MA1 – Management Information Progress Test 2

Name of Lecturer: Mr. Sasenarine Ramnarine (MSc, ACCA)

Date: November 21, 2020

1. Which of the following is an essential feature of useful management information?

A. Completely accurate
B. Appropriate for any purpose
C. Cost effective
D. Distributed regularly

2. Which of the following are necessary aspects of the control which the management of a
business exercises over transactions?
1. Ensuring that new customers have a good credit rating
2. Ensuring that only bona fide employees are on the payroll
3. Ensuring that payments to suppliers are appropriately authorised
A. 1, 2 and 3
B. 1 and 3 only
C. 2 and 3 only
D. 1 and 2 only

3. Direct labour hours worked in a cost centre in a period were 360 hours above the budget of
5,670 hours. The efficiency ratio in the period was 97%. Would the capacity and production
volume ratios in the period be above or below 100%?

Capacity ratio Production volume ratio

A Below 100% Below 100%
B Below 100% Above 100%
C Above 100% Below 100%
D Above 100% Above 100%

4. Product P3 requires 0.4 litres of material M5 per unit. Inventories are planned to change
during period 6 as follows:

Product P3: decrease of 200 units

Material M5: increase of 150 litres
 6,000 units of product P3 are planned to be produced in period 6.
What is the planned usage of material M5 in the production of product P3 in period 6?
A. 2,400 litres B. 2,550 litres C. 2,250 litres D. 2,320 litres

5. Which of the following could be examples of cost centres?

1. Administration department
2. Output from a manufacturing process
3. Group of production machines
4. Materials store
A. 2, 3 and 4
B. 1 and 4 only
C. 1, 3 and 4
D. 1, 2 and 3

6. The following ratios were calculated for a period: Production volume 98% Efficiency 105%
On the basis of the above ratios, is each of the following statements true or false?
(1) Actual hours were more than budgeted hours
(2) Standard hours of production were more than actual hours
(3) Budgeted hours were less than standard hours of
True False
A. 2 1 and 3
B. 2 and 3 1
C. 1 and 3 2
D. 1 and 2 3

7. What would be the appropriate cost unit for a cake manufacturer?

Cost per:

A. cake
B. batch
C. kg
D. Production run
8. Are each of the following statements, about documents used in the materials control cycle,
true or false?
(1) A materials requisition will be completed when materials are needed from stores by a
production department
(2) A purchase order is sent to the purchasing department to request that materials be
ordered from a supplier
(3) A goods received note is sent to the supplier to confirm that goods have been
received

True False
A. (1) and (2) (3)
B. (2) and (3) (1)
C. (1) (2) and (3)
D. (1) and (3) ( 2)

9. Supervisors’ salaries and computer services are among the costs incurred in a factory. Costs
expected at a range of activity levels are:
Activity (000 units) 125 150 175 200
Costs ($000):
Supervisors’ salaries 60 66 66 72
Computer services 42 46 50 54
Which of the following classifications could describe the cost behaviour?
Supervisors’ salaries Computer services
A. Semi-variable Semi-variable
B. Semi-variable Variable
C. Stepped-fixed Semi-variable
D. Stepped-fixed Variable

10. The following transactions relate to Material MM3 for a period:

Day Transaction Quantity (kgs) Price ($ per kg)
1 Balance 276 6.20
5 Issue 181
8 Purchase 630 5.80
15 Issue 215
What is the value of the issues for the period (to the nearest $) using the periodic weighted
average pricing method?
A. $2,297
B. $2,380
C. $2,376
D. $2,345

11. Are the following statements, about weighted average methods of raw materials pricing, true
or false?
(1) The periodic weighted average method requires the recalculation of the issue price
after each issue is made
(2) Fluctuations in issue price are reduced if the cumulative, rather than the periodic,
weighted
average method is used
Statement(1) Statement (2)
A. True True
B. True False
C. False True
D. False False

