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MTQ Question Bank
MTQ Question Bank
MTQ
Question
Bank
Ibrahim Sameer
[email protected]
MTQ Question Bank 2015
Preference
Alhamdulillah!
In the name of Allah, most benevolent, ever merciful. All praise to be Allah, Lord of all the
worlds, giving me the forte, new ideas and forbearance from the commencement until the
completion of this book.
Management accounting combines accounting, finance and management with the leading edge
techniques needed to drive successful businesses. Management accountants normally advise
managers about the financial implications of projects, explain the financial consequences of
business decisions, formulate business strategy, monitor spending and financial control, conduct
internal business audits, explain the impact of the competitive landscape, and bring a high level
of professionalism and integrity to business.
This book “MTQ Question Bank” is prepared for the syllabus requirements of ACCA – F2. The
core intention of this book is to provide the students the comprehensive theory & practice
question for students.
Complete care has been taken to make the book error free. However, mistakes might have crept
in advertently. Readers finding any errors with regards to accounting treatment or calculations
are requested to bring to my notice, for enabling me to rectify them in my future edition.
Like most text book, this book has also drawn from the works of a large number of researchers
and authors in the field of finance. My compilation of this book has also been influenced by a
number of standard and popular text books in the field. A number of problems, Illustrations and
exercised in the book have been drawn from or are based on the examinations of universities and
management institute around the globe as well as the public examinations of the professional
bodies such as ACCA (UK), CIMA (UK), CPA (Irelands), CA (India) & ICWA (India).
Ibrahim Sameer
Question 8
Question 10
Question 12
Question 15
The single product manufactured by Allegrop Co requires 2.5 kg of a single raw material per unit
of product. The material costs $9.00 per kg.
Budgets are being prepared and the following additional information is available:
(3) Opening inventory of raw material in each period is budgeted to be one third of the
budgeted material usage in that period.
1 mark
Task 1
units
2 marks
Task 2
units
3 marks
Task 3
If the budgeted production in Period 3 is 31,600 units and in Period 4 is 28,900 units:
4 marks
Tasks 4 and 5
It is possible that raw material availability will be restricted to 75,000 kg per period. If this
situation arises, 75,000 kg of the material will be purchased and used in each period. Any sales
demand not satisfied in a period would be lost.
2 marks
Task 4
Assume that the restriction on raw material supply occurs throughout the budget period
and that there would be no inventory of raw material or finished goods at the beginning of
Period 1. In this circumstance:
units
2 marks
Task 5
1, 2 and 4
3 only
2, 3 and 4
Background
Kidling Co uses a standard marginal costing system for cost control of its single product. The
standard cost card for the product is:
$ per
unit
Direct material 2.5 kg at $12.60 per kg 31.50
Direct labour 2 hours at $11.20 per hour 22.40
Variable production overhead 8.80
62.70
8 marks
Task 1
2 marks
Task 2
The direct labour rate variance in the month just ended was $1,908 favourable.
$283,924
$139,100
$142,916
$280,108
Background
The following information, for the year to 31 December 20X9, is available for Fun Co which
operates in the toys and games industry.
$'000
Sales 7,660
Gross profit 1,200
Operating profit 590
Capital employed 3,330
Current assets 400
Fun Co sold 350,000 units in the year ended 31 December 20X9. Total sales for the toys and
games industry for the year were $61,280,000.
6 marks
Task 1
Calculate the following performance measures for Fun Co for the year ended 31 December
20X9:
2 marks
Task 2
Return on investment (ROI) and residual income (RI) are both measures of investment
performance.
Does each of the following statements describe a feature of ROI only, RI only, both ROI
and RI or neither of the two measures?
ROI RI
. BothNeither
onlyonly
Based on profit rather than cash flow
Provide(s) a relative measure of investment performance
Facilitates the comparison of performance of business units of different
size
Ensure(s) that managers will select investment projects with positive NPV
2 marks
Task 3
An analyst has calculated the following ratios for Fun Co for comparison with the toys and
games industry average.
Complete the following commentary on Fun Co's performance relative to the industry
average.
Its ability to service its loans is……. (Worse/Better) than the industry average, which could
mean that Fun Co is ……. (lower/higher) having a level of profitability than the industry
average.
Dancer Co wishes to buy a new packaging machine. Two alternatives are available; Machine A
and Machine B. Both have an expected life of three years. Dancer Co's management accountant
has begun to prepare the following spreadsheet to evaluate the two machines but he has not yet
completed it. The data entered to date is correct.
Machine B has a purchase cost of $10,000 and an expected scrap value in three years time of
$4,000. It will generate a contribution of $7,000 per annum before incurring production
overheads (including straight line depreciation) of $3,000 per year. In addition maintenance costs
of $1,200 per year will be payable each year in advance. All costs and revenues, apart from the
purchase cost and maintenance costs may be assumed to occur at the end of the year.
Dancer Co's cost of capital is 10% per year. In the spreadsheet, t0 represents the date of the
initial investment, t1 represents the first anniversary of this date etc.
