CIMA cimapra17-ba2-1 practice test

Question 1

In order for the information in a management accounting report to be authoritative its contents must
be:
A. trusted and from reliable sources.
B. complete and reported in a timely manner.
C. complete and relevant.
D. both financial and non-financial.

Answer:

C
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Question 2

A companys policy is to hold closing inventory each month equal to 10% of the next months
budgeted sales volume. The budgeted sales volumes of product Q for months 1 and 2 are 1,660 units
and 2,300 units respectively.
The production budget for product Q for month 1 is:

• A. 1,596 units
• B. 1,494 units
• C. 1,724 units
• D. 1,890 units

Answer:

B

Question 3

A company has spent $5,000 on a report into the viability of using a subcontractor. The report
highlighted the following:
A machine purchased six years ago for $30,000 would become surplus to requirements. It has a
written-down value of $10,000 but would be resold for $12,000.
A machine operator would be made redundant and would receive a redundancy payment of
$40,000.
The administration of the subcontractor arrangement would cost the company $25,000 each year.
Which THREE of the following are relevant for the decision? (Choose three.)
A. A relevant cost of $5,000 for the viability report.
B. A relevant cost of $30,000 for the machine.
C. A relevant cost of $40,000 for the redundancy payment.
D. A relevant cost of $10,000 for the machine.
E. A relevant cost of $25,000 each year for administration.
F. A relevant revenue of $12,000 for the machine.

Answer:

A,D,E
164/165
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Question 4

CORRECT TEXT
A company has three production departments X, Y and Z, and one service department.
The service departments overhead has been apportioned to the production departments in the ratio
3:2:5. As a result of this apportionment, $2,070 was given to Department Y.
What is the amount of service department overhead that would have been apportioned to
Department Z? Give your answer to the nearest dollar.

Answer:

$5,175

Question 5

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Which THREE of the following are parts of the master budget? (Choose three.)

• A. Finished goods inventory budget.
• B. Budgeted statement of profit or loss.
• C. Cash flow budget.
• D. Sales budget.
• E. Administration overhead budget.
• F. Budgeted statement of financial position.

Answer:

B,C,F

Reference:
https://www.acowtancy.com/textbook/acca-ma/d2-budget-preparation/master-budgets/notes

Question 6

A company has two production departments and two service departments (Maintenance and
Stores). The overhead costs of each of the departments are as follows.

The following equations represent the reapportionment of each of the service department
overheads to the other.
M = 4,700 + 0.1S
S = 5,800 + 0.2M
Where M = total Maintenance overhead after reapportionment from Stores
S = total Stores overhead after reapportionment from Maintenance
60% of the total Maintenance overhead and 50% of the total Stores overhead are to be apportioned
to Production Department 1.
The total production overhead for Production Department 1 after reapportionment of the service
departments overhead costs is closest to:

• A. $71,672
• B. $75,500
• C. $70,720
• D. $71,821

Answer:

C

Question 7

CORRECT TEXT
A company uses full cost pricing. The unit costs for product Z are given below.

What price per unit should be charged in order to achieve a profit margin of 20%?
Give your answer to the nearest cent.

Answer:

$25

Question 8

CORRECT TEXT
The following data are available for a delivery company. The table shows the number of tonnes
delivered (x) and the associated distribution cist (y) in recent periods.

Further analysis of this data has determined the following:
xy = 36,427x2 = 1,144
Using least squares regression analysis, calculate the variable cost per tonne delivered. Give your
answer to the nearest cent.

Answer:

-128.10
162/165
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Question 9

Which of the following statements regarding variances is valid?

• A. Using higher quality material than standard could explain an adverse labour efficiency variance.
• B. Improved maintenance of production machinery could explain an adverse material usage variance.
• C. An adverse labour rate variance could explain a favourable labour efficiency variance.
• D. Poor supervision could explain a favourable labour rate variance.

Answer:

C

Reference:
https://accounting-simplified.com/management/variance-analysis/labor/rate.html

Question 10

A company which manufactures and sells one product has fixed costs of $80,000 per period. The
selling price per unit of $25 generates a contribution/sales ratio of 40%.
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How many units would need to be sold in a period to earn a profit of $10,000?

• A. 9,000
• B. 8,000
• C. 36,000
• D. 32,000

Answer:

D