12. A unit of product P requires two kilograms (kg) of material M. Estimates for the next period
include:
Sales of product P 2,150 units
Opening inventory of product P 320 units
Closing inventory of product P 490 units
Opening inventory of material M 1,200 kg
Closing inventory of material M 980 kg
What is the estimated usage of material M in the next period?
A. 4,470 kg B. 4,640 kg C. 4,420 kg D. 3,960 kg

13. What is a cost unit?

 A. The cost per unit of a product or service
B. A unit of a product or service which has costs attached to it
C. A section of the business where a manager is only responsible for costs
D. A number of different products combined together for cost analysis

14. 260 kilograms (kg) of Material M are required to produce 1,000 units of Product P.
Budgets for the next period include:
Sales of Product P 6,400 units
Inventory of Product P: Opening 2,600 units Closing 3,000 units
Inventory of Material M: Opening 540 kg Closing 480 kg
What is the budgeted usage of Material M in the next period?
A. 1,768 kg
B. 1,560 kg
C. 1,828 kg
D. 1,708 kg

15. What is the purpose of prime entry records?

A. Assist the preparation of a trial balance
B. Prevent unnecessary detail in the ledgers
C. Provide a check on the double-entry bookkeeping
D. Provide a list of outstanding payments

16. For operational purposes, for a company operating a fleet of delivery vehicles, which of the
following cost units would be most useful?

A. Cost per mile run

B. Cost per driver hour
C. Cost per tonne mile
D. Cost per kilogram carried

17. Which of the following would be included in the financial accounts, but may be excluded
from the cost accounts?
A. Direct material costs
B. Depreciation of storeroom handling equipment
C. Bank interest and charges
D. Factory managers salary
18. Which of the following documents will MOST help a sales manager to monitor the
effectiveness of a sales team?
A. A monthly report comparing sales targets with actual results
B. The sales department’s organisational chart
C. A monthly report analysing the reasons for customer complaints
D. The completion of appraisal interview forms

19. The following information is available for a responsibility centre for a period:

Gross profit $460,000

Net profit $176,000
Non-current assets $1,200,000
Net current assets $320,000
Cost of capital 10% per period
What is the residual income for the period?
A. $340,000
B. $308,000
C. $56,000
D. $24,000

20. The following is an extract from a list of data concerning production overheads in a factory:

Output (units) 35000 40000 45000 50000

Management cost ($) 75000 80000 80000 85000
Utilities cost ($) 31000 34000 37000 40000
What cost behavioural types are indicated by the above data?
Management Utilities
A. Fixed Semi-variable
B. Fixed Variable
C. Stepped-fixed Semi-variable
D. Stepped-fixed Variable

21. Which of the following only contains essential features of useful management information?
A. Accurate, clear, presented in report format
B. Timely, reliable, supported by calculations
C. Regular, complete, communicated in writing
D. Clear, accurate, relevant for its purpose

22. What is the double-entry, in an interlocking accounting system, for the purchase of raw
materials on credit?
 Debit Credit
A. Raw materials inventory Trade payables
B. Trade payables Raw materials inventory
C. Raw materials inventory Cost ledger control
D. Cost ledger control Raw materials inventory

23. The inventory record for Component C2 for a month shows:

Day Movement kg $per kg

1 Balance 86 11.20
12 Receipt 200 11.90
14 Issue 174
18 Receipt 200 12.00

The periodic weighted average method is used to price the issue of materials. Each average price
is rounded to
the nearest $0.01.

What is the cost of the issue in the month?

A. $2,070.60
B. $2,034.06
C. $2,056.68
D. $2,079.30

24. Which of the following values would be obtainable from the cost accounts in an interlocking
accounting system?

 Trade payables
 Trade receivables
 Sales revenue
 Inventory of finished goods
A. 1 and 2 only
B. 3 only
C. 3 and 4
D. 1, 2 and 4

25. No inventory of material M60 is held. During a period the following transactions relating to
M60 occurred:

Day 5 160 units bought at $3.50 per unit and used

Day 10 300 units bought at $3.40 per unit and used
Day 15 90 units bought at $3.70 per unit and used
Using the periodic weighted average pricing method, what was the value of the usage on day 15?

