of 85
8/14/2019 Management Accounting CIMA
1/85
The Chartered Institute of Management Accountants 2001
Foundation LevelManagement Accounting
Fundamentals
2 FMAF 21 November 2001
Day 3 afternoon
INSTRUCTIONS TO CANDIDATES
Read this page before you look at the questions
You are allowed three hours to answer this question paper.
Answer the ONE question in section A (this has 25 sub-questions, and is on pages 2 8).
Answer the ONE question in section B (this is on page 9)
Answer ONE question ONLY from section C (these questions are on pages 10 and 11).
Write your examination number in the boxes provided on the front of the answer book.
Write FMAF on the line marked "Subject" on the front of the answer book.
Write your examination number on the special answer sheet for section A. Detach the sheet
from the booklet and insert it into your answer book before you hand this in.
Do NOT write your name or your student registration number anywhere on your answer book.
Tick the appropriate boxes on the front of the answer book to indicate which questions you haveanswered.
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
2/85
FMAF November 20012
SECTION A 50 MARKS
ANSWER ALL TWENTY-FIVE SUB-QUESTIONS 2 MARKS EACH
Question One
1.1 A standard cost is
A the planned unit cost of a product, component or service in a period.
B the budgeted cost ascribed to the level of activity achieved in a budget centre in a
control period.
C the budgeted production cost ascribed to the level of activity in a budget period.
D the budgeted non-production cost for a product, component or service in a period.
1.2 The term budget slack refers to the
A extended lead time between the preparation of the functional budgets and the masterbudget.
B difference between the budgeted output and the breakeven output.
C additional capacity available which can be budgeted for.
D deliberate over-estimation of costs and under-estimation of revenues in a budget.
The following information is required for sub-questions1.3and1.4
RS Ltd is currently preparing the production budget for Product A and the materialpurchase budget for material X for the forthcoming year. Each unit of Product Arequires 5 kgs of material X.
The anticipated opening stock for Product A is 5,000 units and the company wishes toincrease the closing stock by 30% by the end of the year.
The anticipated opening stock for material X is 50,000 kgs and in order to avoid stock-outs the required closing stock has been increased to 60,000 kgs.
The Sales Director has confirmed a sales requirement of 70,000 units of Product A.
1.3 How many units of Product A will need to be produced?
A 68,500 units. B 71,500 units. C 76,500 units. D 80,000 units.
1.4 What will be the purchases budget for material X?
A 347,500 kgs. B 350,000 kgs. C 357,500 kgs. D 367,500 kgs.
Each of the sub-questions numbered from 1.1 to 1.25 inclusive, given below, has only ONE
correct answer.
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
3/85
November 2001 FMAF 3
1.5 S Ltd absorbs overheads on the basis of direct labour hours. Details of budgeted andactual figures for the latest period are as follows:
Budget Actual Overheads 350,000 400,000Output 70,000 units 60,000 unitsLabour hours 35,000 hours 30,000 hours
Which ONE of the following statements is correct?
A Overheads were 50,000 over-absorbed.
B Overheads were 50,000 under-absorbed.
C Overheads were 100,000 over-absorbed.
D Overheads were 100,000 under-absorbed.
1.6 PP Ltd has recorded the following distribution costs during the last three months:
Month Volume Total cost units
1 32,000 100,0002 40,000 120,0003 50,000 145,000
What will be the distribution costs (to the nearest ) in month 4 when the expected activity levelis 42,500 units?
A 126,250. B 127,500. C 129,861. D 132,813.
The following information is required for sub-questions1.7and1.8
ZK Ltd has been asked to quote a price for a special job that must be completed withinone week.
The job requires a total of 100 skilled labour hours and 50 unskilled labour hours. Thecurrent employees are paid a guaranteed minimum wage of 525 for skilled workersand 280 for unskilled workers for a 35-hour week. Currently, skilled labour has sparecapacity amounting to 75 labour hours each week and unskilled labour has sparecapacity amounting to 100 labour hours each week. Additional skilled workers andunskilled workers can be employed and paid by the hour at rates based on the wagespaid to the current workers.
The materials required for the job are currently held in stock at a book value of 5,000.
The materials are regularly used by ZK Ltd and the current replacement cost for thematerials is 4,500. The total scrap value of the materials is 1,000.
1.7 What is the total relevant cost to ZK Ltd of using skilled and unskilled labour on this job?
A Nil. B 375. C 775. D 1,540.
1.8 What is the relevant cost to ZK Ltd of using the materials in stock on this job?
A 1,000. B 3,500. C 4,500. D 5,000.
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
4/85
FMAF November 20014
1.9 Which ONE of the following statements is true?
A The total variable cost varies with a measure of activity.
B A variable cost is an unavoidable cost.
C A variable cost is not relevant for decision-making.D A variable cost becomes fixed in the long run.
1.10 ABC Ltd operates an integrated cost accounting system. The fixed production overheadaccount at 31 July 2001, which is ABC Ltds year end, showed the following information:
Fixed production overhead account
Trade creditors 50,000 Work-in-progress 120,000Bank 20,000 ? 5,000
Depreciation 5,000Salaries 40,000Materials 10,000
125,000 125,000
The 5,000 credit entry represents the value of the transfer to the
A profit and loss account for the under-recovery of fixed production overheads.
B profit and loss account for the over-recovery of fixed production overheads.
C work-in-progress account for the under-recovery of fixed production overheads.
D following period.
1.11 The following budgeted information is available for a company that manufactures four
types of specialist paints:
Product W Product X Product Y Product Z per litre per litre per litre per litre
Selling price 2000 1500 1500 1750Variable overhead 960 600 960 850Fixed overhead 360 300 2.10 210Profit 680 600 330 690
Machine hours per unit 12 10 7 11
All four products use the same machine.
In a period when machine hours are in short supply, the product that makes the most profitableuse of machine hours is
A productW. B productX. C productY. D productZ.
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
5/85
November 2001 FMAF 5
1.12 For decision-making purposes, which of the following are relevant costs?
(i) Avoidable cost(ii) Future cost(iii) Opportunity cost(iv) Differential cost
A (i), (ii), (iii) and (iv).
B (i) and (ii) only.
C (ii) and (iii) only.
D (i) and (iv) only.
The following information is required for sub-questions1.13 to1.15
A company produces a single product that passes through two processes. The detailsfor process 1 are as follows:
Materials input 20,000 kg at 250 per kg
Direct labour 15,000
Production overheads 150% of direct labour
Normal losses are 15% of input in process 1 and without further processing any lossescan be sold as scrap for 1 per kg.
The output for the period was 18,500 kg from process 1.
There was no work-in-progress at the beginning or end of the period.
1.13 What value (to the nearest ) will be credited to the process 1 account in respect of thenormal loss?
A Nil. B 3,000. C 4,070. D 5,250.
1.14 What is the value (to the nearest ) of the abnormal loss/gain for the period forprocess 1?
A 6,104. B 6,563. C 7,257. D 7,456.
1.15 What is the value (to the nearest ) of the output to process 2?
A 88,813. B 90,604. C 91,956. D 94,063.
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
6/85
FMAF November 20016
1.16 A joint product is
(i) the incidental product produced as a result of a process.
(ii) not saleable at the point of separation and must always be processed further.
(iii) one of two or more products separated during processing, each having a
significant sales value.
Which of the above is/are correct?
A (iii) only.
B (i) and (iii) only.
C (ii) and (iii) only.
D (i), (ii) and (iii).
1.17 BH Ltd is currently undertaking a contract to build an apartment block. The contractcommenced on 1 January 2001 and is expected to take thirteen months to complete.The contract value is 54 million. The contractors financial year ends on30 September.
The contract account for the building of the apartment block indicates the followingsituation at 30 September 2001:
Value of work certified 30 millionCosts incurred to date 20 millionFuture costs to completion 28 million
The amount of profits to be recognised is based on the value of work certified to date.It is company policy not to recognise profit on contracts unless the value certified is atleast 50% of the total contract value.
The maximum amount of profit/loss for the contract that can be taken to the profit andloss account for the year ended 30 September 2001 is
A nil. B 199 million. C 333 million. D 555 million.
1.18 XX Ltd absorbs overheads based on units produced. In one period, 23,000 units wereproduced, actual overheads were 276,000 and there was 46,000 under-absorption.
