CIMA Fundamentals of management accounting

QUESTION NO: 1
What is the purpose of performing an NPV?

A. It is a project appraisal technique that calculates a project's contribution to the wealth of the company. B. It allows the company to decide which departments will benefit the most from investment. C. It is technique that calculates the present value of all company assets in case of liquidation.

Correct Answer: A

QUESTION NO: 2
A company operates an absorption costing system. Overheads are absorbed using a pre-determined absorption rate using labour hours.
Actual labour hours were 10% below budget for the period and overheads incurred were 10% above budget for the period. This would result in:

A. Neither an over- or under-absorption of overheads for the period B. An under-absorption of overheads for the period C. Impossible to tell from the information available D. An over-absorption of overheads for the period

Correct Answer: B

QUESTION NO: 3
Refer to the exhibit.

The budget for ORG for the month of September contained the following data:
During the month the actual number of units produced was 1,550. The management accounts showed a direct labour rate variance of $200 adverse and direct labour efficiency variance of $150 adverse.
The actual direct labour hours in the month was:

A. 1,312.5 hours B. 1,200 hours C. 1,012.5 hours D. 1,125 hours

Correct Answer: B

QUESTION NO: 4
An overtime premium may be defined as:

A. The additional payment made during overtime hours B. A premium paid to workers with special skills C. The rate of pay at which overtime hours are paid D. The total number of overtime hours worked

Correct Answer: A

QUESTION NO: 5
Refer to the exhibit.

A company issued its production budget based on an anticipated output of 800 units. Actual output was 1000 units. The details of the costs are shown below:
The budget expenditure variance was:

A. £3,000 adverse B. £5,000 favourable C. £1,000 favourable D. £5,000 adverse

Correct Answer: C

QUESTION NO: 6
In an integrated cost and financial accounting system, the accounting entries for the purchase of raw material on credit would be:

A. Debit: Raw material control accountCredit: Payables control account B. Debit: Payables control accountCredit: Work in progress control account C. Debit: Cost of sales accountCredit: Payables control account D. Debit: Payables control accountCredit: Cost of sales account

Correct Answer: A

QUESTION NO: 7

Which of the following is TRUE regarding the figures given in the table?

A. The youngest customer is 10 years old. B. Median falls into the 30<x<40 group. C. Range = 70 years. D. Modal group = 50<x<60.

Correct Answer: D

QUESTION NO: 8
In the process account, the accounting treatment of the value of the abnormal loss is:

A. Credit Process account Debit Normal Loss account B. Debit Process account Credit Abnormal Loss account C. Debit Process account Credit Normal Loss account D. Credit Process account Debit Abnormal Loss account

Correct Answer: D

QUESTION NO: 9
A company's policy is to hold closing inventory each month equal to 10% of the next month's 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. 1,890 units B. 1,724 units C. 1,596 units D. 1,494 units

Correct Answer: D

CIMA Fundamentals of management accounting - BA2 Exam Questions