A. $309
B. $313
C. $318
D. $333

26. In a large company, which of the following activities may be the responsibility of an
accounting technician?
A. Calculating cost variances
B. Making capital investments decisions
C. Approving budgets
D. Allocating warehouse space

27. A Business has the following results:

$
Sales 100,000
Cost of sales (20,000)
Gross profit 80,000
Expenses (30,000)
Net profit 50,000

What is the net profit margin for the Business?

A. 50%
B. 80%
C. 62·5%
D. 200%

28. The following financial figures relate to Jolly for a year:

20X2
$
Sales 50,000
Cost of sales (10,000)
Gross profit 40,000
Expenses (15,000)
Net profit 25,000
Capital employed 100,000

What is the asset turnover ratio for 20X2?

A. 0·8 times
B. 0·4 times
C. 2 times
 D. 0·5 times

29. Which activity is LEAST likely to be the responsibility of the accounting function of a large
organisation?
A. Calculation of wages
B. Control of trade receivables
C. Dispatch of customer orders
D. Payment of trade payables

30. In an interlocking accounting system what would be the entry for the issue of indirect
material?

A. Dr Raw material inventory Cr Work in progress

B. Dr Raw material inventory Cr Production overhead
C. Dr Work in progress Cr Raw material inventory
D. Dr Production overhead Cr Raw material inventory

31. You have been asked to write a report outlining the qualities of good information.

Which of the following would you NOT include in the report?

A. The information should be complete
B. The information should be communicated via an appropriate channel
C. The information should be understandable
D. The information should be communicated to everyone in the organization

32. Which of the following is TRUE about the effect of different methods of pricing raw
materials from inventory in a period of consistently rising prices?

(1) Production costs will be higher using FIFO rather than LIFO
(2) Closing inventory values will be lower using periodic weighted average rather than
cumulative weighted average
A. 1 only
B. 2 only
C. Both statements
D. Neither statement

33. Which of the costs listed below is NOT a fixed cost?

A. Insurance
B. Business Rates
C. Depreciation – based on straight – line method
D. Materials used in production
34. Sources of useful data may be:
1. External
2. Internal
3. Financial
4. Non – Financial

Which of the above sources may be used by an accounting technician?

A. 1, 2 and 3 only
B. 2, 3 and 4 only
C. 2 and 3 only
D. All four sources

35. Which of the following statements about cost and management accounting are true?

1. Cost accounting cannot be used to provide inventory valuations for external financial
reporting
2. There is a legal requirement to prepare management accounts
3. The format of management accounts may vary from one business to another
4. Management accounting provides information to help management make business
decisions

A. 1 and 2
B. 1 and 4
C. 2 and 3
D. 3 and 4

36. Which of the following are features of an efficient and effective coding sytems?
1. Codes need to be complex to include all items
2. Each code must have a combination of alphabetic and numeric characters
3. Codes for a particular type of item should be consistent in length and structure

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

37. Which of the following best describes an investment centre?

A. Part of a business that uses fixed assets
B. Part of a business that provides a service for other parts of the business
C. Part of a business where management is only responsible for investments costs
D. Part of a business where management is responsible for capital investment as well as
profit
38. Consider the following four accounts:

1. Cost ledger control

2. Financial ledger control
3. Receivables control
4. Work – in – progress control
Which of the accounts are features of an integrated accounting system?

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

39. The production volume ratio for a period was 95%?

What could have caused this?

A. Actual hours worked being greater than budgeted hours
B. Actual hours worked being less than budgeted hours
C. Standard time for actual output being greater than budgeted hours
D. Standard time for actual output being less than budgeted hours

40. Are the following statements true?

1. Completed questionnaires, as part of a market research survey, are examples of data.
2. Monthly management accounting reports, resulting from the processing of financial
transactions, are examples of information.
A. Both statements are not true
B. Only statement (1) is true
C. Only statement (2) is true
D. Both statements are true

41. Machine parts are assembled in a factory. One of the components used in assembling
machine part MP7 is component C6.
Which of the following is an example of a cost unit in the factory?

