Question 1

Which of the following statements about management accounting is correct?

Accepted Answer

A)   Management Accounting follows strict rules
B)   Management Accounting is purely a financial tool
C)   Management Accounting cannot be used for qualitative analysis
D)   Management Accounting techniques are being developed to meet different needs D

Question 2

Using "planned" costs as a basis for making decisions rather than actual costs is known as:

Accepted Answer

A)   Absorption costing
B)   Marginal costing
C)   Variable costing
D)   Standard costing D

Question 3

The cost per unit for making 100 units is £5.But for 200 units,the cost per unit is £4.
This is an example of:

Accepted Answer

A)   A fixed cost
B)   A variable cost
C)   A semi-variable cost
D)   A stepped cost C

Question 4

The cost of Direct Materials in a manufacturing account refers to:

Accepted Answer

A)   The direct materials that were purchased for the production in the period
B)   The direct materials that were used for production in the period
C)   The direct materials that were issued from stores during the period
D)   All the materials used in production - including items such as oil or spare parts for machines

Question 5

Companies are not legally required to produce management accounting information

Accepted Answer

A) True 
 B)False

Question 6

The term "prime costs" refers to the operating costs which are charged as an expense during the period in which they are incurred

Accepted Answer

A) True 
 B)False

Question 7

Operating expenses are period costs,which means they must be charged as an expense during the period in which they are incurred

Accepted Answer

A) True 
 B)False

Question 8

A manufacturing account shows the opening inventory of finished goods minus manufacturing costs of the finished goods plus the closing inventory of finished goods

Accepted Answer

A) True 
 B)False

Question 9

When standard costing is used in conjunction with budgeting,variances can be calculated to show where actual results were not as expected

Accepted Answer

A) True 
 B)False

Question 10

Production expenses which become part of the costs of finished goods are charged as an expense in the period in which they are incurred

Accepted Answer

A) True 
 B)False

Question 11

Absorption costing is closely linked to financial accounting and the calculation of profit

Accepted Answer

A) True 
 B)False

Question 12

Knowing the cost of producing a product helps determine the price to be charged for it

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is false?

Accepted Answer

A)   Manufacturing accounts require adjustments for direct materials
B)   Manufacturing accounts require adjustments for standard costs
C)   Manufacturing accounts require adjustments for work in progress
D)   Manufacturing accounts require adjustments for finished goods

Question 14

Which of the following statements are correct?
(i)Financial Accounting is required by law
(ii)Financial Accounting includes budgeting,forecasting and decision making
(iii)Management Accounting must follow a set pattern
(iv)Management Accounting includes budgeting,forecasting and decision making

Accepted Answer

A)   (i)  and (iv)  are correct
B)   (i) , (ii)  and (iii)  are correct
C)   (i) , (ii)  and (iv)  are correct
D)   All of them are correct

Question 15

A company rents warehouses for storage.Each warehouse is capable of storing up to 400 units,and costs £500 per month.For 250 units,the cost would be £500.For 500 units,the cost would be £1,000.
This is an example of:

Accepted Answer

A)   A Fixed Cost
B)   A variable cost
C)   A semi-variable cost
D)   A stepped cost

Question 16

In a manufacturing account an inventory adjustment is made to direct materials in respect of how much was purchased (as opposed to how much was consumed)

Accepted Answer

A) True 
 B)False

Question 17

Which of the following characteristics apply to Financial Accounting,and which apply to Management Accounting?
(i) Required by law
(ii) Historic data
(iii)Information is only available within the organisation

Accepted Answer

A)   (i)  applies to Financial Accounting. (ii)  and (iii)  apply to Management Accounting
B)   (i) , (ii)  and (iii)  apply to Financial Accounting only
C)   (i)  and (ii)  apply to Financial Accounting. (iii)  applies to Management Accounting
D)   (i) , (ii)  and (iii)  apply to Management Accounting only

Question 18

A small or new business can cope without management accounting

Accepted Answer

A) True 
 B)False

Question 19

Prime Cost is part of the production cost,also called the manufacturing cost or factory cost.
Prime Cost includes:

Accepted Answer

A)   All costs associated with the production of a product, or the running of a factory
B)   Direct material costs only
C)   All material costs and all labour costs
D)   Direct materials and direct labour costs

Question 20

A company has the following costs of production for making 1,000 widgets in June:

The "cost per unit" is:

Accepted Answer

A)   £8 per unit under Absorption Costing and £2 per unit under Marginal Costing
B)   £8 under Absorption Costing and £7 under Marginal Costing
C)   £8 per unit under Marginal Costing and £7 per unit under Absorption Costing
D)   £2 per unit under Marginal Costing and £5 per unit under Absorption Costing

Exam 13: Introduction to Management Accounting

Which of the following statements about management accounting is correct?

Using "planned" costs as a basis for making decisions rather than actual costs is known as:

The cost per unit for making 100 units is £5.But for 200 units,the cost per unit is £4. This is an example of:

The cost of Direct Materials in a manufacturing account refers to:

Companies are not legally required to produce management accounting information

The term "prime costs" refers to the operating costs which are charged as an expense during the period in which they are incurred

Operating expenses are period costs,which means they must be charged as an expense during the period in which they are incurred

A manufacturing account shows the opening inventory of finished goods minus manufacturing costs of the finished goods plus the closing inventory of finished goods

When standard costing is used in conjunction with budgeting,variances can be calculated to show where actual results were not as expected

Production expenses which become part of the costs of finished goods are charged as an expense in the period in which they are incurred

Absorption costing is closely linked to financial accounting and the calculation of profit

Knowing the cost of producing a product helps determine the price to be charged for it

Which of the following statements is false?

Which of the following statements are correct? (i) Financial Accounting is required by law (ii) Financial Accounting includes budgeting,forecasting and decision making (iii) Management Accounting must follow a set pattern (iv) Management Accounting includes budgeting,forecasting and decision making

A company rents warehouses for storage.Each warehouse is capable of storing up to 400 units,and costs £500 per month.For 250 units,the cost would be £500.For 500 units,the cost would be £1,000. This is an example of:

In a manufacturing account an inventory adjustment is made to direct materials in respect of how much was purchased (as opposed to how much was consumed)

Which of the following characteristics apply to Financial Accounting,and which apply to Management Accounting? (i) Required by law (ii) Historic data (iii) Information is only available within the organisation

A small or new business can cope without management accounting

Prime Cost is part of the production cost,also called the manufacturing cost or factory cost. Prime Cost includes:

A company has the following costs of production for making 1,000 widgets in June: The "cost per unit" is: