Which statement best describes the primary purpose of management accounting within an organisation?
Understand Purpose Use Management Accounting
Question · Easy
Which of the following is a key difference between management accounting and financial accounting?
Chapter 1: Purpose and Use of Management Accounting
1.1 Role and Scope of Management Accounting
Study guide
A cost that can be traced directly and economically to a single cost unit, such as the timber used to make one table, is best described as a:
Use Techniques Dealing With Costs
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Total fixed costs are 40,000 GBP and remain constant up to 10,000 units. What is the fixed cost per unit at an output of 8,000 units?
Using the high-low method, total cost is 22,000 GBP at 4,000 units and 30,000 GBP at 6,000 units. What is the variable cost per unit?
Question · Medium
Following on from the high-low data (variable cost 4.00 GBP per unit; total cost 22,000 GBP at 4,000 units), what is the total fixed cost?
1.2 Cost Classification and Responsibility Accounting
A cost that is fixed within a range of activity but jumps to a higher fixed level once a threshold is crossed (for example renting a second machine) is known as a:
Under the FIFO method of inventory valuation, which assumption is made about the issue of materials to production?
Opening inventory is 100 units at 5.00 GBP. A purchase of 200 units at 6.50 GBP is then made. Using the AVCO (weighted average) method, what is the cost per unit after the purchase?
When raw materials are purchased on credit, the correct double entry in a cost accounting system is:
1.3 Information Needs and Management Reporting
An employee is paid 12.00 GBP per hour for a 38-hour week and time-and-a-half for overtime. If they work 44 hours in a week, what is the total gross pay?
Overtime premium for general factory work that cannot be attributed to a specific customer order is normally treated as:
Which of the following correctly defines prime cost?
A service department's costs are reapportioned to production departments. This process of sharing service centre costs is called:
Attribute Costs Organisational Requirements
Chapter 2: Techniques for Dealing with Costs
2.1 Cost Behaviour Patterns
Budgeted production overhead is 180,000 GBP and budgeted labour hours are 30,000. What is the overhead absorption rate per labour hour?
Using a recovery rate of 6.00 GBP per labour hour, overheads absorbed are based on 31,000 actual hours while actual overhead incurred is 180,000 GBP. The overhead is:
Under marginal costing, which cost is treated as a period cost and charged in full against the period's contribution?
A product sells for 50 GBP, has variable cost of 30 GBP, and fixed costs are 60,000 GBP. What is the contribution per unit?
Short Term Decision Making
2.2 High-Low Method and Cost Estimation
Using the data (contribution 20 GBP per unit; fixed costs 60,000 GBP), what is the break-even point in units?
With contribution of 20 GBP per unit and fixed costs of 60,000 GBP, how many units must be sold to achieve a target profit of 30,000 GBP?
Budgeted sales are 5,000 units and the break-even point is 3,000 units. What is the margin of safety expressed as a percentage of budgeted sales?
A product has a contribution to sales (C/S) ratio of 40% and fixed costs of 80,000 GBP. What is the break-even point in sales revenue?
2.3 Costing Methods: Job, Batch, Unit, and Service Costing
When closing inventory is rising (production exceeds sales), how will absorption costing profit compare with marginal costing profit?
Question · Hard
Closing inventory increased by 500 units during the period and the fixed overhead absorption rate is 8 GBP per unit. By how much will absorption profit exceed marginal profit?
Which costing method values inventory to include a share of fixed production overhead, as required by IAS 2 for external financial statements?
Which type of costing system is most appropriate for a furniture maker who produces one-off bespoke items to individual customer specification?
2.4 Cost Accounting Records and Journals
A service cost centre supports two production cost centres. Which method recognises services provided between service cost centres before their costs are assigned to production?
A department completed 800 units and had 200 closing work-in-progress units that were 50% complete for conversion costs. What are the equivalent units for conversion costs?
Activity based costing (ABC) assigns overheads to products using:
A machine set-up cost pool totals 24,000 GBP and there are 120 set-ups in the period. Product X requires 15 set-ups. How much set-up cost is charged to Product X under ABC?
Chapter 3: Attributing Costs to Organisational Requirements
3.1 Material Costs and Inventory Valuation
Standard costing sets a predetermined cost for each unit. The difference between standard cost and actual cost is known as a:
Investigate Deviations From Budgets
Standard material cost for actual production is 19,000 GBP and actual material cost is 20,500 GBP. The total direct materials variance is:
The flexed labour cost for actual output is 19,200 GBP and actual labour cost is 18,560 GBP. What is the total labour variance?
The flexed variable-overhead allowance is 12,600 GBP and actual variable overhead is 13,250 GBP. What is the total variable-overhead variance?
3.2 Labour Costing and Remuneration Systems
The fixed production-overhead budget is 50,000 GBP and actual fixed production overhead is 53,000 GBP. What is the total fixed production variance?
A multi-product budget requires 800 units of Product A using 3 kg each and 600 units of Product B using 5 kg each. Opening raw-material inventory is 500 kg and desired closing inventory is 700 kg. How many kilograms should be purchased?
Which action is the best response to a significant adverse total raw-material variance caused by avoidable production waste?
A rolling budget is updated at the end of each month. What normally happens when the completed month is removed?
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