A. A unit of component C6
B. A unit of machine part MP7
C. The cost per unit of component C6
D. The cost per unit of machine part MP7

42. A semi – variable cost is one that:

A. Increases in direct proportion to output
B. Remains constant irrespective of the level of output
C. Contains an element of both fixed and variable cost
D. Increases throughout the year
43. The double entry for the materials charged to WIP would have been:
A. DR WIP Control, CR Stores ledger control
B. DR Stores ledger control, CR WIP control
C. DR Production overhead control, CR Stores ledger control
D. DR WIP control, CR Production overhead control

44. The double entry for the production overhead recovered in the period, would have been:
A. Dr Finished goods control, CR Production Overhead Control
B. Dr Production overhead control, CR WIP control
C. DR WIP Control, CR Production overhead control
D. None of these

45. The double entry for the transfer of finished goods would have been:
A. DR Finished goods control, CR WIP Control
B. DR cost of sales account, CR WIP Control
C. DR WIP Control, CR Finished goods control
D. DR Finished goods control, CR Cost of Sales

46. A coding system uses a combination of letters and numbers to classify costs. The first two
digits of each code represent the cost centre, the third and fourth digits represent the type of
expense and the fifth and sixth digits represent the detail of the expense.

Relevant codes for a particular expense are:

code
Selling expense 24
Northern division ND
Commission SC

What is the correct code for the above expense?

A. SC24ND
B. NDSC24
C. ND24SC
D. 24SCND

47. Which of the following defines cost classification?

A. The grouping of costs according to their common characteristics

B. The allotment of items of cost to cost centres
C. The sum of all costs incurred
D. The use by several companies of the same costing methods

48. In an interlocking accounting system what would be the entry for the issue of indirect
material?

A. Dr Raw material inventory Cr Work in progress

B. Dr Raw material inventory Cr Production overhead
 C. Dr Work in progress Cr Raw material inventory
D. Dr Production overhead Cr Raw material inventory

49. In a period of continual price inflation for material purchases, which of the following
statements is true?
A. The LIFO method will produce lower profits than the FIFO method and lower closing
inventory values
B. The LIFO method will produce lower profits than the FIFO method and higher closing
inventory values
C. The FIFO method will produce lower profits than the LIFO method and lower closing
inventory values
D. The FIFO method will produce lower profits than the LIFO method and higher closing
inventory values

50. Which of the following best describes a profit centre?

A. Part of a business where management makes investment decisions
B. Part of a business that provides a service to other parts of the business
C. Part of a business where finished products are manufactured
D. Part of a business where management is responsible for revenues and costs

51. Which one of the following may be included in the cost accounts but excluded from the
financial accounts?
A. Depreciation of equipment
B. Distribution expenses
C. Factory manager’s salary
D. Notional Rent

52. Which of the following performance measures are relevant for both profit centres and
investment centres?
1. Return on capital employed
2. Residual income
3. Net profit margin
4. Labour efficiency

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

53. Business X hires a machine which is used in the final packaging process in its warehouse. A
basic fixed monthly amount is paid for the machine with an additional charge for each unit
packaged. The number of units packaged varies from period to period.

Which of the following is/are true about the cost of the machine hire to Business X?
(1) The total cost per unit packaged will vary from period to period
(2) The total cost per unit packaged will increase as packaging activity rises
(3) The total cost per unit packaged will decrease as packaging activity rises
A 2 only
B 3 only
C 1 and 2
D 1 and 3

54. Each finished unit of Product X contains 1.4 litres of Material Y. 10% of material Y used is
lost in processing. Sales and production of Product X in a period were 21,000 and 20,200
units respectively.
What was the usage of Material Y in the period?
A 31,108 litres
B 31,422 litres
C 32,667 litres
D 28,280 litres

55. A company’s single product requires 1.6 litres of material M in each finished unit. 10% of
material is lost in processing. Sales in Period 2 are expected to be 5,700 units and product
inventory is planned to be reduced by 200 units over the period.

What is the expected usage of material M in Period 2?

A 9,778 litres
B 10,489 litres
C 10,133 litres
D 9,680 litres