6 marks
Task 1
What is the net present value (NPV) of
$
Machine A (to the nearest $)?
What is the non-discounted payback period
of Machine A (to the nearest one decimal Years
place)?
What value should be entered in cell C10? $
What value should be entered in cell B11? $
4 marks
Task 2
Does each of the following advantages apply to the NPV method, the non-discounted
payback method, both of these methods or neither of these methods?
21 Ibrahim Sameer ACCA (Management Accounting – F2)
MTQ Question Bank 2015
Non-
Both Neither
. NPV discounted
methods method
payback
It is cash flow based
It takes into account the time value of money
It considers the effect on reported profits
It selects projects that quickly recoup their initial investment
Question 20
Product A is one of the products that are manufactured by a company. The following direct cost
standards were set, for each batch of 50 units of Product A, for the period just ended:
Variable production overheads were absorbed at a standard rate of $3.70 per direct labour hour.
Fixed production overheads were absorbed at a standard rate per machine hour using the
following budgeted data for the factory:
40 batches of Product A were manufactured in the period just ended and the following direct
resources were used:
Material X 416 kg
Material Y 195 litres
Labour 838 hours
6 marks
Task 1
What was the standard total variable production cost per
$
unit of Product A (to two decimal places)?
2 marks
Task 2
Do each of the following fixed production overhead variances occur in a standard marginal
costing system?
. Yes No
Expenditure
Efficiency
Capacity
Volume
2 marks
Task 3
Which of the following variances is/are required in order to reconcile the budgeted profit
for a period with the standard profit on actual sales for the same period?
3 only
1, 2 and 4
1 only
Donner Co operates for 365 days per year and makes all of its sales on credit. A summary of its
current financial information is given below.
6 marks
Task 1
Calculate the following based upon Donner Co's summarised financial information. All
figures should be to one decimal place.
4 marks
Task 2
The performance of Donner Co's closest rival, Competitor A, together with the industry average
in their sector is given below.
Based on the figures above, are the statements about Competitor A true or false?
. True False
Its liquidity position is worse than the industry average
It has a smaller operating profit margin than the industry average
If its operating profit were 30% lower it would make a net loss
Its capital gearing is riskier than the industry average
Background
Blitzen Co manufactures and sells a single product. It is preparing budgets for the three month
period ending 31 December 20X5. The budget is virtually complete and the remaining task is to
prepare the budgeted statement of financial position as at 31 December 20X5. Sales of the
product and purchases of materials are all made on credit terms. There were no purchases or
disposals of non-current assets in the period to 31 December 20X5. Entries marked 'n/a' are yet
to be calculated. The following data is available:
Budgeted statement of profit or loss for the Cash budget for the quarter ending 31
quarter ending 31 December 20X5 December 20X5
$ $
Receipts from
Sales 25,000 23,000
customers
Direct materials 14,000 Payments
Direct wages 6,000 Materials 12,000
Depreciation 1,500 Wages 6,000
Net profit/(loss) 3,500 Net cash inflow 5,000
7 marks
Task 1
Non-current assets $
Receivables $
Cash $
Payables $
2 marks
Task 2
Blitzen Co is about to start work on budgets for 20X6. One kg of direct material A is required to
make four units of its product. Each unit of product also requires three kg of material B and two
hours of direct labour. Demand for the product and the supply of material A is unlimited, but
only 50,000 kg of material B and 40,000 labour hours are available in the coming period.
Direct material A
Sales demand
Direct material B
Direct labour
1 mark
Task 3
Background
Rudolph Co uses a standard marginal costing system to control the costs and revenues of its
only product. The following spreadsheet shows a standard cost-based operating statement for
the month of July. Entries for some cells have been deliberately omitted.
2 marks
Task 1
Cell A4 ……. (sales volume contribution variance/ sales price variance/ sales turnover
variance)
Cell A15 …….. (Standard profit/ Actual contribution/ Actual variable cost)
2 marks
Task 2
Which of the following will calculate correctly the value in cell D18?
=D15+D16+D17
=D7-D14-D16+D17
=D7-D14+D17
= sum(D3:D17)
2 marks
Task 3
4 marks
Task 4
Rudolph Co is now considering changing the costing system from standard marginal costing to
standard absorption costing system. You are given further details that were used to prepare the
July operating statement as follows:
If Rudolph Co had used standard absorption costing in the month of July, what would
have been the value of the following:
Background
Vixen Co is an internet based retailer of books and music. It believes that the factors critical to
the success of its business are the:
Customers place a maximum of one order per visit to the website. The company operates for
365 days per year.
6 marks
Task 1
Calculate the following for Vixen Co for the most recent year.
2 marks
Task 2
The performance indicators calculated above are part of Vixen Co's balanced scorecard
performance monitoring system. They measure process efficiency and customer satisfaction.
Effectiveness
Growth
Financial success
Economy
2 marks
Task 3