These are ACCA F2 (MA/FMA) Management Accounting MCQs for Part-C of the Syllabus “Cost accounting methods and systems”.

These MCQs are designed in a way that students could better understand the exam format and get used to practice online. This approach will reduce exam stress and enable students to prepare better.

We request the students, Not to solve the MCQs until they have learned and finished the entire F2 (MA/FMA) Management Accounting Chapter 5 – Accounting for materials and Syllabus Area Part-C “Cost accounting methods and systems”.

All the questions are compulsory, so do not skip any.

INFORMATION ABOUT THESE CBE MCQs Test/Quiz

Course: ACCA – Associations of Chartered Certified Accountants
Fundamental Level: Knowledge, FIA – Foundation in Accounting
Subject: Management Accounting
Paper: F2 – MA/FMA
Chapter: Accounting for materials
Chapter Number: 05 of the Practice and Exam Kit
Syllabus Area: C – Cost accounting methods and systems
Questions Type: CBE MCQs
Exam Section Type: Section A

Syllabus Area

These Multiple Choice Questions (MCQs) cover the Syllabus Area Part C of the Syllabus; Cost accounting methods and systems of ACCA F2 (MA/FMA) Management Accounting Module.

Time

These multiple-choice questions (MCQs) are not timed, allowing students to solve them without feeling any pressure and to pay proper attention to the questions.

Result

Students can see their result at the end of the Quiz. They can also be able to see the number of correct and wrong questions. Moreover, the explanation of wrong questions.

Types of Questions

MCQs: Choose one from the given options.
Multiple choice: Choose all those answers which seem correct/ or incorrect to you, as per the requirement of the question. Keep your eye on the wording “(select all those which are correct/ or incorrect)“.
Drop-down: Select from the list provided.
Type numbers: Type your answer in numbers as per the requirement of the question.

Keywords

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F2 - Chapter 5 - Part A - MCQs

Course: ACCA - FIA
Subject: F2 (MA/FMA) Management Accounting
Chapter: 5 - Accounting for materials
Syllabus Area: C - Cost accounting methods and systems
Exam Section: Section A
Questions type: MCQs
Time: No Time Limit

INSTRUCTIONS

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REQUEST

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1 / 22

ACB Co gradually receives its re-supply of inventory at a rate of 10,000 units a week. Other information is available as follows.

Weekly demand	5,000 units
Set-up costs for each production run	$125
Weekly cost of holding one unit	$0.0025

What is the economic production run?

1,577 units

7,071 units

31,623 units

894,427 units

2 / 22

5.5 The annual demand for an item of inventory is 2,500 units. The cost of placing an order is $80 and the cost of holding an item in stock for one year is $15.

What is the economic order quantity, to the nearest unit?

_______ units

3 / 22

A company uses an item of inventory as follows.

Purchase price	$25 per unit
Annual demand	1,800 units
Ordering cost	$32 Annual
holding cost	$4.50 per unit
EOQ	160 units

What is the minimum total cost assuming a discount of 2% applies to the purchase price and to holding costs on orders of 300 and over?

$45,000.00

$45,720.00

$44,953.50

$44,967.00

4 / 22

A manufacturing company uses 25,000 components at an even rate during a Each order placed with the supplier of the components is for 2,000 components, which is the economic order quantity. The company holds a buffer inventory of 500 components. The annual cost of holding one component in inventory is $2.

What is the total annual cost of holding inventory of the component?

$3,000

$2,000

$4,000

$2,500

5 / 22

A company determines its order quantity for a raw material by using 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?

EOQ: Lower; Total annual holding cost: Higher

EOQ: Higher; Total annual holding cost: Lower

EOQ: Lower; Total annual holding cost: Lower

EOQ: Higher; Total annual holding cost: Higher

6 / 22

For a particular component, the re-order quantity is 6,000 units and the average inventory holding is 3,400 units.

Using the drop down list, select the level of safety inventory (in whole units).

7 / 22

The material stores control account for a company for March looks like this:

Material stores control account

	$		$
Balance b/d	12,000	Work in progress	40,000
Suppliers	49,000	Overhead control	12,000
Work in progress	18,000	Balance c/d	27,000
	79,000		79,000
Balance b/d	27,000

Which of the following statements are correct?

Issues of direct materials during March were $18,000
Issues of direct materials during March were $40,000
Issues of indirect materials during March were $12,000
Purchases of materials during March were $49,000

(ii) and (iv) only

(ii), (iii) and (iv) only

All of them

(i) and (iv) only

8 / 22

G Co makes the following purchases and sales.