The budgeted overhead absorption rate per unit was
A 10. B 12. C 13. D 14.
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
7/85
November 2001 FMAF 7
1.19 RD Limited uses the LIFO system for valuing material issues from stores to production.
The Materials account had an opening value of 850 on 1 October 2001:
500 units at 120 purchased 12 September 2001
200 units at 125 purchased 27 September 2001
The following receipts and issues were recorded during October:
8 October 2001 Receipts 600 units 130 per unit
20 October 2001 Receipts 600 units 150 per unit
29 October 2001 Issues 1,500 units
What was the total value (to the nearest ) of the issues on 29 October?
A 1,930. B 1,969. C 1,997. D 2,050.
1.20 During a period of rising prices, which ONE of the following statements is correct?
A The LIFO method will produce lower profits than the FIFO method, and lower closingstock values.
B The LIFO method will produce lower profits than the FIFO method, and higher closingstock values.
C The FIFO method will produce lower profits than the LIFO method, and lower closingstock values.
D The FIFO method will produce lower profits than the LIFO method, and higher closing
stock values.
1.21 The economic order quantity is
A the order quantity which minimises the total of stock ordering and holding costs.
B the order quantity used for special ordering purposes.
C the order quantity used for buffer stock.
D the order quantity used to avoid stock outs.
1.22 In a standard cost bookkeeping system, when the actual material price exceeds thestandard price, the double entry to record the difference in price is
A debit the material price variance account and credit the raw material control account.
B credit the material price variance account and debit the raw material control account.
C debit the material price variance account and credit the work-in-progress account.
D credit the material price variance account and debit the work-in-progress account.
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
8/85
FMAF November 20018
1.23 An overhead absorption rate is used to
A allocate overhead costs to cost centres.
B attribute overheads to products.
C spread indirect cost across a number of cost centres.D control overheads.
1.24 A company operates a premium bonus system by which employees receive a bonus of75% of the time saved compared with a standard time allowance (at the normal hourlyrate).
Details relating to employee X are shown below:
Employee X
Actual hours worked 42 hours
Hourly rate of pay 10
Output achieved 400 units of product Y
Standard time allowed (per unit of Y) 7 minutes
The bonus payable (to the nearest ) to employee X is
A 35. B 47. C 70. D 82.
1.25 HD Ltd currently uses absorption costing to calculate profit.
During the last period, the fixed production overhead absorption rate was 25 per unit.There were 500 units of opening stock for the period and 350 units of closing stock.
If marginal costing principles had been used, the profit for the period compared to the absorptioncosting profit would have been
A 3,750 lower.
B 3,750 higher.
C 8,750 lower.
D 8,750 higher.
(Total = 50 marks)
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
9/85
November 2001 FMAF 9
SECTION B 25 MARKS
ANSWER THIS QUESTION
Question Two
SS Ltd makes and sells a single product "PP". The company uses a standard absorption costingsystem.
The budgeted production and sales for the year ended 31 October 2001 were 59,500 units with aselling price of 2 each unit. The standard time for producing each unit was 3 minutes. Thestandard labour rate was 10 an hour. The standard material cost for one unit of PP was 075per unit.
Production overhead absorption rates were based on direct labour cost and were as follows:
Variable overhead 35% of direct labour cost
Fixed overhead 40% of direct labour cost
For the year under review, the actual results were as follows:
Production and sales of PP 62,000 units
Selling price for one unit 200
Labour cost incurred for 3,500 hours 38,500
Material cost for each unit 075
Variable production overhead incurred 9,500
Fixed production overhead incurred 9,500
There were no changes in any stock levels during the period.
Required:(a) Prepare a statement that reconciles budgeted profit with actual profit for the year ended
31 October 2001, showing the analysis of variances in as much detail as possible from theinformation given.
(14 marks)
(b) Referring to your analysis in part (a), suggest two possible reasons for the labour efficiencyvariance and two possible reasons for the labour rate variance that you have calculated.
(4 marks)
(c) Explain the factors that should be considered when selecting the most appropriate base touse for an overhead absorption rate. Your answer should include a discussion of the
method used by SS Ltd.(7 marks)
(Total = 25 marks)
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
10/85
FMAF November 200110
SECTION C 25 MARKS
ANSWER ONE QUESTION ONLY
Question Three
T Ltd is a newly-formed company that designs customised computer programs for its clients.The capital needed to fund the company will be provided by a venture capitalist who will invest150,000 on 1 January 2002 in exchange for shares in T Ltd.
The Directors are currently gathering the information needed to help in the preparation of thecash budget for the first three months of 2002. The information that they have is given below.
Budget details
The budgeted sales (that is, the value of the contracts signed) for the first quarter of 2002 areexpected to be 200,000. However, as the company will only just have commenced trading, it isthought that sales will need time to grow. It is therefore expected that 15% of the first quarter'ssales will be achieved in January, 30% in February and the remainder in March. It is expectedthat sales for the year ending 31 December 2002 will reach 1,000,000.
Clients must pay a deposit of 5% of the value of the computer program when they sign thecontract for the program to be designed. Payments of 45% and 50% of the value are then paidone and two months later respectively. No bad debts are anticipated in the first quarter.
There are six people employed by the company, each earning an annual gross salary of45,000, payable in arrears on the last day of each month.
Computer hardware and software will be purchased for 100,000 in January. A deposit of 25%is payable on placing the order for the computer hardware and software, with the remainingbalance being paid in equal amounts in February and March. The capital outlay will bedepreciated on a straight-line basis over three years, assuming no residual value.
The company has decided to rent offices that will require an initial deposit of 13,000 and anongoing cost of 6,500 per month payable in advance. These offices are fully serviced and therent is inclusive of all fixed overhead costs.
Variable production costs are paid in the month in which they are incurred and are budgeted asfollows:
January 1,200 February 4,200 March 8,000
A marketing and advertising campaign will be launched in January at a cost of 10,000 with afurther campaign in March for 5,000, both amounts being payable as they are incurred.
Administration overhead is budgeted to be 500 each month: 60% to be paid in the month ofusage and the balance one month later.
Tax and interest charges can be ignored.
Required:
(a) Prepare the cash budget by month and in total for the first quarter of 2002.(15 marks)
(b) Identify and comment on those areas of the cash budget that you wish to draw to theattention of the Directors of T Ltd, and recommend action to improve cash flow.
(7 marks)
(c) Briefly explain three advantages for T Ltd of using a spreadsheet when preparing a cashbudget.
(3 marks)
(Total = 25 marks)
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
11/85
November 2001 FMAF 11
Question Four
P Ltd manufactures a specialist photocopier. Increased competition from a new manufacturerhas meant that P Ltd has been operating below full capacity for the last two years.
The budgeted informationfor the last two years was as follows:
Year 1 Year 2
Annual sales demand (units) 70 70
Annual production (units) 70 70
Selling price (for each photocopier) 50,000 50,000
Direct costs (for each photocopier) 20,000 20,000
Variable production overheads (for each photocopier) 11,000 12,000
Fixed production overheads 525,000 525,000
Actual resultsfor the last two years were as follows:
Year 1 Year 2
Annual sales demand (units) 30 60
Annual production (units) 40 60
Selling price (for each photocopier) 50,000 50,000
Direct costs (for each photocopier) 20,000 20,000
Variable production overheads (for each photocopier) 11,000 12,000
Fixed production overheads 500,000 530,000
There was no opening stock at the beginning of year 1.
Required:
(a) Prepare the actual profit and loss statements for each of the two years using:(i) absorption costing;
(ii) marginal costing.
(14 marks)
(b) Calculate the budgeted breakeven point in units and the budgeted margin of safety as apercentage of sales for year 1 and then again for year 2.
(6 marks)
(c) Explain how the change in cost structure (as detailed in the budgeted information) hasaffected the values you have calculated in your answer to part (b).
(5 marks)
(Total = 25 marks)
End of paper
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
12/85
ExaminationQuestion andAnswer Book
Write here your full examination number
Centre Code:Hall Code:
Desk Number:
Foundation Level Management Accounting Fundamentals
2 FMAF22 May 2002
Day 3 afternoon
INSTRUCTIONS TO CANDIDATES
Read this page before you look at the questions
THIS QUESTION PAPER BOOKLET IS ALSO YOUR ANSWER BOOKLET.Sufficient space has been provided for you to write your answers, and also for workings where questionsrequire them. For section B questions, you must write your answers in the shaded space provided.Additional blank pages (19-22) are included towards the back of this booklet if you require more space fornotes or workings. Please note that you will NOT receive marks for your workings. Do NOT remove any
sheets from this booklet: cross through neatly any work that is not to be marked. Avoid the use ofcorrection fluid.
