Semester 1, 2005/2006ACCT 102 Management Accounting

Version 1Test 1

Time allowed: 20 minutes

Name: ______________________________________

ONEGroup: ______________________________________

Mark

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10

This test consists of TEN (10) multiple-choice questions. Choose the MOST APPROPRIATE answer from the alternatives given. Write the most appropriate answer (A), (B), (C), (D) or (E) in the space provided at the end of each question. One (1) mark will be awarded for each correct answer and a quarter (¼) mark will be deducted for each incorrect answer.

1. Which of the following statements is TRUE?A. Management accounting is governed by accounting principles issued by

Chartered Institute of Management Accountants (CIMA).B. Both Financial accounting and Management accounting use similar methods of

reporting financial statements. C. Financial accounting information is primarily designed for decision-makers who

are directly involved in the daily management of the firm. D. Management accounting and Financial accounting both utilize data from an

organization’s accounting system.E. None of the above.

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2. A balanced scorecard consists of a set of

A. Revenue by product analyses.B. Performance measures for employees.C. Monthly Management Accounts.D. Performance measures of an organisation.E. None of the above.

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3. Managers do NOT make decisions about future events based on: A. Perfect information. B. Estimated information. C. Actual information. D. Qualitative information. E. Cost information.F. None of the above

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4. Factory rent can normally be considered as:

Variable Cost

Fixed cost

Prime cost

Conversion Manufacturing overhead

Period Cost

A) No Yes No Yes Yes YesB) No Yes No No Yes YesC) No Yes No Yes Yes NoD) No Yes No Yes No YesE) Yes Yes No Yes Yes No

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QUESTION 5 AND 6 ARE BASED ON THE FOLLOWING INFORMATION:

The noodle shop in the new SMU canteen has the following information since opening:

Day No. of bowls served Costs1 1600 $5,0802 1800 $5,8003 1450 $4,9004 1200 $4,0005 1650 $5,1006 1900 $5,400

5. What is the variable cost per meal served in the shop?A. $1.00B. $1.11C. $1.50D. $3.00E. None of the above

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6. Assume that the new SMU noodle shop expects to serve 1,500 meals on Day 7. The expected total cost of the shop would be: A. $2,400B. $2,800C. $4,600D. $4,900E. None of the above.

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7. Which of the following statements is TRUE?

A. An organization's operating leverage is high when it has a low proportion of variable costs in its total costs.

B. An increase in the selling price per unit will increase an organization's degree of operating leverage, assuming no other change in its cost structure.

C. The slope of the profit line in profit-volume analysis is the operating profit per unit. D. An increase in an organization's fixed costs will result in a higher margin of safety.E. None of the above.

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8. SOB Company sells a single product. If the selling price per unit and the variable cost per unit both decrease by 20% and fixed expenses do not change, then:

Break-even point Margin of safety

ContributionMargin ratio

Contribution Margin per unit

A) Increases Decreases No Change DecreasesB) Increases No Change No Change DecreasesC) Decreases Decreases No Change IncreasesD) Increases No Change Decreases IncreasesE) Increases Decreases No Change No ChangeF) None of the above

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9. You have been provided with the following information:

$Sales 45,000Less variable expenses 27,000Contribution margin 18,000Less fixed expenses 12,000Operating profit 6,000

3,000 units have to be sold in order to achieve the above profitability, if sales decrease by 500 units, how much will fixed expenses have to be reduced to maintain the operating profit of $6,000? A) $9,000. B) $7,500. C) $6,000. D) $3,000. E) None of the above.

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10. SMU Hotel has a capacity of 400 rooms for rental. The Hotel’s operating costs include an annual fixed cost of $5,000,000 and a variable cost of $80 per room for each day that it is rented out. In addition, there is a franchise fee of 20% of rental revenue payable for the use of the US hotel management system. If average rental per room is $200 and assuming 365 days in a year, what average (room) occupancy rate must the Hotel achieve in order to break even?

A. 28.5%B. 42.8%C. 46.9%D. 68.5%E. None of the above.

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