1 January	Purchases	4,000 units for $10,000
31 January	Purchases	1,000 units for $2,000
15 February	Sales	3,000 units for $13,000
28 February	Purchases	1,500 units for $3,750
14 March	Sales	500 units for $1,200

At 31 March which of the following closing inventory valuations using FIFO is correct?

$7,500

$8,000

$6,500

$7,000

9 / 22

What is the economic batch quantity used to establish?

Optimal

reorder quantity

order quantity

recorder level

inventory level for production

10 / 22

5.13 A company wishes to minimise its inventory costs. Order costs are $10 per order and holding costs are
$0.10 per unit per month. Fall Co estimates annual demand to be 5,400 units.

What is the economic order quantity (to the nearest whole unit)?

______ units

11 / 22

Where on the graph would you read off the value for the economic order quantity?

At point A

At point B

At point D

At point C

12 / 22

Which of the following is correct with regard to inventories?

Stock-outs arise when too little inventory is held.
Safety inventories are the level of units maintained in case there is unexpected demand.
A re-order level can be established by looking at the maximum usage and the maximum lead-time

(i) and (iii) only

(i), (ii) and (iii)

(ii) and (iii) only

(i) and (ii) only

13 / 22

G Co makes the following purchases and sales.

1 January	Purchases	4,000 units for $10,000
31 January	Purchases	1,000 units for $2,000
15 February	Sales	3,000 units for $13,000
28 February	Purchases	1,500 units for $3,750
14 March	Sales	500 units for $1,200

At 31 March which of the following closing inventory valuations using LIFO is correct?

$7,000

$8,000

$7,500

$6,500

14 / 22

There are 27,500 units of Part Number X35 on order with the suppliers and 16,250 units outstanding on existing customers' orders.

If the free inventory is 13,000 units, what is the physical inventory?

_______ units

15 / 22

Which of the following functions are fulfilled by a goods received note (GRN)?

Provides information to update the inventory records on receipt of goods
Provides information to check the quantity on the supplier's invoice
Provides information to check the price on the supplier's invoice

(i) only

(i) and (iii) only

(i) and (ii) only

(ii) and (iii) only

16 / 22

A wholesaler had opening inventory of 300 units of product Emm valued at $25 per unit at the beginning of January. The following receipts and sales were recorded during January.

Date	2 Jan	12 Jan	21 Jan	29 Jan
Issues	250	400	200	75

The purchase cost of receipts was $25.75 per unit.

Using a weighted average method of valuation, calculate the value of closing inventory at the end of January.

$9,550

$11,550

$4,192

$4,492

17 / 22

The following data relate to inventory item A452:

Average usage	100 units per day
Minimum usage	60 units per day
Maximum usage	130 units per day
Lead time	20-26 days
EOQ	4,000 units

What is the maximum inventory level?

18 / 22

A domestic appliance retailer with multiple outlets sells a popular toaster known as the Autocrisp 2000, for which the following information is available:

Average sales	75 per day
Maximum sales	95 per day
Minimum sales	50 per day
Lead time	12-18 days
Reorder quantity	1,750

Based on the data above, what is the maximum inventory level?

2,900 units

2,860 units

1,750 units

2,275 units

19 / 22

A domestic appliance retailer with multiple outlets sells a popular toaster known as the Autocrisp 2000, for which the following information is available:

Average sales	75 per day
Maximum sales	95 per day
Minimum sales	50 per day
Lead time	12-18 days
Reorder quantity	1,750

Based on the data above, at what level of inventory would a replenishment order be issued? _______ units

20 / 22

The following data relates to component L512:

Ordering costs	$100 per order
Inventory holding costs	$8 per unit per year
Annual demand	1,225 units

What is the economic order quantity (to the nearest whole unit)?

44 units

175 units

124 units

62 units

21 / 22

Data relating to a particular stores item are as follows:

Average daily usage	400 units
Maximum daily usage	520 units
Minimum daily usage	180 units
Lead time for replenishment of inventory	10 to 15 days
Reorder quantity	8,000 units

What is the reorder level (in units) which avoids stockouts (running out of inventory)?

8,000

7,800

5,000

6,000

22 / 22

The demand for a product is 12,500 units for a three month Each unit of product has a purchase price of $15 and ordering costs are $20 per order placed.

The annual holding cost of one unit of product is 10% of its purchase price.

What is the Economic Order Quantity (to the nearest unit)?

577

866

1,155

816

Your score is

F2 (MA/FMA) – Chapter 05 – PART C – CBE MCQs – ACCA