Câu 17: Which of the following is a style of performance evaluation identified

in Hopwood's studies? *
Non-accounting
Profit maximization
Revenue focused
Budget planning template

Câu 8: Is the following statement true or false?

“Insurance cost is an inventory holding cost”

True

False

Câu 21: A company expected to produce 200 units of its product, the Bone, in
20X3. In fact, 260 units were produced.

The standard labour cost per unit was $70 (10 hours at a rate of $7 per hour). The
actual labour cost was $18,600 and the labour force worked 2,200 hours although
they were paid for 2,300 hours.

What is the direct labour efficiency variance for the company in 20X3?
$400 (A)
$2,100 (F)
$2,800 (A)
$2,800 (F)

Câu 24: Which of the following would help to explain a favourable direct
labour efficiency variance?

(i) Employees were of a lower skill level than specified in the standard

(ii) Better quality material was easier to process

(iii) Suggestions for improved working methods were implemented during the
period
(i), (ii) and (iii)
(i) and (ii) only
(ii) and (iii) only
(i) and (iii) only

Câu 10: The annual demand for an item of inventory is 2,400 units. The cost
of placing an order is £80 and the cost of holding an item in stock for one year
is £15.

What is the economic order quantity, to the nearest unit?

113
160
12,800
25,600

Câu 23: Which of the following situations is most likely to result in a

favourable selling price variance?*
The sales director decided to change from the planned policy of market skimming
pricing to one of market penetration pricing.
Fewer customers than expected took advantage of the early payment discounts
offered.
Competitors charged lower prices than expected, therefore selling prices had to be
reduced in order to compete effectively.
Demand for the product was higher than expected and prices could be raised
without adverse effects on sales volumes.

Câu 5: Which of the following best describes ‘zero-based budgeting’?*

A method of budgeting whereby all activities are re-evaluated each time a budget
is formulated.
The budget for each period is based on the current year's results, modified for
changes in activity levels.
The budget is updated in regular increments, by adding the budget for a further
accounting period when the earliest accounting period has expired
A budget method where an attempt is made to make expenditure under each cost
heading as close to zero as possible.

Câu 4:

£46,260
£49,480
£50,200
£50,530

Câu 22:

Nil
$10,000 Adverse
$10,000 Favourable
$11,000 Adverse
Câu 28: A company has fixed costs of $1.3 million. Variable costs are 55% of
sales up to a sales level of $1.5 million, but at higher volumes of production and
sales, the variable cost for incremental production units falls to 52% of sales.

What is the breakeven point in sales revenue, to the nearest $1,000?

$1,977,000
$2,027,000
$2,708,000
$2,802,000

Câu 9: Which of the following is the correct formula to calculate working

capital?
Inventory – Cash – Receivables + Payables
Inventory + Cash + Receivables – Payables
Receivables + Payables – Inventory – Cash
Inventory + Cash + Payables – Receivables

Câu 12: A company uses the Economic Order Quantity (EOQ) model to
establish reorder quantities. The following information relates to the
forthcoming period:

Order costs = £25 per order

Holding costs = 10% of purchase price

Annual demand = 20,000 units

Purchase price = £40 per unit

EOQ = 500 units

No safety inventory is held

What are the total annual costs of inventory (i.e. the total purchase cost plus
total order cost plus total holding cost)?
£22,000
£33,500
£802,000
£803,000

Câu 18: Gross profit margin might be an appropriate measure for which of
the following responsibility centres:*
All types of responsibility centres
Only cost centre, profit centre and investment centre
Only profit centre and investment centre
Only profit centre

Câu 16: Which of the following describes a flexible budget?

A budget comprising variable production costs only
A budget which is updated with actual costs and revenues as they occur during the
budget period
A budget which shows the costs and revenues at different level of activity
A budget which is prepared using a computer spreadsheet model.

Câu 3: If a company has no production resource limitations, in which order

would the following budgets be prepared?