You are allowed three hours to answer this question paper. All questions are compulsory.
Answer the ONE question in section A (this has 25 sub-questions and is on pages 2-12)
Answer the THREE questions in section B (these are on pages 14-18)
You are advised to spend 10 minutes reading through the paper before starting to answer the questions.
You should spend no more than 85 minutes in total answering the ONE question in section A, which has25 sub-questions.
You should spend no more than 85 minutes in total answering the THREE questions in section B.
Hand this entire booklet to the invigilators at the end of the examination. You are NOT permitted to leavethe examination hall with this booklet.
Do NOT write your name or your student registration number anywhere on this booklet.
TURN OVER
For office use only Total One Two Three Four
Marks awarded (First marker) for each question
Marks awarded (Second marker) for each question
The Chartered Institute of Management Accountants 2002
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
13/85
FMAF 2 May 2002
SECTION A 50 MARKS
ANSWER ALL TWENTY-FIVE SUB-QUESTIONS 2 MARKS EACH
Question One
1.1 Which ONE of the following would be classified as direct labour?
A Personnel manager in a company servicing cars.
B Bricklayer in a construction company.
C General manager in a DIY shop.
D Maintenance manager in a company producing cameras.
1.2 The principal budget factor is the
A factor which limits the activities of the organisation and is often the starting point in budget preparation.
B budgeted revenue expected in a forthcoming period.
C main budget into which all subsidiary budgets are consolidated.
D overestimation of revenue budgets and underestimation of cost budgets, which operates as a safetyfactor against risk.
For office use only Total 1.1 1.2
Marks awarded (First marker) for each sub-questionMarks awarded (Second marker) for each sub-question
Each of the sub-questions numbered from 1.1 to 1.25 inclusive, given below, has only ONE correctanswer.
REQUIRED:Place a circle O around the letterA, B, C orD that gives the correct answer to each sub-question.
If you wish to change your mind about an answer, block out your first answer completely and then circleanother letter. You will NOT receive marks if more than one letter is circled.
Please note that you will NOT receive marks for any workings to these sub-questions. Sufficient spacehas been provided for you to do your workings where these sub-questions require them.
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
14/85
May 2002 3 FMAF
1.3 R Ltd absorbs overheads based on units produced. In one period 110,000 units were produced andthe actual overheads were 500,000. Overheads were 50,000 over-absorbed in the period.
The overhead absorption rate was
A 400 per unit. B 450 per unit. C 500 per unit. D 550 per unit.
Space for workings to 1.3
1.4 X Ltd operates an integrated cost accounting system. The Work-in-Progress Account at the end of theperiod showed the following information:
Work-in-Progress Account
Stores ledger a/c 100,000 ? 200,000Wage control a/c 75,000Factory overhead a/c 50,000 Balance c/d 25,000
225,000 225,000
The 200,000 credit entry represents the value of the transfer to the
A Cost of sales account.
B Material control account.
C Sales account.
D Finished goods stock account.
TURN OVER
For office use only Total 1.3 1.4
Marks awarded (First marker) for each sub-question
Marks awarded (Second marker) for each sub-question
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
15/85
FMAF 4 May 2002
1.5 X Ltd operates a standard costing system and absorbs overheads on the basis of standard machinehours. Details of budgeted and actual figures are as follows:
Budget Actual Overheads 1,250,000 1,005,000
Output 250,000 units 220,000 units
Machine hours 500,000 hours 450,000 hours
Which ONE of the following statements is correct?
A Overheads were 95,000 over-absorbed.
B Overheads were 95,000 under-absorbed.
C Overheads were 120,000 over-absorbed.
D Overheads were 120,000 under-absorbed.
Space for workings to 1.5
For office use onlyTotal 1.5
Marks awarded (First marker) for each sub-question
Marks awarded (Second marker) for each sub-question
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
16/85
May 2002 5 FMAF
The following information is required for Questions1.6 and1.7
P Ltd uses the FIFO system for valuing material issues from stores to production.
The Materials Account had an opening value of 12,000 on 1 April 2002:
1,000 units @ 580 Purchased 22 March 2002
1,000 units @ 620 Purchased 23 March 2002
The following receipts and issues were recorded during April:
2 April 2002 Receipts 5,000 units 630 per unit15 April 2002 Receipts 8,000 units 625 per unit30 April 2002 Issues 9,000 units
Space for workings to 1.6 and 1.7
1.6 Using the FIFO method, what was the value of the closing stock on 30 April?
A 37,200 B 37,400 C 37,500 D 37,600
1.7 If P Ltd had used LIFO, instead of FIFO, the value of the material issued would have been
A 100 lower. B 100 higher. C 300 lower. D 300 higher.
1.8 In an integrated bookkeeping system, when the actual production overheads exceed the absorbedproduction overheads, the accounting entries to close off the production overhead account at the endof the period would be
A debit the production overhead account and credit the work-in-progress account.
B debit the work-in-progress account and credit the production overhead account.
C debit the production overhead account and credit the profit and loss account.
D debit the profit and loss account and credit the production overhead account.
TURN OVER
For office use only Total 1.6 1.7 1.8
Marks awarded (First marker) for each sub-questionMarks awarded (Second marker) for each sub-question
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
17/85
FMAF 6 May 2002
1.9 X Ltd currently uses marginal costing to calculate profit. There were 10,000 units of opening stock and12,000 units of closing stock for the period.
If absorption costing principles had been used and the fixed overhead absorption rate was 30 perunit, the absorption costing profit for the period compared to the marginal costing profit would havebeen
A 30,000 lower. B 30,000 higher. C 60,000 lower. D 60,000 higher.
The following information is required for Questions1.10 to1.12
The following data relate to stock item PR7:
Average usage 1,000 units per day
Minimum usage 600 units per day
Maximum usage 1,300 units per day
Average lead time 75 days
Minimum lead time 5 days
Maximum lead time 10 days
EOQ 40,000 units
1.10 The reorder level is
A 3,000 units. B 7,500 units. C 9,750 units. D 13,000 units.
1.11 The maximum stock level is
A 40,000 units. B 44,500 units. C 46,750 units. D 50,000 units.
1.12 The minimum stock level is
A 2,250 units. B 3,000 units. C 5,500 units. D 8,000 units.
For office use only Total 1.9 1.10 1.11 1.12
Marks awarded (First marker) for each sub-questionMarks awarded (Second marker) for each sub-question
Space for workings to 1.10 to 1.12
Additional space for workings to 1.10 to 1.12
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
18/85
May 2002 7 FMAF
1.13 A company operates a differential piece-rate system and the following weekly rates have been set:
1 500 units 020 per unit in this band501 600 units 025 per unit in this band601 units and above 055 per unit in this band
Details relating to employee A are shown below:
Employee A
Actual output achieved 800 unitsActual hours worked 45
There is a guaranteed minimum wage of 5 per hour for a 40-hour week paid to all employees.
The amount payable (to the nearest ) to employee A is
A 200 B 235 C 435 D 440
Space for workings to 1.13
1.14 Overtime premium is
A the additional amount paid for hours worked in excess of the basic working week.
B the additional amount paid over and above the normal hourly rate for hours worked in excess of thebasic working week.
C the additional amount paid over and above the overtime rate for hours worked in excess of the basicworking week.
D the overtime rate.
TURN OVER
For office use only Total 1.13 1.14
Marks awarded (First marker) for each sub-question
Marks awarded (Second marker) for each sub-question
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
19/85
FMAF 8 May 2002
The following information is required for Questions1.15 and1.16
X Ltd has two production departments, Assembly and Finishing, and one service department, Stores.
Stores provide the following service to the production departments: 60% to Assembly and 40% to Finishing.
The budgeted information for the year is as follows:
Budgeted fixed production overheads:Assembly 100,000Finishing 150,000Stores 50,000
Budgeted output 100,000 units
Space for workings to 1.15 and 1.16
1.15 The budgeted fixed production overhead absorption rate for the Assembly Department will be
A 100 per unit. B 130 per unit. C 250 per unit. D 300 per unit.
