Mock 1 MA2 0724

11/18/24, 8:19 AM MA2 (MANAGEMENT INFORMATION)
MA2 (MANAGEMENT INFORMATION)

This exam contains 50 questions, each worth 2 marks (100 marks in total).
All questions are COMPULSORY. The time allowed is 2 hours.
* Indicates required question
1. Email *
2. Name: *
3. Student ID: *
4. Section: *
Mark only one oval.
5. 1. Which TWO of the following are direct expenses? * 2 points
Check all that apply.
The cost of special designs, drawings or layouts for a specific job.

The hire of tools or equipment for a particular job.
Salesmen’s wages
Rent, wages and insurance of a factory.
https://docs.google.com/forms/d/1PHKgDaTEUpk8DwaMWfObTcL98-C3_eRoy-zxt5DubbA/edit 1/23
6. 2. Storm plc has just developed a new product to be called the Rain and * 2 points
is now considering putting it into production.
Which of the following costs/revenues would be relevant to an NPV

calculation (tick in the box)?
1) Costs incurred in the development of Rain amounting to $480,000

2) Purchase of new machinery at a cost of $2,400,000 payable
immediately
3) Depreciation charge for the new machinery of $600,000 per annum
4) Sales price of $80 per Rain
Mark only one oval.
1 and 3
2 and 4
1 and 4
2 and 3
7. 3. Last month a manufacturing company’s profit was $2,000, calculated * 2 points

using absorption costing principles. If marginal costing principles had
been used, a loss of $3,000 would have occurred. The company’s fixed
production cost is $2 per unit. Sales last month were 10,000 units.
What was last month's production (in units)
8. 4. Kiveton Cleaning Services supplies its employees with protective * 2 points
clothing. One such item is protective gloves.
Records from the stores department for January showed:
1 Jan Opening inventory 150 pairs @ $2each

7 Jan Purchases 40 pairs @ $1.90
15 Jan Issues 30 pairs
29 Jan Issues 35 pairs
What is the value of the issues and the closing inventory if the FIFO
method is used?
Mark only one oval.
Issues: $130 Closing inventory: $246
9. 5. The following data is available for Tallus Co in period 2. * 2 points
Actual overheads $225900

Actual machine hours $7530
Budgeted overheads $216,000
The budgeted overhead absorption rate was $32 per hour.

What were the budgeted machine hours?
10. 6. What would the accounting entries be for $10,000 of over-absorbed * 2 points
overheads?
Mark only one oval.
Dr WIP control account Cr Overhead control account
Dr Statement of profit or loss Cr WIP control account
Dr Statement of profit or loss Cr Overhead control account
Dr Overhead control account Cr Statement of profit or loss
11. 7. A firm absorbs overheads on labor hours. In some period 11,500 * 2 points
hours were worked, actual overheads were $138,000 and there was
$23,000 over-absorption. What was the overhead absorption rate per
hour (to 2 decimal places)?
12. 8. Which of the following methods of remuneration is not an incentive- * 2 points

based scheme?
Mark only one oval.
Straight piecework
Day rate
Group bonus
Differential piecework
13. 9. The following information is available for two projects. Only one * 2 points
project can be undertaken.
Project A Project B
Internal rate of return (IRR) 16% 17%
Discounted payback period 3.6 years 4.1 years
Net present value (NPV) $18300 $16900
Which TWO of the following statements are true?
At a cost of capital of 17% project B would have a zero NPV

Ranking the projects based on discounted payback period would make project B
seem more favourable
Project A should be accepted because it has the higher NPV
Project B should be accepted because it has the higher IRR
14. 10. The following budgeted information relates to a manufacturing * 2 points

company for next period:
Production units 14000

Sales units 12000
Fixed production costs $63000

Fixed selling costs $12000
The normal level of activity is 14000 units per period.

Using absorption costing the profit for next period has been calculated
as $36000.
What would be the profit for next period using marginal costing?
Mark only one oval.
$25000
$27000
$45000
$47000
15. 11. Reginald is the manager of production department M in a factory * 2 points
which has ten other production departments.
He receives monthly information that compares planned and actual

expenditure for department M. After department M, all production goes
into other factory departments to completed prior to being dispatched to
customers. Decisions involving purchasing asset
items in department M are not taken by Reginald.
Which of the following describes Reginald’s role in department M?
Mark only one oval.
A cost centre manager
An investment centre manager
A revenue centre manager
A profit centre manager
16. 12. The following statements refer to qualities of good information: * 2 points
(i) It should be communicated to the right person.
(ii) It should always be completely accurate before it is used.
(iii) It should be understandable by the recipient.
Which of the above statements are correct?
Mark only one oval.
(i) and (ii) only
(i) and (iii) only
(ii) and (iii) only
(i), (ii) and (iii)
17. 13. A veterinarian should take on average 20 minutes to stitch a dog’s * 2 points
wound. In one day the veterinarian stitched 5 dogs taking 1 hour in
total.
What is the efficiency ratio for the veterinarian? (nearest whole number)
18. 14. Over the last two months the following production costs were * 2 points
incurred by Department Z:
Level of activity Production cost

