Download - F2 Past Paper_Question12-2003
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FinancialInformation forManagement
PART 1
FRIDAY 5 DECEMBER 2003
QUESTION PAPER
Time allowed 3 hours
This paper is divided into two sections
Section A ALL 25 questions are compulsory and MUST be
answered
Section B ALL FIVE questions are compulsory and MUST be
answered
Formulae Sheet, Present Value and Annuity Tables are onpages 13, 14 and 15 P
ap
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Section A ALL 25 questions are compulsory and MUST be attempted
Please use the Candidate Registration Sheet provided to indicate your chosen answer to each multiple choice
question.
Each question within this section is worth 2 marks.
1 A cost is described as staying the same over a certain activity range and then increasing but remaining stable over a
revised activity range in the short term.
What type of cost is this?
A A fixed cost
B A variable cost
C A semi-variable cost
D A stepped fixed cost
2 The following quarterly adjustments have been calculated using the multiplicative model for time series analysis:
Quarter 1 Quarter 2 Quarter 3
095 125 070
What would be the adjustment for quarter 4 to two decimal places?
A 083
B 091
C 110
D 120
3 A company which uses marginal costing has a profit of 37,500 for a period. Opening stock was 100 units and
closing stock was 350 units.
The fixed production overhead absorption rate is 4 per unit.
What is the profit under absorption costing?
A 35,700
B 36,500
C 38,500
D 39,300
4 The following could relate to contract costing:
(i) Work is for a period of long duration.
(ii) Progress payments are amounts paid for the contract throughout the course of the contract.
(iii) Architects certificates are provided to establish the amount of work certified.
Which of the above are correct?
A (i) and (ii) only
B (i) and (iii) only
C (ii) and (iii) only
D (i), (ii) and (iii)
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5 A company values stocks using the weighted average value after each purchase. The following receipts and issues
have been made with regards to materials for the last month:
Date Receipts Issues
Units /unit Valuation Units
Brought forward 100 5 500
4th 150 550 825
16th 100
20th 100 6 600
21st 75
What is the value of the closing stock using this weighted average method?
A 1,01250
B 97650
C 96250
D 92500
6 Sydney wishes to make an investment on a monthly basis starting next month for five years. The payments into the
fund would be made on the first day of each month.
The interest rate will be 05% per month. Sydney needs a terminal value of 7,000.
What should be the monthly payments into the fund to the nearest ?
A 75
B 86
C 100
D 117
7 A company has the following budget for the next month:
Finished Product
Sales 7,000 units
Production units 7,200 units
Materials
Usage per unit 3 kg
Opening stock 400 kg
Closing stock 500 kg
What is the material purchases budget for the month?
A 20,900 kg
B 21,100 kg
C 21,500 kg
D 21,700 kg
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8 The following could relate to optical mark readers:
(i) Specialist pens are always required for use.
(ii) Data entry is quick.
(iii) Computers carry out most of the work.
Which of the above would be considered to be advantages of using optical mark readers?
A (i) and (ii) only
B (i) and (iii) only
C (ii) and (iii) only
D (i), (ii) and (iii)
9 Which of the following would be best described as a short term tactical plan?
A Reviewing cost variances and investigate as appropriate
B Comparing actual market share to budget
C Lowering the selling price by 15%
D Monitoring actual sales to budget
10 A company incurs the following costs at various activity levels:
Total cost Activity level
Units
250,000 5,000
312,500 7,500
400,000 10,000
Using the high-low method what is the variable cost per unit?
A 25
B 30
C 35
D 40
11 An investment gives the following results:
Net present value Discount rate
000
383 10%
(246) 15%
What is the estimated internal rate of return to the nearest whole percentage?
A 12%B 13%
C 14%
D 17%
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12 A company uses process costing to establish the cost per unit of its output.
The following information was available for the last month:
Input units 10,000
Output units 9,850
Opening stock 300 units, 100% complete for materials and 70%
complete for conversion costs
Closing stock 450 units, 100% complete for materials and 30%
complete for conversion costs
The company uses the weighted average method of valuing stock.
What were the equivalent units for conversion costs?
A 9,505 units
B 9,715 units
C 9,775 units
D 9,985 units
13 Which of the following is correct with regard to expected values?
A Expected values provide a weighted average of anticipated outcomes
B The expected value will always equal one of the possible outcomes
C Expected values will show whether the decision maker is risk averse, risk seeking or risk neutral
D The expected value will never equal one of the possible outcomes
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14 The following graph has been established for a given set of constraints:
The objective function (OF) for the company has also been plotted on the graph and the feasible region is bounded
by the area ABCD.
At which point on the graph will profits be maximised?
A
B
C
D
15 The following information has been obtained for sales of two products for a three year period:
Price Quantity
Product A Product B Product A Product B
2000 (base year) 100 150 3 4
2001 125 140 2 3
2002 130 135 2 4
What is the Paasche quantity index for 2002?
A 086
B 089
C 119
D 120
6
300
200
100
100 200 3000
y
x
OF
A
BC
D
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16 A company has just secured a new contract which requires 500 hours of labour.
There are 400 hours of spare labour capacity. The remaining hours could be worked as overtime at time and a half
or labour could be diverted from the production of product X. Product X currently earns a contribution of 4 in two
labour hours and direct labour is currently paid at a rate of 12 per normal hour.
What is the relevant cost of labour for the contract?
A 200B 1,200
C 1,400
D 1,800
17 The following statements relate to performance evaluation methods:
(i) Residual income is not a relative measure.
(ii) The return on investment figure is a relative measure.
(iii) Residual income cannot be calculated for an individual project.