1.16 At the end of the year, the total of all of the fixed production overheads debited to the FinishingDepartment Fixed Production Overhead Control Account was 130,000, and the actual outputachieved was 100,000 units.
The overheads for the Finishing Department were
A 20,000 under-absorbed.
B 20,000 over-absorbed.
C 40,000 under-absorbed.
D 40,000 over-absorbed.
For office use only Total 1.15 1.16
Marks awarded (First marker) for each sub-questionMarks awarded (Second marker) for each sub-question
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
20/85
May 2002 9 FMAF
1.17 R Ltd has been asked to quote for a job. The company aims to make a profit margin of 20% on sales.The estimated total variable production cost for the job is 125.
Fixed production overheads for the company are budgeted to be 250,000 and are recovered on thebasis of labour hours. There are 12,500 budgeted labour hours and this job is expected to take 3labour hours.
Other costs in relation to selling and distribution, and administration are recovered at the rate of 15per job.
The company quote for the job should be
A 200. B 222. C 240. D 250.
Space for workings to 1.17
1.18 Which of the following would NOT be included in a cash budget?
(i) Depreciation
(ii) Provisions for doubtful debts
(iii) Wages and salaries
A (i) and (ii) only
B (ii) and (iii) only
C (iii) only
D (i) only
TURN OVER
For office use only Total 1.17 1.18
Marks awarded (First marker) for each sub-questionMarks awarded (Second marker) for each sub-question
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
21/85
FMAF 10 May 2002
The following information is required for Questions1.19 and1.20
X Ltd is preparing its budgets for the forthcoming year.
The estimated sales for the first four months of the forthcoming year are as follows:
Month 1 6,000 units
Month 2 7,000 units
Month 3 5,500 units
Month 4 6,000 units
40% of each months sales units are to be produced in the month of sale and the balance is to be producedin the previous month.
50% of the direct materials required for each months production will be purchased in the previous monthand the balance in the month of production.
The direct material cost is budgeted to be 5 per unit.
Space for workings to 1.19 and 1.20
1.19 The production budget in units for Month 1 will be
A 2,400 units. B 5,200 units. C 6,000 units. D 6,600 units.
1.20 The material cost budget for Month 2 will be
A 29,750 B 30,500 C 31,750 D 35,000
For office use only Total 1.19 1.20
Marks awarded (First marker) for each sub-questionMarks awarded (Second marker) for each sub-question
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
22/85
May 2002 11 FMAF
1.21 When calculating the material purchases budget, the quantity to be purchased equals
A material usage + materials closing stock materials opening stock
B material usage materials closing stock + materials opening stock
C material usage materials closing stock materials opening stock
D material usage + materials closing stock + materials opening stock
1.22 The following extract is taken from the overhead budget of X Ltd:
Budgeted activity 50% 75%
Budgeted overhead 100,000 112,500
The overhead budget for an activity level of 80% would be
A 115,000 B 120,000 C 136,000 D 160,000
Space for workings to 1.22
1.23 Which of the following would be included in the cash budget, but would not be included in thebudgeted profit and loss account?
(i) Repayment of a bank loan
(ii) Proceeds from the sale of a fixed asset
(iii) Bad debts write off
A (i) and (ii) only
B (i) and (iii) only
C (ii) and (iii) only
D (i), (ii) and (iii)
TURN OVER
For office use only Total 1.21 1.22 1.23Marks awarded (First marker) for each sub-question
Marks awarded (Second marker) for each sub-question
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
23/85
FMAF 12 May 2002
1.24
Sales
Total cost
Fixed cost
Level of activity
This graph is known as a
A semi-variable cost chart.
B conventional breakeven chart.
C contribution breakeven chart.
D profit volume chart.
1.25 The following details have been extracted from the creditors records of X Limited:
Invoices paid in the month of purchase 25%Invoices paid in the first month after purchase 70%Invoices paid in the second month after purchase 5%
Purchases for July to September are budgeted as follows:
July 250,000
August 300,000
September 280,000
For suppliers paid in the month of purchase, a settlement discount of 5% is received. The amount
budgeted to be paid to suppliers in September is
A 227,500 B 240,000 C 289,000 D 292,500
Space for workings to 1.25
(Total = 50 Marks)
End of Section A
For office use only Total 1.24 1.25Marks awarded (First marker) for each sub-question
Marks awarded (Second marker) for each sub-question
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
24/85
May 2002 13 FMAF
SECTION B STARTS OVERLEAF
TURN OVER
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
25/85
FMAF 14 May 2002
SECTION B 50 MARKS
ANSWER ALL THREE QUESTIONS
IMPORTANTMARKS ARE AWARDED FOR CORRECTLY COMPLETING THE SHADED BOXES WITH THECORRECT ANSWER WHERE A MARK IS INDICATED IN THE RIGHT-HAND COLUMN.
THERE ARE NO MARKS FOR COMPLETING THE MISSING FIGURES WHERE NO MARK ISINDICATED, BUT COMPLETING THESE WILL HELP YOU OBTAIN THE CORRECT ANSWERS.
DO NOT WRITE IN THE MARGINS NOR IN THE COLUMNS FOR USE BY MARKERS.
Question Two
TP Ltd is a small company that specialises in servicing computers. The company operates a standardcosting system and details of the standard cost of servicing a computer are shown below.
The figures were based on servicing 20,000 computers during the year.
Standard cost to service one computer:
Material One unit of X 1000
One unit of Y 500
Labour (service engineers) 2 hours @ 15 per hour 3000
Variable overheads 2 hours @ 750 per hour 1500
Fixed overheads 2 hours @ 15 per hour 3000
Total service cost 9000
Profit mark up 50% 4500
Service price per computer 13500
The majority of work that TP Ltd undertakes is based on three-year service contracts. However, PP Ltd, anew local company, has asked TP Ltd to quote for an urgent stand-alone job of servicing 150 computers.TP Ltd wants to win this order because it has some spare capacity, but knows that the standard price perservice is more than PP Ltd is willing to pay.
The accountant of TP Ltd has ascertained the following information:
Material X is regularly used. There is sufficient stock of Material X held, with a book value of 10 perunit. The replacement cost of Material X is 11 per unit.
Material Y is regularly used. There are 100 units held in stock, with a book value of 5 per unit. Thereplacement cost of Material Y is 550 per unit.
No additional engineers would be required to do this job. The service engineers are paid for a 35-hourweek. 70% of the time required to complete this job can be undertaken within normal working hours;however, the remainder would have to be completed during overtime. Overtime is paid at time plus ahalf.
There will be no additional fixed costs incurred by this job.
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
26/85
May 2002 15 FMAF
Required:
TP Ltd is preparing a quote for the PP Ltd job based on relevant costing.
Write your answers to parts (a) to (e) in the shaded boxes below Marksavailable
For useby thesecondmarker
For useby thefirst
marker
(a) The total relevant cost of Material X for this job would be 2
(b) The total relevant cost of Material Y for this job would be 2
(c) The total relevant cost of the labour for this job would be 2
(d) The total relevant cost of the variable overheads for thisjob would be
2
(e)Explain in no more than 20 words (in the shaded area below) how you
would calculate the relevant cost of the fixed overheads for this job
2
Sub-total:10
Parts (f) and (g) of Question Two are overleaf
TURN OVER
Do not write in thesecolumns below
Space for workings and/or notes for question two
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
27/85
FMAF 16 May 2002
Question Two continued
TP Ltd is now planning for 2002/2003. The budgeted demand is expected to be 20,000 services. Because ofchanges in technology, Material X and Material Y will be replaced by a new component that will cover both oftheir functions. Labour costs, variable overhead costs and fixed overhead costs are expected to remain atthe same level as the previous year. The new component will cost 1440 per service. TP Ltd will keep thestandard service charge at 135 for each computer.
Required:
Write your answers to parts (f) and (g) in the shaded boxes belowMarks
available
For useby thesecondmarker
For useby thefirst
marker
(f) The breakeven output for next year will be2
(g) If the fixed costs were to increase to 650,000, the salesrevenue required in order to achieve a profit of 673,000next year will be
3
Sub-total:5
Total for Question Two = 15 Marks
Question Three
A cleansing detergent is manufactured by passing raw material through two processes. The details of theprocess costs for Process 1 for April 2002 were as follows:
Opening work-in-progress 5,000 litres valued as follows:
Material cost 2,925
Conversion costs 6,600
Raw material input 50,000 litres valued at a cost of 37,500
Conversion costs 62,385
Normal loss is 3% of the input during the period and has a scrap value of 020 per litre. It is company policyto deduct the income from the sale of normal loss from that periods materials cost.