May 2,180 units $13,405
June 3,200 units $15,700
In July budgeted production was 2,560 units, what would the budgeted
production cost be?
Mark only one oval.
$14260
$15740
$12560
$14552.50
19. 15. A company determines its order quantity for a raw material by using * 2 points
the Economic Order Quantity (EOQ) model.
What would be the effects on the EOQ and the total annual holding cost
of a decrease in the cost of ordering a batch of raw material?
Mark only one oval.
EOQ: Higher Total annual holding cost: Lower
EOQ: Higher Total annual holding cost: Higher
EOQ: Lower Total annual holding cost: Higher
EOQ: Lower Total annual holding cost: Lower
20. 16. * 2 points
Mark only one oval.
$32340
$150000
$1032340
$850000
21. 17. Field is considering a new project. Details of the proposed project * 2 points
are as follows:
Life of project: 6 years

Initial cost: $85,000
Annual savings: $24,000
NPV at 5%: $36,824
What is the internal rate of return for this project to the nearest 1%?
Mark only one oval.
16%
18%
20%
22%
22. 18. Which one of the following is true? * 2 points
Mark only one oval.
The x-axis on a scatter diagram is used to represent the independent variable
Scatter diagrams are graphs which show equations
23. 19. A company is evaluating a project that requires 400 kg of raw * 2 points
material X. The company has 150 kg of X in stock that was purchased
six months ago for $55 per kg. The company no longer has any use for
X. The inventory of X could be sold for $40 per kg. The current purchase
price for X is $53 per kg.
What is the total relevant cost of raw material X for the project?
Mark only one oval.
$21200
$21500
$19250
$13250
24. 20. * 2 points

XYZ produces three main products. Which would be the most appropriat
e chart or diagram
for showing total revenue analysed into product revenue month by mont
h?
Mark only one oval.
Scatter graph
Line graph
Pie chart
Component bar chart
25. 21. ABC Co sells to both cash and credit customers. It expects that * 2 points
40% of its sales will be paid for in cash and of the remainder, 50% will
be paid the month after sale, 40% two months after sale and the rest will
remain unpaid.
Jan $100000
Feb $120000
Mar $140000
Apr $150000
May $160000
Jun $180 000
What is the value of cash receipts forecast in the month of April?
Mark only one oval.
$182000
$130800
$116000
$212000
26. 22. Two products W and X are created form a joint process. Both * 2 points
products can be sold immediately after split-off. There are no opening
inventories or work-in-progress. The following information is available
for the last period:
Total joint production costs $776,16

Product Production units Sales units Selling price
W 12000 10000 $10
X 10000 8000 $12
Using the sales value method of apportioning joint production costs,

what was the value of the closing inventory of product X for the last
period?
27. 23. A company uses absorption costing with a predetermined hourly * 2 points
fixed overhead absorbed situations arose last month:
1) Actual hours worked were less than the budgeted hours used to set
the predetermined absorption rate
2) Actual overhead expenditure exceeded budgeted expenditure
Which of the following statements is correct?
Mark only one oval.
Situation 1 would cause the overheads to be under-absorbed and situation 2

would cause the overheads would be over-absorbed
Situation 1 would cause the overheads to be over-absorbed and situation 2

would cause the overheads would be under-absorbed
Both situations would cause the overheads to be under-absorbed
Both situations would cause the overheads to be over-absorbed
28. 24. A manufacturing company uses 28,000 components at an even rate * 2 points
during the year. Each order placed with the supplier of the components
is for 1,500 components, which is the economic order quantity. The
company holds a buffer inventory of 700 components. The annual cost
of holding one component in inventory is $3.
What is the total annual cost of holding inventory of the component?
29. 25. * 2 points

