Management Information (MA1) Class Test 1
Answer ALL questions below. Duration: 75 minutes
1. The cost accountant has provided information about the actual and budgeted costs of the materials used in
production in the last month.
This information will primarily aid management in which of the following areas?
(a) Planning
(b) Implementing
(c) Control
(d) Decision Making
2. Which of the following is a necessary feature of useful management information?
(a) Communicated in writing
(b) Presented in report format
(c) Supported by calculations
(d) Timely and clear to the user
3. The management accountant compares the profitability of two products, P and Q, and concludes that P is the best
product to make. He writes a report of his findings for the broad of directors.
Which will this report aid management in?
(a) Decision Making
(b) Planning
(c) Controlling
(d) Implementing
4. Which of the following is TRUE about a line graph?
(a) The independent variable is always shown on the y axis
(b) The independent variable is always show on the x axis
(c) The dependent variable is always shown on the x axis
(d) It does not matter which axis the variable is shown
5. Which of the following statements is CORRECT?
(a) Costing accounting is only relevant to manufacturing organizations
(b) Management accounts must be prepared in a regulated format
(c) Financial and management accounts are prepared from completely separate sets of data
(d) Management accounts are normally prepared for internal use
6. Which of the following is an example of internal information for the wages department of a large company?
(a) A code of practice issued by the institute of directors
(b) A national minimum wage
(c) Changes to tax arrangements issued by the tax authorities
(d) The company’s employees’ schedule of hours worked
Management Information (MA1) Class Test 1
7. Which of the following is NOT a quality of good information
(a) Accuracy
(b) Completeness
(c) Complexity
(d) Relevance
8. What is an integrated system?
(a) The cost accounts for every product are maintained on the same cost ledger
(b) The financial and cost accounts are maintained on the same system
(c) The financial and cost accounts are maintained independently
(d) The budget accounts are maintained along with the financial accounts on the same ledger
9. Which department would be responsible for completing a standard purchase requisition?
(a) The purchasing (buying) department
(b) The department that requires the goods
(c) The goods inwards department
(d) The accounting department staff
10. Which one of the following is a common feature of cost accounting but not financial accounting?
(a) Control accounts
(b) Cost classification
(c) Cost unit
(d) Periodic stocktaking
11. Which document is sent to a supplier following the receipt of a quotation?
(a) Purchase order
(b) Goods received note
(c) Purchase requisition
(d) Delivery note
12. Which one of the following does NOT apply to real time systems?
(a) Output can be simultaneous with input
(b) Updates are done at predetermined times
(c) On-line input, queries and processing are possible
(d) Continually changing data is received
13. Which of the following activities may be the responsibility of an accounting technician?
(a) Calculating cost variances
(b) Making capital investment decisions
(c) Approving budgets
(d) Allocating warehouse space
Management Information (MA1) Class Test 1
14. Which of the following is a feature of a centralized organization?
(a) The authority to take decisions is passed down to units
(b) It offers more participation in decision making at lower levels
(c) Decisions can be taken more quickly and responsively
(d) Upper levels in the hierarchy retain the authority to take decision
15. An organization chart is a way of showing which of the following?
(a) The stakeholders who have interest in the company
(b) The physical layout of the buildings on a site
(c) The informal patterns of communication
(d) How the tasks of an organization are divided an coordinated
16. Which of the following costs would NOT be included as part of the prime cost of a product?
(a) Hire for specialized machine required for the product
(b) Rent and rates of the factory
(c) Material input for product
(d) Labour cost of the product
17. Company has to pay royalties of $1.50 per unit of production. The agreement states that royalties are payable
monthly based on that month’s production.
How would the royalty be classified in the costs account?
(a) Variable cost
(b) Semi variable cost
(c) Stepped cost
(d) Fixed cost
18. Which of the following is most likely to be treated as an indirect cost by a computer manufacturer?
(a) Production line worker wages
(b) Mircochips
(c) Plastic housing for computer bodies
(d) Factory supervisor’s wages
19. Which TWO of the following are direct costs?
(a) The labour cost of production workers
(b) The hire of tools or equipment for a particular job
(c) Salesman’s wages
(d) Rent and insurance of the factory
20. Which of the following would be classed as indirect labour?
(a) Machine operators in a company manufacturing washing machines
(b) A stores assistant in a factory store
(c) Plumbers in a construction company
(d) A team of inspectors ensuring that products meet quality standards
Management Information (MA1) Class Test 1
21. Which of the following calculates prime cost?
(a) Direct labour cost plus production overheads
(b) Material cost plus production overheads
(c) Total production cost less production overheads
(d) Production overheads plus material costs plus direct labour costs
22. A particular cost is classified as being semi variable.
What is the effect on the cost per unit if the activity increases by 10%?
(a) Decrease by 10%
(b) Decrease by less than 10%
(c) Increase by less than 10%
(d) Remain constant
23. If activity is reduced by 10%, what is the effect on the fixed cost per unit of output?
(a) Increase by 10%
(b) Increase by less than 10%
(c) Increase by more than 10%
(d) No change
24. Which one of the following would be classified as indirect labour?
(a) Assembly workers on a car production line
(b) Bricklayers in a house building company
(c) Machinists in a factory producing clothes
(d) Forklift truck drivers in the stores of an engineering company
25. Production costs of Product X have been classified in various ways
Prime Costs $50.80 per unit
Variable Costs $54.44 per unit
Fixed overheads 15.20 per direct labour hour
Direct labour $2.6 hours per unit at $12 per hour
Variable overheads $1.40 per direct labour hour
Direct Materials $19.60 per unit
What is the total production cost per unit of product X?
(a) $105.24
(b) $144.76
(c) $93.96
(d) $125.16
Management Information (MA1) Class Test 1
26. Which is the best description that fits the cost curve shown below?
CACIQUE ACCOUNTING COLLEGE
(a) Direct material cost per unit
(b) Direct labour cost per unit
(c) Variable production cost per unit
(d) Fixed production cost per unit
27. Which of the following costs per unit may be expected to decrease by the greatest percentage with an increase in
the volume of units produced?
(a) Fixed cost per unit
(b) Semi-variable cost per unit
(c) Variable cost per unit
(d) Total cost per unit
28. A factory making soft toys uses a particular machine on each production line and each machine costs $1,000 a
month to hire. Each production line can make up to 100 toys per month.
Which is the best description of the cost above?
(a) A fixed cost
(b) A variable cost
(c) A mixed cost
(d) A step cost
29. Which behaviour is the following cost displaying?
Outputs (units) Cost ($)
3000 7000
4000 9000
5000 11000
(a) Fixed cost
(b) Variable cost
(c) Mixed cost
(d) Step cost
30. Which TWO of the following are likely to be classed as variable cost?
(a) Direct materials for production
(b) Annual salary for a factory supervisor
(c) Production line employees’ wages
(d) Telephone bill
END OF TEST