Actual output to Process 2 49,000 litres
Closing work-in-progress 4,000 l itres, which were 100% complete formaterials and 40% complete for conversioncosts.
A template that could be used to calculate the cost of the output from Process 1 is shown below. Thetemplate has been partially completed.
Costs Equivalent litres Cost per equivalent litre
OWIP + Period = Total Transfer out + Abnormal loss + CWIP = Total
Materials 2,925 + A 500 075
Conversion = 68,985 = 51,100 135
OWIP = Opening work-in-progressCWIP = Closing work-in-progress
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
28/85
May 2002 17 FMAF
Required:Write your answers to parts (a) to (e) in the shaded boxes below Marks
available
For useby thesecondmarker
For useby thefirst
marker
(a) The value to be inserted in the table at A is 4
(b) The total value of the transfers to Process 2 is 3
(c) The value of the abnormal loss is 2
(d) The value of the closing work-in-progress is
(e) In no more than 15 words, state one possible reason for theabnormal loss occurring
3
2
Sub-total= 14
In another process, the abnormal loss account showed the following values:
Abnormal Loss Account
Process account 1,000 B 400Profit and loss account 600
1,000 1,000
Write your answers to parts (f) to (h) in the shaded boxes belowMarks
available
For useby thesecondmarker
For useby thefirst
marker
(f) The narrative that would be written at point B in the abnormal lossaccount above is
(g) In no more than 20 words, explain what is meant by an abnormalgain
(h) In no more than 25 words, explain the main difference betweenprocess costing and job costing
2
2
2
Sub-total: 6
Total for Question Three = 20 Marks
TURN OVER
Do not write in thesecolumns below
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
29/85
FMAF 18 May 2002
Question Four
BB Ltd, a fast food restaurant, prepares and sells a meal called Yum Yum. The meal consists of a burger,fries and a cold drink. BB Ltd uses a standard marginal costing system.
The budgeted meal sales for the quarter ended 31 March 2002 were 100,000 meals with a selling price of 5per meal. The standard labour cost for preparing each meal was 060. The standard labour time per mealwas 6 minutes. The standard food and drink cost for each meal was 150. The budgeted fixed overheads
for the year were estimated to be 500,000 and these are expected to be incurred evenly throughout theyear.
For the quarter under review, the actual results were as follows:
Sales of Yum Yum 90,000 meals
Selling price per meal 475Labour cost incurred for 8,250 hours 48,675Food and drink cost incurred 112,500Fixed overhead incurred 120,000
There was no stock of food or drink at the beginning or end of the quarter.
Required:
Complete the shaded boxes labelled (a) to (f) on the reconciliationstatement below. For all calculated variances, you must state whether theyare favourable (F) or adverse (A). There are no marks for filling in the twoshaded boxes labelled X, but completing these will help you obtain thecorrect answers.
Profit reconciliation statementfor the quarter ending 31 March 2002 Marks
available
For useby thesecondmarker
For useby thefirst
marker
(a) Budgeted profit 2
(b) Total sales margin contributionvariance
X
2
(c) Food and drink: total cost variance 2
(d) Labour efficiency variance 2
(e) Labour rate variance 2
(f) Fixed overhead expenditure variance 2
Total cost variances X
Actual profit 146,325Sub-
total: 12
(g) If BB Ltd used absorption costing, instead of marginal costing, stateand briefly explain in no more than 25 words (in the shaded boxbelow), another variance that would have to be included in thereconciliation statement.
3
Sub-total: 3
Total for Question Four = 15 marks
End of Question Paper -ADDITIONAL SPACE FOR WORKINGS AND NOTES IS PROVIDEDON PAGES 19 TO 22
Do not write in thesecolumns below
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
30/85
May 2002 19 FMAF
You may use this sheet for workings(no marks are awarded for workings)
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
31/85
FMAF 20 May 2002
You may use this sheet for workings(no marks are awarded for workings)
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
32/85
May 2002 21 FMAF
You may use this sheet for workings(no marks are awarded for workings)
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
33/85
FMAF 22 May 2002
You may use this sheet for workings(no marks are awarded for workings)
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
34/85
May 2002 23 FMAF
DO NOT WRITE ON THIS SHEET
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
35/85
FMAF 24 May 2002
2
FMAF
Management Accounting Fundamentals
Day 3 afternoon
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
36/85
ExaminationQuestion andAnswer Book
Write here your full examination number
Centre Code:Hall Code:
Desk Number:
Foundation Level Management Accounting Fundamentals
2 FMAF20 November 2002
Day 3 afternoon
INSTRUCTIONS TO CANDIDATES
Read this page before you look at the questions
THIS QUESTION PAPER BOOKLET IS ALSO YOUR ANSWER BOOKLET.Sufficient space has been provided for you to write your answers, and also for workings where questionsrequire them. For section B questions, you must write your answers in the shaded space provided. Pleasenote that you will NOT receive marks for your workings. Do NOT remove any sheets from this booklet:cross through neatly any work that is not to be marked. Avoid the use of correction fluid.
You are allowed three hours to answer this question paper. All questions are compulsory.
Answer the ONE question in section A (this has 25 sub-questions and is on pages 2-10)
Answer the THREE questions in section B (these are on pages 11-16)
You are advised to spend 10 minutes reading through the paper before starting to answer the questions.
You should spend no more than 85 minutes in total answering the ONE question in section A, which has25 sub-questions.
You should spend no more than 85 minutes in total answering the THREE questions in section B.
Hand this entire booklet to the invigilators at the end of the examination. You are NOT permitted to leavethe examination hall with this booklet.
Do NOT write your name or your student registration number anywhere on this booklet.
The Chartered Institute of Management Accountants 2002
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
37/85
FMAF 2 November 2002
SECTION A 50 MARKS
ANSWERALL TWENTY-FIVE SUB-QUESTIONS 2 MARKS EACH
Question One
1.1
Y
XLevel of activity
The difference in the values () between point X and point Y on the profit volume chart shown aboverepresents
A contribution.
B profit.
C breakeven.
D loss.
Each of the sub-questions numbered from 1.1 to 1.25 inclusive, given below, has only ONE correctanswer.
REQUIRED:Place a circle O around the letterA, B, C orD that gives the correct answer to each sub-question.
If you wish to change your mind about an answer, block out your first answer completely and then circleanother letter. You will NOT receive marks if more than one letter is circled.
Please note that you will NOT receive marks for any workings to these sub-questions. Sufficient spacehas been provided for you to do your workings where these sub-questions require them.
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
38/85
November 2002 3 FMAF
1.2
Level of activity
The shaded area on the conventional breakeven chart shown above represents
A loss.
B fixed cost.
C variable cost.
D profit.
1.3 In a standard cost bookkeeping system, when the actual material usage has been greater than thestandard material usage, the double entry to record this is
A Debit the material usage variance account Credit the raw material control account
B Credit the material usage variance account Debit the raw material control account
C Debit the material usage variance account Credit the work-in-progress account
D Credit the material usage variance account Debit the work-in-progress account
1.4 R Ltd makes one product, which passes through a single process. Details of the process account forperiod 1 were as follows:
Material cost 20,000 kg 26,000Labour cost 12,000Production overhead cost 5,700
Output 18,800 kgNormal losses 5% of input
There was no work-in-progress at the beginning or end of the period. Process losses have no value.The cost of the abnormal loss (to the nearest ) is
A 437 B 441 C 460 D 465
Space for workings to 1.4
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
39/85
FMAF 4 November 2002
1.5 JJ Ltd is preparing a quote for a job. The job requires 500kg of material X. There are 400kg of materialX currently held in stock at a book value of 2 per kg. JJ Ltd uses material X regularly and the current
market price is 250 per kg. The material has a scrap value of 1 per kg.