What would be the double entry for an issue of indirect production mate
rials?
Mark only one oval.
Dr Materials control account Cr Finished goods control account
Dr Production overhead control a/c Cr Materials control account
Dr Work-in-progress control account Cr Production overhead control a/c
Dr Work-in-progress control account Cr Materials control account
30. 26. A firm has discovered that the cost of a raw material will increase. If * 2 points
nothing else changes what is the effect of this on margin of safety and
breakeven point?
Mark only one oval.
The margin of safety will decrease and the breakeven point will increase
The margin of safety will increase and the breakeven point will increase
The margin of safety will decrease and the breakeven point will decrease
The margin of safety will increase and the breakeven point will decrease
31. 27. A company values inventory using the periodic weighted average * 2 points
cost method. At 1 October 20X8, there were 60 units in inventory valued

at $12 each. On 8 October, 40 units were purchased for $15 each, and
a further 50 units were purchased for $18 each on 14 October. On 21
October, 75 units were sold for $1,200.
What was the value of closing inventory at 31 October 20X8?
32. 28. Which of the following is a building firm who constructs extensions * 2 points
to private houses most likely to use?
Mark only one oval.
Service Costing
Batch Costing
Job Costing
Process Costing
33. 29. Vroom manufactures toy cars, and all sales are made to retailers * 2 points
who have credit accounts.
Vroom sells 50,000 cars a month at $10 each. A 3% discount is given
for payment in the month of sale. 30% of customers take up this offer.
The remaining customers pay in the following month.
What are the cash receipts that Vroom would expect to receive each
month?
Mark only one oval.
$145500
$500000
$495500
$395000
34. 30. Which TWO of the following are most likely to use batch costing? * 2 points
A footwear manufacturer
A film making company
A bakery
An oil refinery
35. 31. What is the annual rate of interest of 2.1% compounded every three * 2 points
months?
Mark only one oval.
6.43%
8.40%
8.67%
10.87%
36. 32. The standard labour cost for a unit of production is 4 hours at $9 * 2 points
per hour. Hours worked for June were 3,200 at an actual cost of $8.50
per hour. Budgeted production for June was 800 units and actual
production was 1,000 units.
What was the labour efficiency variance for June?
Mark only one oval.
$1600 F
$8800 A
$7200 F
$1600 A
37. 33. Fawley’s direct labour cost data relating to last month were as * 2 points
follows:
Standard labour cost of actual hours worked $116,000

Standard hours worked 30,000
Standard rate per hour $4
Labour rate variance $5,800 F
Labour efficiency variance $4,000 F
What is the actual rate of pay per hour (to 2 decimal places)?
38. 34. Which of the following is NOT a feature of certificates of deposit? * 2 points
Mark only one oval.
Fixed term
Issued by a bank
Specified interest rate
Non-negotiable
39. 35. The following information is for Question 35 and 36. * 2 points
What is the total cash flows to be included in the investment appraisal

(to the nearest $)
A company is considering an investment in new machinery. The

incremental annual profits/(losses) relating to the investment are
estimated to be:
$
Year 1 (11000)
Year 2 3000
Year 3 34000
Year 4 47000
Year 5 8000
Investment at the start of the project would be $175,000. The

investment sum, assuming nil
disposal value after five years, would be written off using the straight‐
line method. The depreciation has been included in the profit estimates
above, which should be assumed to arise at each year end.
Mark only one oval.
$81000
$278000
$256000
$440000
40. 36. What is the net present value (NPV) of the investment at a discount * 2 points
rate of 10% per annum?
Given the present value factor at 10% as follows:

Year 1 0.909
Year 2 0.826
Year 3 0.751
Year 4 0.683
Year 5 0.621
41. 37. In decision making, costs which need to be considered are said to * 2 points
be relevant costs. Which of the following are characteristics associated
with relevant costs?
(i) Future costs
(ii) Unavoidable costs
(iii) Incremental costs
(iv) Differential costs
Mark only one oval.
(i) and (iii) only
(i) and (ii) only
(i), (iii) and (iv) only
All of them
42. 38. * 2 points
Mark only one oval.
M, F, S
F, S, M
S, M, F
S, F, M
43. 39. What is exception reporting? * 2 points
Mark only one oval.
Reporting of exceptional activities within an organisation
Reporting only controllable matters to managers
Reporting only of variances which exceed a certain amount
Reporting of all variances to the relevant manager
44. 40. When communicating information, which of the following * 2 points
combinations of factors would influence the method of communication

used?
1 Timeliness
2 Confidentiality
3 Complexity
Mark only one oval.
All three
1 and 2 only
1 and 3 only
2 and 3 only
45. 41. During 20X0, Joe Ltd bought new machinery for $40,000 and built * 2 points
an extension on its head office at a
cost of $20,000. Machinery was maintained at a cost of $4,000 during
the year and the head office
was repainted at a cost of $5,000.
What was Joe Ltd's capital expenditure in 20X0?
Mark only one oval.
$60000
$40000
$64000
$69000
46. 42. A new machine has an estimated five year life and a nil disposal * 2 points
value at the end of its life. Depreciation methods being considered are:
(i) Reducing balance at 25% per annum