(i) Material usage budget

(ii) Sales budget

(iii) Material purchase budget

(iv) Finished goods inventory budget

(v) Production budget

(vi) Material inventory budget

(v), (iv), (i), (vi), (iii), (ii)
(ii), (iv), (v), (i), (vi), (iii),
(ii), (iv), (v), (i), (iii), (vi)
(ii), (v), (iv), (i), (vi), (iii)

Câu 7: Is the following statement true or false?

“In the periodic review system of inventory control, the inventory records are
updated for each receipt and issue of inventory as it occurs.”
True
False
Câu 25: Is the following statement about limiting factor analysis true or false?

“When there’s insufficient resource to meet the potential sales demand for 2
products, in order to maximize contribution, company should give production
priority for product which has the higher contribution per unit of limiting factor
than the other.”
True
False
Câu 2: Reducing the incidence of budgetary slack is an advantage of a
‘bottom-up’ style of budgeting. Is it true or false?*
True
False

Câu 19: Is the following statement true or false?

“Standard costing (for control) involves: (i) The estimation of the costs of products
or services; (ii) The collection of actual costs; (iii) The comparison of the actual
costs with the predetermined estimates”
True
False

Câu 13: Is the following statement about flexible budget true or false?

“Flexible budget shows the costs and revenues at different levels of activity”
True
False

Câu 15: Which of the following sentences best describes what is necessary for
a responsibility accounting system to be successful?*
Each manager should know the criteria used for evaluating his or her own
performance.
The details on the performance reports for individual managers should add up to
the totals on the report of their superior.
Each employee should receive a separate performance report.
Service department costs should be apportioned to the operating departments that
use the service.

Câu 27:

$86,400
$112,837.50
$113,060.50
$113,200

Câu 6: The following details have been extracted from the payables' records
of Dimo Co.:

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 September to November are budgeted as follows:

September: £250,000

October: £300,000

November: £280,000

For suppliers paid in the month of purchase, a settlement discount of 5% is

received. What is the amount budgeted to be paid to suppliers in November?
£278,500
£280,000
£289,000
£292,500

Câu 1: Is the following statement true or false?

“Coordination and allocation of responsibility for the preparation of budgets is one

of the functions of the budget committee.”
True
False

Câu 29: The contribution ratio of product A is 40%. The manufacturer of product
A wishes to make a contribution of $100,000 towards fixed costs.

If the selling price is $5 per unit, the number of units of A that must be sold is:
50,000 units
40,000 units
20,000 units
8,000 units

Câu 11: Which of the following is correct with regard to inventories?

(i) Stock-outs arise when too little inventory is held

(ii) Safety inventories are the level of units maintained in case there is unexpected
demand
(iii) A re-order level is where an order should be placed whenever inventory fall to
this level.
(i) and (ii) only
(i) and (iii) only
(ii) and (iii) only
(i), (ii) and (iii)

Câu 20: Is the following statement true or false?

“The sales volume variance is the difference between the actual units sold and the
budgeted quantity, valued at the expected sales price per unit”
True
False

Câu 26: Is the following statement about CVP analysis true or false?

“CVP analysis is the study of the interrelationships between contribution, volume

and profit at various levels of activity.”
True
False

Câu 30: Rachel Ltd manufactures and sells a single product. The variable cost of
production is £8.0 per unit and the current sales price is £15 per unit. Fixed costs
are £2,600 per month, and the annual profit for the company at the current sales
volume is £60,000. The volume of sales demand is constant throughout the year.

The sales manager wishes to raise the sales price to £18 per unit, but considers that
a price rise will result in some loss of sales.

What should monthly sales volume be to maintain current profit with the
sales price of £18 per unit?
760 units
423 units
2,543 units
6,260 units

Câu 14: Is the following statement about flexible budget preparation true or
false?