The relevant cost of using the materials for this job is
A 850 B 1,000 C 1,050 D 1,250
Space for workings to 1.5
The following information is required for sub-questions 1.6 to 1.12
X Ltd operates a standard marginal costing system. The following budgeted and standard costinformation is available:
Budgeted production and sales 10,000 units
per unitSelling price 250
Direct material cost 3 kg x 10 30Direct labour cost 5 hours x 8 40Variable production overheads 5 hours x 4 20
Actual results for the period were as follows:Production and sales 11,500 units
Sales value 2,817,500Direct material 36,000 kg 342,000Direct labour 52,000 hours 468,000Variable production overheads 195,000
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
40/85
November 2002 5 FMAF
1.6 The direct material price variance is
A 18,000 adverse. B 3,000 adverse. C 3,000 favourable. D 18,000 favourable.
1.7 The direct material usage variance is
A 15,000 adverse. B 14,250 adverse. C 14,250 favourable. D 15,000 favourable.
1.8 The direct labour rate variance is
A 52,000 adverse. B 8,000 adverse. C 8,000 favourable. D 52,000 favourable.
1.9 The direct labour efficiency variance is
A 49,500 adverse. B 44,000 adverse. C 44,000 favourable. D 49,500 favourable.
1.10 The variable production overhead expenditure variance is
A 35,000 adverse. B 13,000 adverse. C 13,000 favourable. D 35,000 favourable.
1.11 The variable production overhead efficiency variance is
A 22,000 adverse. B 20,625 adverse. C 20,625 favourable. D 22,000 favourable.
1.12 The total sales contribution variance is
A 240,000 adverse. B 182,500 adverse. C 182,500 favourable. D 240,000 favourable.
You may use this space for workings for sub-questions 1.6 1.12(no marks are awarded for these workings)
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
41/85
FMAF 6 November 2002
1.13 Y Ltd operates a standard absorption costing system. The following fixed production overhead data isavailable for the latest period:
Budgeted output 100,000 units
Budgeted fixed production overhead 500,000Actual fixed production overhead cost 650,000Total fixed production overhead cost variance 50,000 Adverse
The actual level of production for the period is
A 115,000 units. B 120,000 units. C 135,000 units. D 140,000 units.
Space for workings to 1.13
1.14 X Ltd manufactures a product called the "ZT". The original budget for next year was:
Annual sales 10,000 units
per unitSelling price 20
Variable cost 14Fixed costs 3Profit 3
If the selling price of the ZT were reduced by 10%, the sales revenue that would be needed togenerate the original budgeted profit would be
A 90,000 B 135,000 C 180,000 D 270,000
Space for workings to 1.14
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
42/85
November 2002 7 FMAF
1.15 A Ltd operates a standard costing system and absorbs overheads on the basis of standard labourhours. There were 500,000 labour hours budgeted and the budgeted production overheads were300,000 for the forthcoming year. The company budgeted to produce 125,000 units. The actualresults for the period were as follows:
Overheads 350,000Output 130,000 unitsLabour hours 450,000 hours
Which ONE of the following statements is correct?
A Overheads were 38,000 over-absorbed.
B Overheads were 38,000 under-absorbed.
C Overheads were 80,000 over-absorbed.
D Overheads were 80,000 under-absorbed.
Space for workings to 1.15
1.16 Z Ltd produces a single product. The management currently uses marginal costing, but is consideringusing absorption costing in the future. The budgeted fixed production overheads for the period are250,000. The budgeted output for the period is 1,000 units. There were 400 units of opening stock forthe period and 250 units of closing stock.
If absorption costing principles were applied, the profit for the period compared to the marginal costingprofit would be
A 37,500 higher. B 37,500 lower. C 62,500 higher. D 62,500 lower.
Space for workings to 1.16
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
43/85
FMAF 8 November 2002
1.17 Which of the following terms best describes an abnormal loss?
(i) Controllable cost(ii) Unavoidable cost(iii) Expected cost
A (i) only. B (i) and (ii) only. C (ii) and (iii) only. D (i) and (iii) only.
1.18 The audit fee paid by a manufacturing company would be classified by that company as
A a production overhead cost.
B a selling and distribution cost.
C a research and development cost.
D an administration cost.
1.19 A purchase requisition is used to
A order goods or services specifying quantities, prices, delivery dates and order terms.
B instruct the buying office to purchase goods or services, stating their quantity and description.
C authorise the issue from stores of a specified quantity of material.
D record goods or services at the point of receipt.
1.20 The following information relates to stock item 007:
Price of stock item 007 20 per unit Note: EOQ basic model:
Cost of placing an order 15
Annual storage costs 3% of purchase price
EOQ =
hC
DoC2
Monthly usage of 007 7,500 units per month Where Co = cost of placing an orderCh = cost of holding 1 unit in stock for 1 yearD = annual demand
The economic order quantity for 007 (to the nearest unit) is
A 463 units B 612 units C 1,604 units D 2,121 units
Space for workings to 1.20
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
44/85
November 2002 9 FMAF
1.21 Wage payments for idle time within a production department are classified as
A direct labour cost.
B prime cost.
C administration overhead.
D factory overhead.
1.22 Z Ltd operates a standard absorption costing system. The following fixed production overhead data isavailable:
Actual output 500,000 units
Actual fixed production overhead cost 800,000
Total fixed production overhead cost variance 125,000 favourable
The fixed production overhead absorption rate is
A 125 per unit. B 135 per unit. C 160 per unit. D 185 per unit.
Space for workings to 1.22
1.23 Retention monies are
A agreed proportions of a contract price held as security.
B interim payments made on a contract.
C deposit payments made to secure a contract.
D payments made on a contract on a regular basis.
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
45/85
FMAF 10 November 2002
The following information is required for sub-questions 1.24 and 1.25
R Ltd has the following year-end information regarding one of its long-term contracts:
Value certified 2,500,000
Profit recognised 750,000
Cash received 1,875,000
Costs to date 2,200,000
Future costs to completion 220,000
R Ltd uses the following formula to calculate the amount of profit to be recognised on the contract:
Profit to be recognised = Notional profit to date xvaluecontractTotal
datetocertifiedworkofValue
1.24 The cost of work certified was
A 1,750,000 B 1,980,000 C 2,200,000 D 2,420,000
1.25 The value of the contract debtor is
A 105,000 B 325,000 C 545,000 D 625,000
Space for workings to 1.24 and 1.25
(Total = 50 Marks)
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
46/85
November 2002 11 FMAF
SECTION B 50 MARKSANSWER ALL THREE QUESTIONS
IMPORTANTMARKS ARE AWARDED FOR CORRECTLY COMPLETING THE SHADED BOXES WITH THECORRECT ANSWER WHERE A MARK IS INDICATED IN THE RIGHT-HAND COLUMN.
DO NOT WRITE IN THE MARGINS NOR IN THE COLUMNS FOR USE BY MARKERS.
Question Two
PB Ltd is a print shop. Today, 20 November 2002, it is printing 100,000 leaflets for one of its regularcustomers.
PB Ltd carries stock of the paper and ink required for this job. The stores ledger card for the paper so far thismonth, excluding the entry for issuing 100,000 sheets required for this job, has the following information:
Receipts Issues BalanceDate Qty Price Qty Price Qty Price
01/11/02 300,000 030 90,000
15/11/02 60,000 036 21,600
17/11/02 100,000
18/11/02 150,000
19/11/02 165,000 041 67,650
The current price of paper has risen to 043 per sheet.
Both skilled and unskilled labour is required for this job. Skilled workers are paid 15 per hour and unskilled
workers 10 per hour. This job will utilise 32 hours of skilled labour and 78 hours of unskilled labour.
An overtime premium equal to 50% above the normal rate is paid to skilled workers and 30% above thenormal rate to unskilled workers. As this job is urgent, 65% of the time required will be worked as overtime.A bonus of 5% of the normal wage rate will be paid for hours worked.
The following fixed production overhead information is available for the current year:
Printing department Finishing department Budgeted overheads 750,000 350,000Actual overheads to date 630,000 330,000
Budgeted labour hours 93,750 70,000
Actual labour hours to date 90,000 60,000Budgeted machine hours 375,000 10,000Actual machine hours to date 315,000 8,800
Job informationLabour hours 32 78Machine hours 120 10
The printing department absorbs overheads on the basis of machine hours and the finishing departmentabsorbs overheads on the basis of labour hours.