(ii) Straight line
Which of the following statements is correct?
Mark only one oval.
Depreciation in each year would be greater using the reducing balance method.
Depreciation in each year would be greater using the straight-line method.
Depreciation would be greater in year 1 but less in year 5 if the reducing balance
method, rather than the straight line method, was used.
Depreciation would be greater in year 1 but less in year 5 if the straight line
method, rather than the reducing balance method, was used.
47. 43. Which of the following are characteristics of service costing? * 2 points
(i) High levels of indirect costs as a proportion of total costs

(ii) Use of composite cost units
(iii) Use of equivalent units
Mark only one oval.
(i) only
(i) and (ii)
(ii) only
(ii) and (iii)
48. 44. * 2 points
Mark only one oval.
$847.50
$678.00
$904.00
$362.66
49. 45. In process costing, what is a joint product? * 2 points
Mark only one oval.
A product which is later divided into many parts
A product which is produced simultaneously with other products and is of

significant value
A product which is produced simultaneously with other products but which is of

a greater value than any of the other products
A product produced jointly with another organisation
50. 46. Which of the following describes the margin of safety? * 2 points
Mark only one oval.
Actual contribution margin achieved compared with that required to break-even
Actual sales compared with sales required to break-even
Actual verses budgeted net profit margin
Actual verses budgeted sales
51. 47. The following forecasts relate to a single-product business for a * 2 points
period:
Variable costs $38,640

Fixed costs $39,975
Sales revenue $84,000
Sales unit 6,000
What sales revenue is required to achieve a profit of $12,000 in the

period?
Mark only one oval.
$74030
$90615
$96250
$112990
52. 48. * 2 points
Mark only one oval.
Scratch: 0 unit Purr:166 units Buzz: 700 units
Scratch: 700 units Purr: 0 units Buzz: 400 units
53. 49. Which of the following are cost units? * 2 points
(i) A car manufactured in a car factory

(ii) A person employed as a hairdresser
(iii) An accounts department at a software company
(iv) A pizza sold by a pizza restaurant
Mark only one oval.
(i) and (ii) only
(i) and (iv) only
(ii) and (iii) only
(ii), (iii) and (iv) only
54. 50. Which of the following is NOT a reason for an adverse labour * 2 points
efficiency variance?
Mark only one oval.
Wage rate increase
Machine breakdown
Non-availability of material
Illness or injury to worker
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11/18/24, 8:19 AM MA2 (MANAGEMENT INFORMATION)

MA2 (MANAGEMENT INFORMATION)

All questions are COMPULSORY. The time allowed is 2 hours.

* Indicates required question

Mark only one oval.

5. 1. Which TWO of the following are direct expenses? * 2 points

Check all that apply.

The cost of special designs, drawings or layouts for a specific job.

Which of the following costs/revenues would be relevant to an NPV

1) Costs incurred in the development of Rain amounting to $480,000

Mark only one oval.

7. 3. Last month a manufacturing company’s profit was $2,000, calculated * 2 points

What was last month's production (in units)

8. 4. Kiveton Cleaning Services supplies its employees with protective * 2 points

clothing. One such item is protective gloves.

Records from the stores department for January showed:

1 Jan Opening inventory 150 pairs @ $2each

Mark only one oval.

Issues: $130 Closing inventory: $246

Issues: $129 Closing inventory: $247

Issues: $246 Closing inventory: $130

Issues: $247 Closing inventory: $129

9. 5. The following data is available for Tallus Co in period 2. * 2 points

Actual overheads $225900

The budgeted overhead absorption rate was $32 per hour.

Mark only one oval.

Dr WIP control account Cr Overhead control account

Dr Statement of profit or loss Cr WIP control account

Dr Statement of profit or loss Cr Overhead control account

Dr Overhead control account Cr Statement of profit or loss

12. 8. Which of the following methods of remuneration is not an incentive- * 2 points

Mark only one oval.

project can be undertaken.

Which TWO of the following statements are true?

Check all that apply.

At a cost of capital of 17% project B would have a zero NPV

14. 10. The following budgeted information relates to a manufacturing * 2 points

Production units 14000

Fixed production costs $63000

The normal level of activity is 14000 units per period.

Mark only one oval.

15. 11. Reginald is the manager of production department M in a factory * 2 points

which has ten other production departments.

He receives monthly information that compares planned and actual

Mark only one oval.

A cost centre manager

An investment centre manager

A revenue centre manager

A profit centre manager

Which of the above statements are correct?

Mark only one oval.

(i) and (ii) only

(i) and (iii) only

(ii) and (iii) only

(i), (ii) and (iii)

Level of activity Production cost

Mark only one oval.

Mark only one oval.

EOQ: Higher Total annual holding cost: Lower

EOQ: Higher Total annual holding cost: Higher