and a quarterly time series analysis of product (unit) sales demand since commencement is described by the regression (trend) line:

Y = 300 + 10x

Where:

Y = The demand for products a given quarter (before seasonal variations)

x = The trend for increased demand (products per quarter) since 1^st July 2014

Average seasonal variations to trend are:

Quarter 1 -(i.e. July to September)

0.60

Quarter 2 - (i.e. October to December)

1.10

Quarter 3 - (i.e. January to March)

1.20

Quarter 4 - (i.e. April to June)

0.30

Expected sales demand for the quarter July to September 2020 is expected to be:

a.354 units

b.660 units

c.2,583 units

d.1,447 units

2.Business planning that is classified as 'strategic' will usually have a timescale that is:

a. Retrospective

b. Medium term

c. 5 years plus

d. Non-financial only

3.A business has indirect production overheads (fixed costs) of 40,000 per month absorbed into a standard 8,000 units. For last month, 8,500 units were produced. The fixed overhead total volume variance, therefore, is:

1. 600 (Adverse)
2. 100 (Adverse)
3. Nil (No volume variance)
4. 2,500 Favourable

4.A product has a standard selling price of 6. During one trading period, 1,200 units were sold and the sales price variance was established at 300 (favourable variance). The actual average selling price per unit, therefore, was:

1. 13.50
2. 10.00
3. 6.25
4. 7.80

5.Abnormal gains in process are accounted for by:

a.A debit to the Process a/c and a credit to the Trading a/c

b.A debit to the Trading a/c and a credit to the Process a/c

c.A debit to the Sales a/c and a credit to the Purchases a/c

d.A debit to the Abnormal a/c and a credit to the Receivables (working capital) a/c

6.The value of resources (i.e. 600 kilos of direct materials, direct labour and production overhead) input to a process was 9,000. Normal losses, estimated at 6% of total inputs, can be sold for 5.60 per kilo. The total cost per kilo of the process good output, therefore, is:

1. 13.50
2. 15.60
3. 36.00
4. 201.60

1.A business has current assets valued at 125,000 and current liabilities valued at 80,000. Working capital is aggressively financed using short-term bank debt with an annual interest rate of 16%. The annual cost of working capital asset financing, therefore, is:

1. 12,800
2. 14,400
3. 20,000
4. 7,200

2.At production levels above current capacity:

a.The selling price will be increased in-line with diminishing demand

b.The value for fixed costs values and the rates for variable costs can no longer be relied upon

c.The fixed costs will increase by 'step' at a rate in excess of 15%

d.The variable cost per unit will fall by 5% because of the bulk discounts available on materials

3.Which ONE of the following describes financial planning?

1. A strategic plan clearly identifying the business long-term production objectives and the approaches to their achievement (i.e. executive decision-making and tactical positioning.)
2. The application of computer resources (i.e. software and hardware) to design an overall forecast for discussion and implementation through the business interlocking operating functions.
3. The preparation of a forecast describing future business objectives (expectation) expressed in financial terms e.g. profits and cash flows.
4. The extracted cost of production resources from the previous period's budget plans and on-going management negotiations with customers, suppliers and employees.