“Semi-variable costs need splitting into their fixed and variable elements for
calculating budget cost allowance”.
True
False

Câu 28:

A, then B, then C
B, then A, then C
A, then C, then B
C, then B, then A
Câu 20:
$6,000 Favourable
$20,000 Adverse
$22,000 Favourable
Nil

Câu 15: Division A is a profit centre within PC Ltd. Over which of the
following is the manager of division A likely to have control?
(1) Transfer prices

(2) Level of inventory in the division

(3) Discretionary fixed costs incurred in the division

(4) Discretionary fixed costs incurred in the division

(1), (2), (3) and (4)
(1), (2) and (3) only
(1) and (2) only
(1) only
Câu 27: A company manufactures a single product for which cost and selling
price data are as follows:

Selling price per unit: £20

Variable cost per unit: £10

Fixed costs per month: £50,000

Budgeted monthly sales (units): 8,000

The margin of safety, expressed as a percentage of budgeted monthly sales, is:
68.75%
60.00%
37.50%
31.25%
Câu 12: Is the following statement true or false?

“The key trade-off that lies at the heart of working capital management is that
between business stability and solvency.”
True
False
Câu 19: A company manufactures a single product L, for which the standard
material cost is as follows.

Material: 14 kg * $3 = $42 per unit

During July, 800 units of L were manufactured, 12,000 kg of material were

purchased for $33,600, of which 11,500 kg were issued to production.

This company values all inventory at standard cost.

What are the material price and usage variances for July?
Price: $2,300 (F); Usage: $900 (A)
Price: $2,300 (F); Usage: $300 (A)
Price: $2,400 (F); Usage: $900 (A)
Price: $2,400 (F); Usage: $840 (A)

Câu 6: Cash budget is a functional budget. Is it true or false

True
False

Câu 3: Nimo Co. is going to prepare a budgeted income statement for the six
months ending on 31 December 20X2.

Monthly sales are forecasted to be £4,000 for July, £5,500 for each of August and
September and £6,000 per month from October onwards.

Selling price is fixed to generate a margin of 30%.

Overhead expenses (excluding depreciation) are estimated at £1,000 per month.

The company plans to purchase non-current assets on 1 July costing £6,000, which
will be paid for at the end of September and are expected to have a five-year life
(with no residual value).

The budgeted net profit for the six month ending 31 December 20X2 is
£2,700
£3,300
£3,600
£7,700
Câu 2: What does a master budget comprise?
The budgeted statement of profit or loss
The budgeted cash flow, budgeted statement of profit or loss and budgeted
statement of financial position
The budgeted cash flow
The entire set of budgets prepared
Câu 14: Within decentralised organisations there may be cost centres,
investment centres and profit centres. Which centres have the highest and
lowest degree of autonomy respectively?*
Investment centres and Cost centres
Profit Centres and Cost Centres
Cost Centres and Revenue Centres
All responsibility centres have the same degree of autonomy
Câu 22: A company has a budgeted material cost of $125,000 for the production
of 25,000 units per month. Each unit is budgeted to use 2 kg of material. The
standard cost of material is $2.50 per kg.

Actual materials in the month cost $136,000 for 27,000 units and 53,000 kg were
purchased and used.

What was the adverse material price variance?

$1,000
3,500
$7,500
$11,000
Câu 13: Which of the following is NOT an example of budget bias?

I) A production manager overestimates costs when setting the budget so that they
will not be blamed for overspending in the future

II) A sales manager underestimates revenues when setting the budget to guard
against poor results.

III) A manager try to ensure that his spending rises to meet his inflated budget.

