ACCA

SUBJECT: MA1
TOTAL MARKS: 100

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1. Which of the following are advantages of using Spreadsheets?

1) They help accountants to perform calculations quickly and easily

2) They enable data to be manipulated and numerical information to be analysed
3) They remove the risk of errors in financial analysis

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

2. What is an organisation chart designed to show?

A) Coding structure
B) Main items of expenditure
C) Aim of the organisation
D) Directions of responsibility

3. What is meant by the classification of costs by behaviour?

A) Classification of costs as prime costs and overheads

B) Classification according to how costs change with activity
C) Classification according to whether costs are direct or indirect
D) Classification of costs as material, labour and other expenses

4. What is a cost unit?

A) A unit of a product or service which has costs attached to it

B) A section of the business where a manager is only responsible for costs
C) A number of different products combined together for cost analysis
D) The cost per unit of a product or service
5. Forecast sales and production of product P in the next period are 6,000 units and
5,800 units respectively. 50 litres of material M are used per 100 units of product P.
Inventory of material M is planned to be reduced by 60 litres in the next period.

What quantity of material M needs to be purchased in the next period?

A) 3,060 litres
B) 2,960 litres
C) 2,940 litres
D) 2,840 litres

6. Which accounts need to be charged for factory wages used in production?

A) Wages control, work in progress and production overhead

B) Work in progress and finished goods
C) Creditors and wages control
D) Wages control, production overhead and bank

7. A direct worker in a production cost centre worked for 41 hours in week 6. The basic
week is 38 hours and the basic rate of pay is $12 per hour. Extra hours are worked to
meet the general needs of the business and are paid at a premium of 20% above the
basic rate.

How much of the direct worker's gross wages in week 6 would be charged as a
direct cost?

A) $499.20
B) $535.20
C) $492.00
D) $456.00

8. A company has two divisions: North and South. The accountant is preparing a sales
report totalling sales from both divisions. The spreadsheet includes three worksheets:
"Total", "North" and "South". The layout of the spreadsheet is the same for each
worksheet.
What formula will be used in cell C3 on the 'Total' spreadsheet to show the
company's total sales for Product 1 in January?

A) =NorthC3+SouthC3
B) =!NorthC3+!SouthC3
C) =North!C3+South!C3
D) =North!C3:South!C3

9. The management accountant is trying to display a large amount of data in a

spreadsheet but finding it difficult to prevent the column and row headings from scrolling
off the screen. She wants to 'freeze' the first four rows and the first three columns
(shaded below) using the freeze panes function:

Where should the management accountant position the cell pointer when she
clicks the 'Freeze panes' function in order to freeze the first four rows and the
first three columns as illustrated?

A) In cell D5
B) In cell C4
C) In cell C5
D)In cell D4

10) In the cost coding system of Company A each digit of a code represents a
classification, with each digit further to the right representing a smaller subset than the
previous digit.

What type of coding system is Company A using?

A) Hierarchical
B) Mnemonic
C) Block
D) Sequential

11. Which of the following would occur in a production environment where

process costing is used?

1) Continuous production process

2) Output of one process may become the input of the next process
3) Output is always a single product
A) 1 and 2 only
B) 1 and 3 only
C) 1, 2 and 3
D) 3 only

12. Which of the following is/are advantages of using spreadsheets?

1) They are suitable for holding very large volumes of data

2) They enable data to be manipulated easily
3) They enable complex 'what if' analysis to be performed quickly
4) Large spreadsheets are unlikely to contain any critical errors

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

13. Which of the following correctly describes the range of cells below?

A) C4:F8
B) C8:F4
C) C4:F4
D) F4:C8
14. The image below shows the 'Circular References' error message shown in a
spreadsheet status bar.

What could cause a circular reference error?

A) A formula dividing a number by zero

B) A formula which includes a reference to its own cell address
C) A formula referring to a cell containing text
D) A formula which does not separate cell references correctly

15. Which of the following statements reflect attributes of real time processing in
a computer data processing environment?

1) Control over the input of data is facilitated

2) It is suitable for internal regular tasks
3) Transactions are input and processed immediately
4) Up-to-date information is always available

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

16. Which of the following are usual tasks carried out by the accounts department
in a large business?

1) Preparation of the payroll

2) Payment of suppliers invoice
3) Quality control of finished products
4) Deciding on selling prices

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

17. Which of the following would MOST likely influence the content of a
management information report?
A) The information requirements of the recipient of the report
B) The cost of obtaining the necessary information
C) Whether the information is from internal or external sources
D) The degree of accuracy of the information within the report

18. Management needs information to make choices between alternatives.

Which purpose of management information is the above statement an illustration

of?

