ACCA

F2 (MA/FMA)

Management Accounting

QUESTIONS

Mock A

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 MOCK QUESTIONS

SECTION A – ALL 35 QUESTIONS ARE COMPULSORY AND MUST BE

ATTEMPTED

Each question is worth 2 marks

1 Which TWO of the following are direct expenses?

A The cost of special designs, drawings or layouts for a specific job.

B The hire of tools or equipment for a particular job.
C Salesmen’s wages.
D Rent, wages and insurance of a factory.

2 Storm plc has just developed a new product to be called the Rain and is now considering
putting it into production.

Which of the following costs/revenues would be relevant to an NPV calculation (tick in

the box)?

Relevant?
Costs incurred in the development of Rain amounting to $480,000
Purchase of new machinery at a cost of $2,400,000 payable immediately
Depreciation charge for the new machinery of $600,000 per annum
Sales price of $80 per Rain

3 What is the weighted price index, using 20X1 as the base year, based on the following
data?

Product Quantity 20X1 Price 20X2 Price

Towel 250 $2.50 $2.00
Bucket 300 $1.50 $3.00

A 101.5
B 145.5
C 84.1
D 108.4

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ACCA MA AND FMA: MANAGEMENT ACCOUNTING

4 A company wants to calculate the economic order quantity (EOQ) for an item of inventory.
The following data is available in a spreadsheet.

A B
1 Monthly demand 1,000 units
2 Cost of placing an order $25
3 Cost of holding one unit of inventory $2.50 per annum
4 Economic order quantity ??

What formula is required to calculate the EOQ?

A B4 = SQRT((2*B3*B1*12)/B2)
B B4 = SQRT(2*B3*B1*12)/B2
C B4 = SQRT((2*B2*B1*12)/B3)
D B4 = SQRT(2*B2*B1)/B3

5 Kiveton Cleaning Services supplies its employees with protective clothing. One such item is
protective gloves.

Records from the stores department for January showed:

1 Jan Opening inventory 150 pairs @ $2 each
7 Jan Purchases 40 pairs @ $1.90
15 Jan Issues 30 pairs
29 Jan Issues 35 pairs
What is the value of the issues and the closing inventory if the FIFO method is used?
Issues Closing inventory
A $130 $246
B $129 $247
C $246 $130
D $247 $129

6 The following data is available for Tallus Co in period 2.

Actual overheads $225,900

Actual machine hours 7,530
Budgeted overheads $216,000
The budgeted overhead absorption rate was $32 per hour
What were the budgeted machine hours?

hours

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 MOCK QUESTIONS

7 Binsey Co uses regression analysis to forecast monthly costs. The accountant has
produced the following equation:

TC = 4Q + 600
Where Q is the number of units produced each month and TC is the total cost in a month.
Which of the following statements is correct?
A Variable costs = $600 per unit, Fixed costs = $4 per month
B Annual fixed costs = $28,800
C Annual fixed costs = $7,200
D Variable costs = $4 per unit, Fixed costs = $7,200 per month

8 Burgess operates a continuous process into which 3,000 units of material costing $9,000
was input in a period.

Conversion costs for this period were $11,970 and losses, which have a scrap value of $1.50
per unit, are expected at a rate of 10% of input. There was no opening or closing inventory
and output for the period was 2,900 units.
What was the cost per unit of output?
A $6.84
B $6.99
C $7.76
D $7.60

9 When opening inventory was 10,000 litres and closing inventory was 12,000 litres, a
company had a profit of $72,000 using absorption costing. The fixed overhead absorption
rate was $5 per litre.

What would be the profit under marginal costing?

10 Mountain Venture has net assets of $540,000 and made profits of $280,000 for the year.
The cost of capital is 8% per annum.

What are the ROI and RI for Mountain Venture?

ROI RI
A 4% $43,200
B 15% $22,400
C 48% $517,600
D 52% $236,800

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ACCA MA AND FMA: MANAGEMENT ACCOUNTING

11 If a company compares its procedures with another company that is does not compete
with. What is this form of benchmarking is known as?

A Strategic
B Competitive
C Functional
D Internal

12 A retailer has mean sales of 75 per day and a standard deviation of 15 sales.

What is the coefficient of variation as a % (to the nearest whole number)?

13 A company had a budgeted fixed production overhead of $7,500 with budgeted output of
1,000 units. The company absorbs overheads using labour hours and had budgeted to work
10,000 hours. Actual output was 790 units, 8,848 hours were worked and the actual
overhead was $6,800.

What were the fixed overhead capacity and efficiency variances for the period?
Capacity Efficiency
$ $
A 864 (A) 1,575 (F)
B 864 (A) 711 (A)
C 1,575 (A) 711 (F)
D 864 (F) 711 (F)

14 If a population is very large but opinions need to be sourced in the most efficient way
from the entirety of a couple of groups, which method of sampling would be the most
appropriate?