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
47/85
FMAF 12 November 2002
Required:
Write your answers to parts (a) to (g) in the shaded boxes below
Marksavailable
For useby thefirst
marker
For useby thesecondmarker
(a) If the company used the weighted average method forcalculating the value of the stock balance, the total valueof the 100,000 sheets issued today would be
3
(b) The total amount paid to the labour force for this job willbe
4
(c) The production overheads absorbed by this job in theprinting department will be
3
(d) The production overheads absorbed by this job in the
finishing department will be3
(e) If the company used the LIFO stock valuation method, thevalue of the closing stock after the completion of this jobwould be
2
(f) If this had been a special job that PB Ltd had costed on arelevant cost basis, the amount charged to the job for thepaper used would have been
2
In no more than 20 words, in the shaded box below, state the majordifferences between job costing and contract costing
(g)
Total Marks for Question Two =
3
20
Total for Question Two = 20 Marks
Do not write in thesecolumns below
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
48/85
November 2002 13 FMAF
Question Three
The management accountant of RL Ltd is preparing the budgets for next year.
RL Ltd produces and sells 4 products A, B, C and D. The four products use the same type of directmaterial.
The following budgeted information is available:
A B C DProduction/sales (units) 5,500 6,250 7,500 3,750Revenue 36,685 40,000 65,025 30,000Selling price per unit 667 640 867 800
Direct material informationTotal cost 7,920 8,250 10,350 4,725Usage per unit (litres) 120 110 115 105
Direct labour informationTime per unit of product 9 minutes 12 minutes 10 minutes 8 minutes
Rate per hour 800 600 750 825
General fixed production overheadsAbsorbed per unit 225 300 250 200
The budgeted general fixed production overheads are 57,375 and are absorbed on the basis of labourhours. There are 3,825 labour hours budgeted for next year.
The budgeted revenue represents the maximum demand volumes for each of the products.
Ignore stock and any work-in-progress.
Space for workings
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
49/85
FMAF 14 November 2002
Required:
Write your answers to parts (a) to (e) in the shaded boxes below
Marksavailable
For useby thefirst
marker
For useby thesecondmarker
(a) The budgeted annual contribution for the company is 2
(b) The company has just been told that the availability of materials fornext year will be limited to 20,000 litres.
(i) The maximum contribution that could be earned given thescarce resource will be
4
(ii) The expected fixed costs for the revised production planare
2
(c) Assume that insufficient materials are available to satisfy all of thedemand for product B next year, but a new supplier has now beenfound who can provide the additional materials needed. The maximumprice per litre that the company will be willing to pay for the additionalmaterials would be 3
(d) In no more than 15 words, in the shaded box below, state twoproblems which may arise as a result of using the external supplier.
2
(e) Explain in no more than 25 words, in the shaded box below, themeaning of the term "opportunity cost".
Total Marks for Question Three =
2
15
Total for Question Three = 15 Marks
Do not write in thesecolumns below
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
50/85
November 2002 15 FMAF
Question Four
L Ltd produces a specialist computer component and is currently preparing the budgets for 2003.
L Ltd has the capacity to produce 12,000 specialist components per annum. However, as competition istough, the company expects to operate at only 70% of capacity next year.
Based on the company operating at 70% of capacity, the following budgeted information has been collected:
Departments Machining Assembly Finishing StoresOverheads 520,000 275,000 250,000 30,000
Labour informationRate per hour
Skilled 800 650 725Unskilled 600 475 550 600
Total labour hoursSkilled 40,000 25,000 15,000Unskilled 20,000 10,000 16,250 4,000
Machine hours 100,000 10,000 8,500
Various materials are used in the production of the specialist component. One of these materials is called Pand 75 units of P are required per specialist component. The current cost per unit of material P is 750 andthis is expected to rise by 12% next year. It is expected that the opening stock of material P will be 7,500units and that the budgeted closing stock required will be 30% less than the anticipated opening stock.
The stores department works 60% of the time for the machining department and 40% of the time for theassembly department.
The selling and distribution costs for the most recent two months of the current year were as follows:
Output Cost (Units) September 600 6,800October 750 7,250
The cost structure for the selling and distribution costs will be unchanged.
Space for workings
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
51/85
FMAF 16 November 2002
Required:
Write your answers to parts (a) to (e) in the shaded boxes below
Marksavailable
For useby thefirst
marker
For useby thesecondmarker
(a) The purchases budget for material P (in value) for 2003will be 3
(b) The direct labour cost budget (in value) for 2003 will be2
(c) Based on the information available, the most appropriateoverhead absorption rate for the finishing department for2003 will be
2
(d) Based on the information available, the most
appropriate overhead absorption rate for themachining department for 2003 will be
2
(e) Assume that it is now the end of the budget period for 2003. If, duringthis period, the company actually operated at 75% of capacity,
(i) the flexible budget cost allowance for material P would be 2
(ii) and if the actual selling and distribution costs incurredwere 92,000, the selling and distribution cost variancewould be
4
Total Marks for Question Four = 15
Total for Question Four = 15 Marks
End of Question Paper
Do not write in thesecolumns below
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
52/85
ExaminationQuestion andAnswer Book
Write here your full examination number
Centre Code:Hall Code:
Desk Number:
Foundation Level Management Accounting Fundamentals
2 FMAF21 May 2003
Wednesday afternoon
INSTRUCTIONS TO CANDIDATES
Read this page before you look at the questions
THIS QUESTION PAPER BOOKLET IS ALSO YOUR ANSWER BOOKLET.Sufficient space has been provided for you to write your answers, and also for workings where questionsrequire them. For section B questions, you must write your answers in the shaded space provided. Anadditional blank page (22) is included if you require more space for notes or workings. Please note thatyou will NOT receive marks for your workings. Do not exceed the stated number of words. Do NOT
remove any sheets from this booklet: cross through neatly any work that is not to be marked. Avoid theuse of correction fluid.
You are allowed three hours to answer this question paper. All questions are compulsory.
Answer the ONE question in section A (this has 25 sub-questions and is on pages 2-12)
Answer the THREE questions in section B (these are on pages 14-21)
You are advised to spend 10 minutes reading through the paper before starting to answer the questions.
You should spend no more than 85 minutes in total answering the ONE question in section A, which has25 sub-questions.
You should spend no more than 85 minutes in total answering the THREE questions in section B.
Hand this entire booklet to the invigilators at the end of the examination. You are NOT permitted to leavethe examination hall with this booklet.
Do NOT write your name or your student registration number anywhere on this booklet.
The Chartered Institute of Management Accountants 2003
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
53/85
FMAF 2 May 2003
SECTION A 50 MARKS
ANSWER ALL TWENTY-FIVE SUB-QUESTIONS 2 MARKS EACH
Question One
1.1 W plc uses the economic order quantity (EOQ) as part of its materials control policy. The objective ofthe EOQ is to ensure that
A the company never runs out of stock, except in exceptional circumstances.
B the cost of being out of stock is minimised.
C the combined cost of ordering and holding stock is minimised.
D stock is purchased from suppliers at the cheapest price.
1.2 The effect of using the last in, first out (LIFO) method of stock valuation rather than the first in, first out(FIFO) method in a period of rising prices is
A to report lower profits and a lower value of closing stock.
B to report higher profits and a higher value of closing stock.
C to report lower profits and a higher value of closing stock.
D to report higher profits and a lower value of closing stock.
Each of the sub-questions numbered from 1.1 to 1.25 inclusive, given below, has only ONE correctanswer.
REQUIRED:Place a circle O around the letter A, B, C or D that gives the correct answer to each sub-question.
If you wish to change your mind about an answer, block out your first answer completely and then circleanother letter. You will NOT receive marks if more than one letter is circled.
Please note that you will NOT receive marks for any workings to these sub-questions. Sufficient spacehas been provided for you to do your workings where these sub-questions require them.
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
54/85
8/14/2019 Management Accounting CIMA
55/85
FMAF 4 May 2003
1.6 The management accountants report shows that fixed production overheads were over-absorbed inthe last accounting period. The combination that is certain to lead to this situation is
Production activity and Fixed overhead expenditure
A lower than budget and higher than budget
B higher than budget and higher than budget
C as budgeted and as budgeted
D higher than budget and lower than budget
1.7 Which ONE of the following costs would NOT be classified as a production overhead cost in a foodprocessing company?
A The cost of renting the factory building.
B The salary of the factory manager.
C The depreciation of equipment located in the materials store.
