Free BA2 – Fundamentals of Management Accounting Exam CIMAPRA17-BA2-1 Exam Practice Test

Fast Manufacturers PLC have reconsidered their new project and the initial investment required of£1,000,000 is now 25% less than the original conception. The project will remain will have a three year life span andhave no scrap value.However, this new conception has operating costs of £150,000 in year 1, and increasing by 5% due to inflation the following years. The gross revenue will also be higher across the board. The new project conception is forecasting a gross revenue of £525,000 in year 1 and again increasing with inflation 5% for years 2 and 3.If the cost of capital has remained at 14%, should Fast Manufacturers PLC go ahead with the revised project?

• Go ahead with the project
• Do not go ahead with the project
• Cannot tell from the information given

A company currently allows a discount of 20% to customers who pay at the time of purchase. If 30% of customers pay immediately, the extra sales needed in July to increase the cash receipts in that month by £6,000 are:

• £7500
• £20000
• £25000
• £30000

CORRECT TEXTCVP Limited manufactures a single product with a selling price of $25.60. Fixed costs are $122,880 per month and the product has a profit/volume ratio of 40%.In a month when actual sales were $358,400, CVP's margin of safety in units was

A company has spent $5,000 on a report into the viability of using a subcontractor. The report highlighted the following:A machine purchased six years ago for $30,000 would become surplus to requirements. It has a written-down value of $10,000 but would be resold for $12,000.A machine operator would be made redundant and would receive a redundancy payment of$40,000.The administration of the subcontractor arrangement would cost the company $25,000 each year. Which THREE of the following are relevant for the decision? (Choose three.)

• A relevant cost of $5,000 for the viability report.
• A relevant cost of $30,000 for the machine.
• A relevant cost of $40,000 for the redundancy payment.
• A relevant cost of $10,000 for the machine.
• A relevant cost of $25,000 each year for administration.
• A relevant revenue of $12,000 for the machine.

Which TWO of the following are characteristics of Management Accounts? (Choose two.)

• Governed by rules and regulations
• Provide information to managers
• Provide information needed by shareholders
• Internally focused
• Statutory requirement

CORRECT TEXTA company currently allows a discount of 10% to customers who pay at the time of purchase. If 20% of customers pay immediately, the extra sales needed in July to increase the cash receipts in that month by £9,000 are:

CORRECT TEXTLC produces a household detergent in a single process. Information for this process for last month is as follows:

• Materials input - 11,000 Litres at £2.00 per litre.
• Conversion costs - £23,000
• Output during the month - 8,000 litres.
• There were 2,000 units of closing work in progress which was complete as to materials and 35% complete as to conversion.
• Normal loss for the month was 5% of input and all losses have a scrap value of 50p per litre.
• There was no opening work in progress.
• What was the value of the abnormal loss/gain during the month (to the nearest £)?

An increase in the selling price per unit, will cause the point at which the line plotted on a profit/volume (PV) graph intersects the horizontal axis to:

• Move to the left
• Move to the right
• Double
• Stay where it is

CORRECT TEXTXter Ltd produces product 'PZ'. The forecast sales for the forthcoming year are 50,000 units.It is anticipated that there will be 10,000 units of opening inventory at the beginning of the year. However, management wishes to reduce this inventory by 30% by the end of next year.The production budget for the forthcoming year will be

Each finished carton of product P contains 15 litres of liquid L. During the production process there is an unavoidable loss of 20% of the liquid input. The standard price of liquid L is $2 per litre.The standard ingredient cost for liquid L shown on the standard cost card for one carton of product P will be

• $18.75
• $30.00
• $36.00
• $37.50