Which of the above are correct?
A (i) and (ii) onlyB (i) and (iii) only
C (ii) and (iii) only
D (i), (ii) and (iii)
18 A company uses variance analysis to control costs and revenues.
Information concerning sales is as follows:
Budgeted selling price 15 per unit
Budgeted sales units 10,000 units
Budgeted profit per unit 5 per unitActual sales revenue 151,500
Actual units sold 9,800 units
What is the sales volume profit variance?
A 500 favourable
B 1,000 favourable
C 1,000 adverse
D 3,000 adverse
19 A company has the following budgeted information for the coming month:Budgeted sales revenue 500,000
Budgeted contribution 200,000
Budgeted profit 50,000
What is the budgeted break-even sales revenue?
A 125,000
B 350,000
C 375,000
D 450,000
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20 An investment has the following cash inflows and cash outflows:
Time Cash flow per annum
000
0 (20,000)
1-4 13,000
5-8 17,000
10 (10,000)
What is the net present value of the investment at a discount rate of 8%?
A (2,416)
B 7,046
C 6,981
D 2,351
21 Which of the following is correct?
A When considering limiting factors the products should always be ranked according to contribution per unit sold
B If there is only one scarce resource linear programming should be used
C In linear programming the point furthest from the origin will always be the point of profit maximisation
D The slope of the objective function depends on the contributions of the products
22 A company has over absorbed fixed production overheads for the period by 6,000. The fixed production overhead
absorption rate was 8 per unit and is based on the normal level of activity of 5,000 units. Actual production was
4,500 units.
What was the actual fixed production overheads incurred for the period?
A 30,000
B 36,000
C 40,000
D 42,000
23 A company uses process costing to value its output. The following was recorded for the period:
Input materials 2,000 units at 450 per unit
Conversion costs 13,340
Normal loss 5% of input valued at 3 per unit
Actual loss 150 units
There were no opening or closing stocks.
What was the valuation of one unit of output to one decimal place?
A 118
B 116
C 112
D 110
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24 Which of the following are correct with regard to regression analysis?
(i) In regression analysis the n stands for the number of pairs of data.
(ii) x2 is not the same calculation as (x)2
(iii) xy is calculated by multiplying the total value ofx and the total value ofy
A (i) and (ii) only
B (i) and (iii) only
C (ii) and (iii) only
D (i), (ii) and (iii)
25 The following information relates to labour costs for the past month:
Budget Labour rate 10 per hour
Production time 15,000 hours
Time per unit 3 hours
Production units 5,000 units
Actual Wages paid 176,000
Production 5,500 units
Total hours worked 14,000 hours
There was no idle time.
What were the labour rate and efficiency variances?
Rate variance Efficiency variance
A 26,000 adverse 25,000 favourable
B 26,000 adverse 10,000 favourable
C 36,000 adverse 12,500 favourable
D 36,000 adverse 25,000 favourable
(50 marks)
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Section B ALL FIVE questions are compulsory and MUST be attempted
1 A business operates with two production centres and three service centres. Costs have been allocated and apportioned
to these centres as follows:
Information regarding how the service centres work for each other and for the production centres is given as:
Information concerning production requirements in the two production centres is as follows:
Centre 1 Centre 2
Units produced 1,500 units 2,000 units
Machine hours 3,000 hours 4,500 hours
Labour hours 2,000 hours 6,000 hours
Required:
(a) Using the reciprocal method calculate the total overheads in production centres 1 and 2 after
reapportionment of the service centre costs. (7 marks)
(b) Using the most appropriate basis establish the overhead absorption rate for production centre 1. Briefly
explain the reason for your chosen absorption basis. (3 marks)
(10 marks)
10
Production Centres Service Centres
1 2 A B C
2,000 3,500 300 500 700
Work done for:
Production Centres Service Centres
1 2 A B C
By A 45% 45% 10%
By B 50% 20% 20% 10%
By C 60% 40%
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2 Break-even charts and profit-volume charts are commonly associated with cost-volume-profit analysis (break-even
analysis).
Required:
(a) (i) Sketch a break-even chart and indicate where the break-even point would be for a single product firm.
Clearly label the axes and indicate the following lines:
total revenue;
variable cost;
fixed costs; and
total cost.
(ii) How would contribution be established from your chart in (a)(i)? (6 marks)
(b) (i) Sketch a profit-volume chart and indicate where the break-even point would be for a single product firm.
Clearly label the axes and indicate the profit line and fixed costs.
(ii) How would contribution be established from your chart in (b)(i)? (4 marks)
[Note: no specific numbers are required.]
(10 marks)
3 A company has obtained the following information regarding costs and revenue for the past financial year:
Original budget:
Sales 10,000 units
Production 12,000 units
Standard cost per unit:
Direct materials 5Direct labour 9
Fixed production overheads 8
22
Selling price 30
Actual results:
Sales 9,750 units
Revenue 325,000
Production 11,000 units
Material cost 65,000Labour cost 100,000
Fixed production overheads 95,000
There were no opening stocks.
Required:
(a) Produce a flexed budget statement showing the flexed budget and actual results. Calculate the variances
between the actual and flexed figures for the following:
sales;
materials;
labour; and
fixed production overhead. (7 marks)(b) Explain briefly how the sales and materials variances calculated in (a) may have arisen. (3 marks)
(10 marks)
11 [P.T.O.
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13 [P.T.O.
Formulae Sheet
Laspeyres price index =
Paasche price index =
Laspeyres quantity index =
Paasche quantity index =
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Present Value Table
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Annuity Table
End of Question Paper