A Random
B Multi‐stage
C Cluster
D Quota

15 Which of the following is a building firm who constructs extensions to private houses
most likely to use?

A Service Costing
B Batch Costing
C Job Costing
D Process Costing

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 MOCK QUESTIONS

16 The value for money concept used in assessing performance in a not for profit organisation
revolves around the 3Es.

What are the 3Es?

1 Efficiency
2 Effectiveness
3 Ecology
4 Economy

A 1, 2 and 3 only
B 1, 3 and 4 only
C 2, 3 and 4 only
D 1, 2 and 4 only

17. Jones, Industries uses process costing system. In October, the finishing department had 30,000
(20% as to conversion) units in beginning work-in process, 45,000 (40% as to conversion) units in
ending inventory and had 95,000 units transferred in from the previous department. Material is
added at the beginning of the process and conversion costs are added uniformly throughout the
process.
Required: If Jones uses weighted average, what are the equivalent units of production for
direct material and conversion costs?
A. Material 125,000 units Conversion cost 45,000 units
B. Material 125,000 units Conversion cost 98,000 units
C. Material 125,000 units Conversion cost 18,000 units
D. Material 125,000 units Conversion cost 80,000 units

18. Identify whether each of the following statements about big data analytics in organisations is
true or false?

True False
It can improve forecasting to aid decision making

It can help to provide more detailed, relevant and up to date

performance measurement.

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ACCA MA AND FMA: MANAGEMENT ACCOUNTING

19. A veterinarian should take on average 20 minutes to stitch a dog’s wound. In one day the
veterinarian stitched 5 dogs taking 1 hour in total.

What is the efficiency ratio for the veterinarian?

A 100%
B 83%
C 167%
D 60%

20. The numbers below have been calculated to use in a linear regression analysis, in order to
estimate the total cost line for a company.

x = number of units
y = total costs (in $000)
x = 25
y = 271
xy = 550
x2 = 65
y2 = 30,275
n = 15
What is the variable cost per unit using regression analysis (to two decimal places)?

21. Over the last two months the following production costs were incurred by Department Z:
Level of activity Production cost
May 2,180 units $13,405
June 3,200 units $15,700
In July budgeted production was 2,560 units, what would the budgeted production cost
be?
A $14,260
B $15,740
C $12,560
D $14,552.50

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 MOCK QUESTIONS

22. The production machinery of Grape Co is nearing the end of its useful life and it needs to be
replaced.

Estimates have been made for the initial capital cost, proportional sales income and
operating costs of the replacement machine, which is expected to have a useful life of three
years:
Initial investment $500,000
Cash flows
Year Sales income Operating costs
1 $280,000 $100,000
2 $330,000 $120,000
3 $390,000 $130,000
The company appraises capital investment projects using a cost of capital of 10% per
annum.
What is the NPV of this machine?
A $32,340
B $150,000
C $1,032,340
D $850,000

23. CA Co manufactures a single product and has drawn up the following flexed budget for the year.
60% 70% 80%
$ $ $
Direct materials 120,000 140,000 160,000
Direct labour 90,000 105,000 120,000
Production overheads 54,000 58,000 62,000
Other overheads 40,000 40,000 40,000
Total Cost 304,000 343,000 382,000

What would be the total cost in a budget that is prepared at the 77% level of activity?

(a) $ 330,300 (b) $ 370,300 (c) $ 373,300 (d) $ 377,300

24. Field is considering a new project. Details of the proposed project are as follows:
Life of project: 6 years
Initial cost: $85,000
Annual savings: $24,000
NPV at 5%: £36,824
What is the internal rate of return for this project to the nearest 1%?
A 16%
B 18%
C 20%
D 22%

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ACCA MA AND FMA: MANAGEMENT ACCOUNTING
25. Which of the following are features of Activity Based Costing?

1 Cost pools
2 Cost drivers
3 Low levels of overhead costs

A 1 only
B 1 and 2 only
C 3 only
D 1, 2 and 3

26. Which of the following would NOT be classified as a production overhead in a food
processing 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

27. A company produces two types of tables, the farmhouse and the cottage which require 10
and 16 labour hours respectively. The budgeted data for the next period is as follows:
Farmhouse Cottage
Sales 7,500 units 12,000 units
Opening inventory of finished goods 1,800 units 2,400 units
Inventory of finished goods is budgeted to be reduced by 50% by the end of the next
period.
What are the total budgeted labour hours for the next period?
A 295,200 hours
B 267,000 hours
C 238,800 hours
D 210,600 hours

28. The instruction to a market researcher is to ‘stop 50 men and 70 women to do the
questionnaire’.

What type of sampling is being used?

A Stratified sampling
B Quota sampling
C Cluster sampling
D Random sampling

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 MOCK QUESTIONS
29. ABC Co sells to both cash and credit customers. It expects that 40% of its sales will be paid
for in cash and of the remainder, 50% will be paid the month after sale, 40% two months
after sale and the rest will remain unpaid.
Jan Feb Mar Apr May Jun
$000s $000s $000s $000s $000s $000s
100 120 140 150 160 180
What is the value of cash receipts forecast in the month of April?
A $182,000
B $130,800
C $116,000
D $212,000

30. The results of a customer survey are normally distributed with a mean score of 75 and a
standard deviation of 15.

What is the percentage probability that a customer scored more than 90 (to 2 decimal
places)?