IV) A manager overestimates revenues when setting the budget in order to make a
favourable impression on senior managers.
None of the above
I, II and III
II and III
All of the above
Câu 16: What is a budget cost allowance?*
A budget of expenditure applicable to a particular function
A budget allowance which is set without permitting the ultimate budget manager
the opportunity to participate in setting the budget
The budgeted cost expected for the actual level of activity achieved during the
period
A fixed budget allowance for expenditure which is expected every period,
regardless of the level of activity
Câu 7:

£13,500
£13,200
£5,100
£4,800
Câu 11: Is the following statement true or false?
“Perpetual inventory method is a system where by inventory levels are reviewed at
fixed time intervals to fit in with production schedules, and variable quantities are
ordered as appropriate.”
True
False

Câu 9: Which of the following is/are (a) reason(s) for holding inventory?
(i) to ensure continuity of production

(ii) to reduce ordering costs

(iii) for technical reasons

(iv) to take advantage of quantity discounts

(iii) only
(i) and (ii) only
(i), (ii) and (iv) only
All of the above

Câu 4: Which of the following best describes a ‘top-down’ budget?*

A series of budgets is prepared, from the most optimistic performance down to the
most pessimistic.
Top management prepare a budget with little or no input from operating personnel.
A budget which is set by delegating authority from top management, allowing
budget holders to participate in setting their own budgets.
A budget which has been set by scaling down individual expenditure items until
the total budgeted expenditure can be met from available resources.

Câu 18: Is the following statement about balanced scorecard true or false?

“The balanced scorecard approach to the provision of information focuses on four

different perspectives: suppliers, innovation and learning, financial and internal
business.”
True
False

Câu 24: Is the following statement true or false?

“A standard cost per unit is the expected, or normal, cost per unit, based on
expectations (standards) for usage and price per unit of resources”
True
False
Câu 30: Is the following statement about margin of safety true or false?

“The margin of safety is the difference in units between the budgeted sales volume
and the actual sales volume”
True
False
Câu 21: Which of the following best describes management by exception?
Using management reports to highlight exceptionally good performance, so that
favourable results can be built upon to improve future outcomes
Sending management reports only to those managers who are able to act on the
information contained within the reports
Focusing management reports on areas which require attention and ignoring those
which appear to be performing within acceptable limits
Focusing management reports on areas which are performing just outside
acceptable limits

Câu 8: The purchase price of an inventory item is £42 per unit. In each three‐
month period the usage of the item is 2,000 units. The annual holding costs
associated with one unit is 5% of its purchase price. The EOQ is 185 units.

What is the cost of placing an order (to 2 decimal places)?

£0.02
£0.05
£4.49
£8.98
Câu 17: Is the following statement about budgetary control true or false?

“At the end of each period, actual results may be compared with the any activity
level in the fixed budget as a control procedure.”
True
False
Câu 29: Rachel’s bakery makes a single product, the Bread. This product sells for
£3, variable costs are £1 per unit. Total fixed costs per annum are £15,250.

If Rachel wishes to make an annual profit of £14,000 how many Bread does
she need to sell?
7,625 units
9,750 units
14,000 units
14,625 units

Câu 10: A manufacturing company uses 25,000 components at an even rate

during a year. Each order placed with the supplier of the components is for
2,000 components, which is the economic order quantity. The company holds
a buffer inventory of 500 components. The annual cost of holding one
component in inventory is £2.

What is the total annual cost of holding inventory of the component?

£2,000
£2,500
£3,000
£4,000
Câu 26: Is the following statement about contribution true or false?

“Contribution per unit is the difference between the selling price per unit and the
variable costs per unit”
True
False

Câu 23: Is the following statement true or false?

“‘Material price increase’ is one of the reasons for a favourable material price
variance”
True
False
Câu 25: Is this true or false if material is identified as limiting factor in the
case as follows?

It needs 3 kg of material X and 2 machine hours to produce one unit of product A

and those of 2 kg and 1.5 hours for product B. It was expected that 6,000 machine
hours and 10,000 kg of X being available for production. Sales demand was 2,000
units for each product.
True
False

Câu 1: Which of the following is NOT one of the main purposes of a budget?
To compel planning
To inform shareholders of performance
To communicate ideas and plans
To provide a framework for responsibility accounting
Câu 5: Is the following statement true or false?
“An advantage of the high-low method of cost estimation is that it takes into
account the full range of available data.”
True
False