Fundamentals Level Knowledge ModuleManagement AccountingSpecimen Exam applicable from June 2014Time allowed: 2 hoursThis paper is divided into two sections:Section A ALL 35 questions are compulsory and MUSTbe attemptedSection B ALL THREE questions are compulsory and MUSTbe attemptedFormulae Sheet, Present Value and Annuity Tables are onpages 16, 17 and 18.Do NOT open this paper until instructed by the supervisor.This question paper must not be removed from the examination hall.The Association of Chartered Certified Accountants Section A ALL 35 questions are compulsory and MUST be attemptedPlease use the space provided on the inside cover of the Candidate Answer Booklet to indicate your chosen answer toeach multiple choice question.Each question is worth 2 marks.1A manufacturing company benchmarks the performance of its accounts receivable department with that of a leadingcredit card company.What type of benchmarking is the company using?ABCDInternal benchmarkingCompetitive benchmarkingFunctional benchmarkingStrategic benchmarking23Which of the following BEST describes target costing?ABCDSetting a cost by subtracting a desired profit margin from a competitive market priceSetting a price by adding a desired profit margin to a production costSetting a cost for the use in the calculation of variancesSetting a selling price for the company to aim for in the long runInformation relating to two processes (F and G) was as follows:ProcessNormal loss as% of inputInput(litres)Output(litres)FG8565,00037,50058,90035,700For each process, was there an abnormal loss or an abnormal gain?Process FProcess GABCDAbnormal gainAbnormal gainAbnormal lossAbnormal lossAbnormal gainAbnormal lossAbnormal gainAbnormal loss4The following budgeted information relates to a manufacturing company for next period:Units$ProductionSales14,00012,000Fixed production costsFixed selling costs63,00012,000The normal level of activity is 14,000 units per period.Using absorption costing the profit for next period has been calculated as $36,000.What would be the profit for next period using marginal costing?ABCD$25,000$27,000$45,000$47,0002 5The Eastland Postal Service is government owned. The government requires it to provide a parcel delivery service toevery home and business in Eastland at a low price which is set by the government. Express Couriers Co is a privatelyowned parcel delivery company that also operates in Eastland. It is not subject to government regulation and most ofits deliveries are to large businesses located in Eastlands capital city. You have been asked to assess the relativeefficiency of the management of the two organisations.Which of the following factors should NOT be allowed for when comparing the ROCE of the two organisations toassess the efficiency of their management?ABCDDifferences in prices chargedDifferences in objectives pursuedDifferences in workforce motivationDifferences in geographic areas served6Under which sampling method does every member of the target population has an equal chance of being in thesample?ABCDStratified samplingRandom samplingSystematic samplingCluster sampling7A Company manufactures and sells one product which requires 8 kg of raw material in its manufacture. The budgeteddata relating to the next period are as follows:UnitsSalesOpening inventory of finished goodsClosing inventory of finished goods19,0004,0003,000KgOpening inventory of raw materialsClosing inventory of raw materials50,00053,000What is the budgeted raw material purchases for next period (in kg)?ABCD141,000147,000157,000163,0003P.T.O. 8Up to a given level of activity in each period the purchase price per unit of a raw material is constant. After that pointa lower price per unit applies both to further units purchased and also retrospectively to all units already purchased.Which of the following graphs depicts the total cost of the raw materials for a period?$AB00$CD00ABCDGraph AGraph BGraph CGraph D9Which of the following are benefits of budgeting?1234It helps coordinate the activities of different departmentsIt fulfils legal reporting obligationsIt establishes a system of controlIt is a starting point for strategic planningABCD1 and 4 only1 and 3 only2 and 3 only2 and 4 only10 The following statements relate to the participation of junior management in setting budgets:1.2.3.It speeds up the setting of budgetsIt increases the motivation of junior managersIt reduces the level of budget paddingWhich statements are true?ABCD1 only2 only2 and 3 only1, 2 and 34 11 A company