31. Which TWO of the following are advantages of using the Balanced Scorecard approach to
appraising performance?

A Performance is appraised from a much wider view point

B Managers can easily distort measures to their advantage
C Comparison with different organisations is made easier
D It should lead to long term success rather than short term improvements

32. Bag Inc manufactures a popular suitcase. They produce the suitcases in batches. The
following information is available for Bag Inc:

Fixed costs = $100 per month

Annual demand for suitcases = 100,000 per year
Cost of setting up a batch = $500
Holding cost = $8 per suitcase
Replenishment rate = 200,000 per year
How many suitcases should be produced in a batch?
A 2,000
B 3,000
C 4,000
D 5,000

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 ACCA MA AND FMA: MANAGEMENT ACCOUNTING
33. S produces and sells one product, P, for which the data are as follows:
Selling price $ 28
Variable cost $ 16
Fixed cost $4
The fixed costs are based on a budgeted production and sales level of 25,000 units for the next
period. Due to market changes both the selling price and the variable cost are expected to increase
above the budgeted level in the next period.
If the selling price and variable cost per unit increase by 10% and 8% respectively, by how much must
sales volume change, compared with the original budgeted level, in order to achieve the original
budgeted profit for the period?

(a) 10.1% decrease (b) 11.2% decrease (c) 13.3% decrease (d) 16.0% decrease

34. Puffle plc wants to produce a pie chart to represent the sales levels in its 6 regions. The
sales are as follows:

Region Sales value $000s

1 352
2 410
3 248
4 178
5 578
6 368
What would be the angle on the pie chart for region 5?

35. Which of the following costs has a variable cost behaviour?

1,840 units 4,700 units

1 Materials $9,200 $23,500
2 Labour $12,880 $42,300
3 Rent $2,000 $4,000

A 1 only
B 1 and 2 only
C 2 and 3 only
D All of them

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 MOCK QUESTIONS

SECTION B – ALL THREE QUESTIONS ARE COMPULSORY AND MUST BE

ATTEMPTED

Self-prepared
MTQ 1

The following information summarizes the standard cost card for producing Toy robot under marginal
costing system for the month of March 2022.

Rs. Per Unit

Materials 1.5 Kg P.U 300
Direct Labor 6 hrs. @ Rs. 80 480
Factory Overhead:
Variable 140
Contribution 280

Activity Levels Budget Actual

Sales 25,000 25,600
Production 25,000 26,000

Actual Results
Sales Revenue 30,668,800
Direct Material Purchased and used 7,957,600
Direct Labour 12,134,400

Variances:
Material price Rs. 117,600 unfavorab1e
Labor rate Rs. 134,400 unfavorable

Required:

1) Calculate the sales Price variance ----------- (2.75)

2) Calculate Sales Volume Contribution variance _______ (2.75)
3) What were the actual quantity of materials used during the month (in Kg)? ____ (2)
4) Calculate labour efficiency variance ------ (2.75)
5) Calculate the actual Hours worked during the month. --------- (2)
6) Calculate Material Usage variance _____ (2.75)

ANS 1) 168000 Favourable

2) 51200 unfavourable
3) 39200 Kg
4) 480000 unfavourable
5) 150000
6) 40000 unfavourable

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 ACCA MA AND FMA: MANAGEMENT ACCOUNTING
MTQ 2

Henderson manufactures and sells active wear. Below is a summary of the financial
statements for the business for 20X1:
20X2
$’000
Sales 3,500
Cost of sales 1,750
Expenses 500
Interest 80
Share capital and reserves 3,200
Long term borrowings 800
Non-current assets 2,800
Receivables 400
Inventory 250
Payables 180

Task 1
Complete the table below to calculate the performance measures for 20X6 (please give your answer to two
decimal places).
Performance measure 20X2 Marks ANS
Return on capital employed _________ 1.5 31.25
Operating profit margin _____ 1.5 35.71
Asset turnover ____ 1.5 0.875
Interest cover _____ 1.5 15.63
Gearing (debt/debt + equity) _____ 1.5 20
Inventory days ____ 1.5 52
Receivables days ________ 1.5 42
Payables day ____ 1.5 38
T. Marks 12
Task 2

Which of the following drop down options is NOT one of the four perspectives in a balanced
scorecard? Marks 1.5

Select... ⯆

Financial success

Non-financial success

Process efficiency
Customer satisfaction

ANS Non Financial Success

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 MOCK QUESTIONS

Task 3
Which of the following is a definition of a 'critical success factor' for an organisation?
 A statement of what the organisation intends to achieve over a period of time
 A measurable indicator of organisational performance
 A performance requirement that is fundamental to competitive success
 A basic belief of the people who work in the organisation (1.5 marks)

Ans C

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