D The cost of ingredients.
1.8 The output of a process consists of two joint products, Jointpro A and Jointpro B, and a by-product.Jointpro B could go through a further process in order to increase its sales value. To assistmanagement in making the decision whether to carry out further processing, which ONE of thefollowing is relevant?
A The share of the total processing cost which has been allocated to Jointpro B.
B The sales value of Jointpro A and the by-product.
C The physical quantities of all three products at separation point.
D The cost of further processing Jointpro B and the increase in sales value that will result.
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
56/85
May 2003 5 FMAF
The following information is required for sub-questions 1.9 to 1.11
The incomplete process account relating to period 4 for a company which manufactures paper is shownbelow:
Process account
Units $ Units $
Material 4,000 16,000 Finished goods 2,750Labour 8,125 Normal loss 400 700Production overhead 3,498 Work in progress 700
There was no opening work in process (WIP). Closing WIP, consisting of 700 units, was complete asshown:
Material 100%Labour 50%Production overhead 40%
Losses are recognised at the end of the production process and are sold for $175 per unit.
1.9 Given the outcome of the process, which ONE of the following accounting entries is needed tocomplete the double entry to the process account?
Debit Credit A Abnormal Loss account Process account
B Process account Abnormal Loss account
C Abnormal Gain account Process account
D Process account Abnormal Gain account
1.10 The value of the closing WIP was
A $3,868. B $4,158. C $4,678. D $5,288.
1.11 The total value of the units transferred to finished goods was
A $21,052 50. B $21,58750. C $22,12250. D $22,656 50.
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
57/85
FMAF 6 May 2003
1.12 A machine operator is paid $1020 per hour and has a normal working week of 35 hours. Overtime ispaid at the basic rate plus 50%. If, in week 7, the machine operator worked 42 hours, the overtimepremium paid to the operator would be
A $2820. B $3570. C $7140. D $10710.
1.13 An engineering firm operates a job costing system. Production overhead is absorbed at the rate of
$850 per machine hour. In order to allow for non-production overhead costs and profit, a mark up of60% of prime cost is added to the production cost when preparing price estimates.
The estimated requirements of job number 808 are as follows:
Direct materials $10,650Direct labour $3,260Machine hours 140
The estimated price notified to the customer for job number 808 will be
A $22,256. B $22,851. C $23,446. D $24,160.
1.14 The diagram represents the behaviour of a cost item as the level of output changes:
Totalcost ($)
0 Output
Which ONE of the following situations is described by the graph?
A Discounts are received on additional purchases of material when certain quantities are purchased.
B Employees are paid a guaranteed weekly wage, together with bonuses for higher levels of production.
C A licence is purchased from the government which allows unlimited production.
D Additional space is rented to cope with the need to increase production.
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
58/85
8/14/2019 Management Accounting CIMA
59/85
FMAF 8 May 2003
1.19 The following actions are possible responses to an anticipated cash shortage:
(i) issue additional shares;
(ii) request additional bank overdraft facilities;
(iii) sell machinery currently working at half capacity;
(iv) postpone the purchase of plant and machinery.
Which of the above actions are appropriate if the cash shortage is thought to be temporary?
A (ii) only.
B (ii) and (iv) only.
C (ii), (iii) and (iv) only.
D (i), (ii), and (iv) only.
The following information is required for sub-questions 1.20 and 1.21
A company manufactures three products, X, Y and Z. The sales demand and the standard unitselling prices and costs for the next accounting period, period 1, are estimated as follows:
X Y ZMaximum demand (000 units) 40 55 70
$ per unit $ per unit $ per unit Selling price 28 22 30
Variable costs:
Raw material ($1 per kg) 5 4 6Direct labour ($12 per hour) 12 9 18
1.20 If supplies in period 1 are restricted to 90,000 kgs of raw material and 18,000 hours of direct labour,the limiting factor would be
A direct labour.
B raw material.
C both direct labour and raw material.
D neither direct labour nor raw material.
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
60/85
May 2003 9 FMAF
1.21 In period 2 the company will have a shortage of raw materials, but no other resources will berestricted. The standard selling prices and costs and the level of demand will remain unchanged.
In what order should the materials be allocated to the products if the company wants to maximiseprofit?
1st
2nd
3rd
A Z X Y
B Y Z X
C Z Y X
D Y X Z
1.22 Performance standards which have remained unchanged over a long period of time are known as
A ideal standards.
B current standards.
C basic standards.
D long-term standards.
The following information is required for sub-questions 1.23 and 1.24
W Ltd makes leather purses. It has drawn up the following budget for its next financial period:
Selling price per unit $1160Variable production cost per unit $340
Sales commission 5% of selling priceFixed production costs $430,500Fixed selling and administration costs $198,150Sales 90,000 units
1.23 The margin of safety represents
A 56% of budgeted sales.
B 83% of budgeted sales.
C 116% of budgeted sales.
D 148% of budgeted sales.
1.24 The marketing manager has indicated that an increase in the selling price to $1225 per unit would notaffect the number of units sold, provided that the sales commission is increased to 8% of the sellingprice.
These changes will cause the breakeven point (to the nearest whole number) to be
A 71,033 units. B 76,016 units. C 79,879 units. D 87,070 units.
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
61/85
FMAF 10 May 2003
1.25 An engineering firm has surplus capacity and wishes to secure a short-term contract to supplycomponents. It has decided to bid for a contract at a price which will just cover all relevant costs.
Which ONE of the following costs should be included in the calculation of the minimum price it can bid?
A The cost of a research project undertaken last year which has resulted in an improved method ofmanufacturing the components.
B The cost of hiring a supervisor to oversee the contracts progress.
C The cost of labour which will be transferred to the contract from another production line where it iscurrently idle.
D The depreciation charge on existing machinery owned by the firm which will be used to manufacturethe components.
(Total = 50 Marks)
End of Section A
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
62/85
May 2003 11 FMAF
SECTION B 50 MARKSANSWER ALL THREE QUESTIONS
IMPORTANTMARKS ARE AWARDED FOR COMPLETING THE SHADED BOXES WITH THE CORRECTANSWER WHERE A MARK IS INDICATED IN THE RIGHT-HAND COLUMN.
DO NOT WRITE IN THE MARGINS NOR IN THE COLUMNS FOR USE BY MARKERS.
Question Two
N Ltd uses one of its factories to manufacture plastic packaging which it supplies, in various forms, to thefood processing industry. The factory has three production cost centres: laminating, printing and slitting.
Some information from the overhead analysis sheet has been produced.
Laminating Printing Slitting
Production overheads $120,000 $180,000 $71,250Machine hours (a) 20,000 30,000Direct labour hours 60,000 40,000 35,000Direct labour cost $200,000 $150,000 (b)Overhead absorption rate $250 per machine
hour$450 per direct
labour hour
80% of direct labourcost
Required:
Complete the sentences below using the shaded areas provided Marksavailable
For useby thefirst
marker
For useby the
secondmarker
(a) The value that would be inserted in space (a) in the overhead analysis
sheet above is machine hours. 2
(b) The value that would be inserted in space (b) in the overhead analysissheet above is $
2
(c) If N Ltd decided to use a single factory-wide absorption rate based onlabour hours, the rate would be $ per labour hour
2
(d) State ONE benefit and ONE disadvantage of using separate overheadabsorption rates for individual cost centres, rather than a singlefactory-wide rate.
Benefit
(maximum of 15 words) 1
Disadvantage
(maximum of 15 words) 1
sub-total: 8
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
http://kaka-pakistani.blogspot.com/8/14/2019 Management Accounting CIMA
63/85
8/14/2019 Management Accounting CIMA
64/85
8/14/2019 Management Accounting CIMA
65/85
FMAF 14 May 2003
Question Three continued
Required:
Write your answers to parts (d) to (g) in the shaded boxes below Marksavailable
For useby thefirst
marker
For useby the
secondmarker
(d) B Ltd employs 75 machinists who will each work a 35-hour weekduring period 5, which consists of 26 weeks. No overtime working isallowed. Should the management accountant report a surplus orshortage of machinist hours for period 5?
A shortage* / surplus*
* delete as appropriateof hours 3
B Ltd implemented an incentive scheme for operatives based on thestandard times allowed for production. A bonus is paid in addition tothe normal weekly wage, at 50% of the basic rate per hour, for any
time saved