Question 1

Comparing planned costs with actual costs is associated with:

Accepted Answer

A)  Variance analysis 
B)  Flexible analysis 
C)  Break-even analysis 
D)  Costing analysis

Question 2

A company uses "Standard Costing".If the standard variable cost of making one unit is £0.32 and the budgeted production is 10,000 units but company produced 12,000 units,the expected variable cost would be:

Accepted Answer

A)  £3,200 
B)  £0.32 
C)  £3,840 
D)  £640

Question 3

Cost of sales is calculated by subtracting opening inventory from purchases and adding closing inventory

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is false?

Accepted Answer

A)  There are no formal requirements for producing and presenting management accounting information 
B)  Financial accounting information is intended mainly for users outside the organization (such as shareholders and creditors) 
C)  Companies are not legally required to produce financial accounting information 
D)  Management accounting information is often private, whereas financial accounting information is public

Question 5

Absorption costing requires fixed costs to be separated from variable costs in order to aid decision making

Accepted Answer

A) True 
 B)False

Question 6

A company manufactures furniture.Which of the following costs would be included in the production of a piece of furniture as a direct cost,and used to calculate the cost per unit,when making tables?
(i) The wood used to make the table tops
(ii)The varnish and paint used
(iii)The wages of the workers on the assembly line,paid per table manufactured.
(iv)The salary of the supervisor of the assembly line
(v) The salary of the accountant producing the annual accounts for the company.

Accepted Answer

A)  (i) and (ii) only as these are used in the product 
B)  (i) - (iv) as these are part of production. The accountant is not 
C)  (i) and (iii) only. The others are indirect costs 
D)  All of them. The company cannot exist without all of these costs and more

Question 7

Prime costs include which of the following?

Accepted Answer

A)  Distribution costs 
B)  Administrative expenses 
C)  Direct labour 
D)  Interest payable

Question 8

Standard costing is the most appropriate approach where actual costs do not fluctuate much

Accepted Answer

A) True 
 B)False

Question 9

Financial accounting is predominantly forward looking and includes forecast and plans,while management accounting is about recording past events

Accepted Answer

A) True 
 B)False

Question 10

Production overheads are charged as an expense in the income statement as part of costs of sales

Accepted Answer

A) True 
 B)False

Exam 13: Introduction to Management Accounting

Comparing planned costs with actual costs is associated with:

A company uses "Standard Costing".If the standard variable cost of making one unit is £0.32 and the budgeted production is 10,000 units but company produced 12,000 units,the expected variable cost would be:

Cost of sales is calculated by subtracting opening inventory from purchases and adding closing inventory

Which of the following statements is false?

Absorption costing requires fixed costs to be separated from variable costs in order to aid decision making

Prime costs include which of the following?

Standard costing is the most appropriate approach where actual costs do not fluctuate much

Financial accounting is predominantly forward looking and includes forecast and plans,while management accounting is about recording past events

Production overheads are charged as an expense in the income statement as part of costs of sales