A) Reporting
B) Decision-making
C) Control
D) Planning

19. A trainee accountant working in an accountancy practice carries out a variety of

work for several clients in a period.

What document may be used by the trainee to record the analysis of hours
worked?

A) Employee record card

B) Timesheet
C) Clock card
D) Payroll extract

20. Which of the following statement(s) about coding is/are CORRECT?

1) A code is a system of words, letters, figures or symbols used to represent other items
2) Authorisation of transactions is not required if codes are used
3) Costs are coded to facilitate their entry into the accounting records

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

21. Telecommunication costs incurred by a business each month are made up of a

standing charge plus an additional amount according to the volume of communications.

How would the telecommunication costs be classified?

A) Fixed cost
B) Stepped cost
C) Variable cost
D) Semi-variable cost
22. Which of the following correctly states the activities of a responsibility
centre?

A) A profit centre is responsible for costs and revenues only

B) An investment centre is responsible for revenues and capital investment only
C) An investment centre is responsible for costs and capital investment only
D) A profit centre is responsible for revenues only

23. The following information relates to a division of a business for a period:

Sales revenue $420,000

Capital employed $260,000
Net (operating) profit margin 10%
Cost of capital 8%

What is the residual income of the division?

A) $3,200
B) $7,600
C) $21,200
D) 2%

24. Which of the following statements would be TRUE if raw materials prices were
rising?

A) FIFO would give a lower profit figure than LIFO

B) Under LIFO production costs would be lower than under FIFO
C) Periodic weighted average would give a lower closing inventory valuation than the
cumulative weighted average pricing method
D) LIFO would give a lower closing inventory valuation than FIFO

25. The packaging section in a warehouse operates a piecework payment system as

follows:

Units packed Piecework rate per unit ($)

1 to 5,000 0.04
5,001 to 8,000 0.05
8,001 and above 0.06

Only additional units packed, over the previous threshold, are paid at the higher rates.

If 8,340 units are packed, what are the wages?

A) $500.40
B) $420.40
C) $370.40
D) $367.00

26. Which of the following costs would MOST appropriately be apportioned to

cost centres on the basis of floor space occupied?

A) Machine depreciation
B) Indirect labour
C) Heat and light
D) Indirect material

27. Central costs in a business are shared to each cost centre.

What term is used for such costs sharing?

A) Absorption
B) Apportionment
C) Re-apportionment
D) Allocation

28. As part of the purchasing cycle, what is the correct order in which the
following documents would be processed?

A) Purchase requisition, purchase order, goods received note, invoice

B) Purchase order, purchase requisition, invoice, goods received note
C) Purchase order, purchase requisition, goods received note, invoice
D) Purchase requisition, purchase order, invoice, goods received note

29. Which of the following identifies a row of cells in a spreadsheet?

A) A1 - G1
B) A1 - A20
C) A1 - Z10
D) A5 - B6

30. Which of the following correctly describes the calculation of unit cost of
production using batch costing?

A) Prime cost divided by the number of batches produced

B) Cost of sale divided by units in the batch
C) Full production cost divided by the number of units in the batch
D) Direct cost divided by the number of batches produced
31. A company uses a single process for which the following information is available:

Processing cost per input unit $3

Quantity of input units 1,800
Units lost in the production process 15%

What is the cost per unit of output for this process?

A) $2.55
B) $3.33
C) $3.53
D) $3.00

32. What is a spreadsheet file with multiple sheets often referred to as?

A) Document
B) Workbook
C) Database
D) Worksheet

33. Which of the following would NOT be a task of a trainee accountant?

A) Value inventory
B) Calculate materials cost
C) Estimate product profitability
D) Authorising invoices

34. Which of the following is an advantage of having centralised rather than de-
centralised business administration?

A) Administration under control of local management

B) Economy in terms of space and cost
C) Self-sufficient local offices
D) Systems tailored to individual requirements

35. What is the double-entry for the purchase of raw materials on credit in an
integrated accounting system?

A) Dr Raw materials control

Cr Payables control
B) Dr Purchase ledger control
Cr Raw materials control
C) Dr Payables control
Cr Raw materials control
D) Dr Cost ledger control
Cr Purchase ledger control
36. What document is required to authorise an issue of raw material from stores?

A) Goods received note

B) Materials requisition
C) Purchase requisition
D) Bin card

37. How is the contribution per unit calculated in marginal costing?

A) Selling price less variable production costs per unit

B) Selling price less total production costs per unit
C) Selling price less total variable costs per unit
D) Selling price less total costs per unit

38. A company absorbs indirect costs as follows:

Production overheads $29.40 per machine hour worked

Selling and administration overheads 12% of total production costs

During a period 6,000 units of a product were manufactured in 1,000 machine hours.
Direct costs incurred in the manufacture of the product were:

Raw materials $18,600

Labour 1,800 hours at $15 per hour

What is the total cost per unit of the product?

A) $12.50
B) $14.00
C) $37.00
D) $41.44

39. The labour efficiency and capacity utilisation ratios in a period were 112% and 94%
respectively.

What was the production volume ratio in the period (to the nearest %)?

A) 119%
B) 106%
C) 105%
D) 84%

40. Materials inventory at the beginning of the month totalled $16,780. The following
lists activity during the month:
Purchases of materials, all on credit $33,660
Issues of direct materials from inventory $29,010
Issues of indirect materials from inventory $1,980
Return of materials to suppliers $860
Return of materials to inventory following over-issue $620

What was the inventory of materials at the end of the month?

A) $19,450
B) $20,930
C) $19,210
D) $19,690

41. In month 2, the materials purchased by a manufacturing business totalled

$126,440. The materials inventory at the end of month 2 was $75,770. During month 2
the issues of direct materials to production were $114,960 and issues of indirect
materials were $7,590.

What was the balance on the materials control account at the beginning of month
2?

A) $56,700
B) $94,840
C) $71,880
D) $79,660

42. In a factory cost centre, direct workers are paid $9 per hour. Ten units of product A
are manufactured per direct labour hour.

If productivity improves by 10%, what will be the direct labour cost per unit of
product A (to two decimal places)?

A) $1.11
B) $0.90
C) $0.82
D) $0.81

43. Actual and budgeted figures for a manufacturing cost centre for a period are:
Actual Budget
Overhead costs $181,250 $150,000
Labour hours 75,000 72,000

Labour hours are used to absorb the overheads in the cost centre.

What is the predetermined overhead absorption rate (to two decimal places)?
A) $2.52
B) $2.42
C) $2.08
D) $2.00

44. Jonah prepares the following information for material purchases:

Sales 100 units

Opening inventory of finished goods 50 units
Closing inventory of finished goods 75 units
Materials per unit 3 kg
Labour hours per unit 4
Opening inventory of raw materials 300 kg
Closing inventory of raw materials 450 kg

What will be material purchases for Jonah?

A) 75 kg
B) 650 kg
C) 450 kg
D) 525 kg

45. Below is a schedule of expenses for Kathy prepared using a spreadsheet.

Which formula would give the average monthly cost?

A) =SUM(B4:B9)
B) =SUM(B10/6)
C) =AVERAGE(B4/B9)
D) =AVERAGE(B4:B9)
46. The formula = B5*B9 - D1/D2 appears in a spreadsheet cell.

Which of the following is a way to re-write the formula in order to produce the
same result?

A) [B5 x (B9 - D1)]÷D2

B) (B5 x B9) - (D1÷D2)
C) B5 x [B9 - (D1÷D2)]
D) [(B5 x B9) - D1]÷D2

47. The information below contrasts management accounting with financial accounting

Management accounting
1) Accounts presentation determined by standards
2) Accounts used both within a business and externally
3) Concerned both with past data and future data
4) Concerned with financial information only

Financial accounting
1) Accounts presentation determined by management
2) Accounts used within a business only
3) Focused on past data
4) Concerned with both financial and non-financial information

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

48. Lilly Co produced a single product called Bud using a single process. No losses
occur during the process.

During June 500 kg of raw material were input into the process at a total cost of $8,000.
Conversion costs during the month amounted to $2,500. There was no work in
progress at the start of June.

At the end of June, 350 kg of Bud were transferred to finished goods. The remaining
work in progress was 100% complete with respect to materials and 80% complete with
respect to conversion costs.
What are the equivalent units for conversion at the end of the month?

A) 400 kg
B) 500 kg
C) 380 kg
D) 470 kg

49. A large hospital is in the process of budgeting for the heating costs of its various
cost centres.

Which of the following is the BEST basis for apportioning the heating costs to the
cost centres?

A) Number of employees per cost centre

B) Number of patients per cost centre
C) Cubic metres per cost centre
D) Value of machinery in each cost centre

50. Which department is responsible for preparing a goods received note?

A) Quality control
B) Stores
C) Purchasing
D) Accounts