F2 (MA/FMA) – Chapter 10b – PART D – CBE MCQs – ACCA

These are ACCA F2 (MA/FMA) Management Accounting MCQs for Part-D of the Syllabus “Budgeting”.

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 10b – The budgetary process and Syllabus Area Part-D “Budgeting”.

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: The budgetary process
Chapter Number: 10b of the Practice and Exam Kit
Syllabus Area: D – Budgeting
Questions Type: CBE MCQs
Exam Section Type: Section A

Syllabus Area

These Multiple Choice Questions (MCQs) cover the Syllabus Area Part D of the Syllabus; Budgeting 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.


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F2 - Chapter 10b - Part A - MCQs

Course: ACCA - FIA
Subject:
F2 (MA/FMA) Management Accounting
Chapter: 10b - The budgetary process
Syllabus Area: D - Budgeting
Exam Section: Section A
Questions type: MCQs
Time: No Time Limit

INSTRUCTIONS

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REQUEST

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1 / 25

In a situation where there are no production resource limitations, which TWO of the following items of information must be available for the production budget to be completed?

2 / 25

The following details have been extracted from the receivables collection records of C Co.

Invoices paid in the month after sale 60%
Invoices paid in the second month after sale 25%
Invoices paid in the third month after sale 12%
Bad debts 3%

Invoices are issued on the last day of each month.
Customers paying in the month after sale are entitled to deduct a 2% settlement discount. Credit sales values for June to September are budgeted as follows.

June July August September
$35,000 $40,000 $60,000 $45,000

What is the amount budgeted to be received from credit sales in September?

3 / 25

An extract from a company's sales budget is as follows:

$
October 224,000
November 390,000
December 402,000

Ten per cent of sales are paid for immediately in cash. Of the credit customers, 30 per cent pay in the month following the sale and are entitled to a one per cent discount. The remaining customers pay two months after the sale is made.

What is the value of sales receipts shown in the company's cash budget for December?

4 / 25

Budgeted production in a factory for next period is 4,800 units. Each unit requires five labour hours to make. Labour is paid $10 per hour. Idle time represents 20% of the total labour time.

What is the budgeted total labour cost for the next period?

5 / 25

Budgeted sales of X for December are 18,000 units. At the end of the production process for X, 10% of production units are scrapped as defective. Opening inventories of X for December are budgeted to be 15,000 units and closing inventories will be 11,400 units. All inventories of finished goods must have successfully passed the quality control check.

What is the production budget for X for December?

_______ units

6 / 25

Which of the following control actions could be taken to help eliminate an adverse direct labour efficiency variance?

  1. Employ more highly skilled labour
  2. Ensure stricter supervision of labour workers
  3. Ask employees to work paid overtime

7 / 25

The following statements relate to fixed budgets and flexible budgets.

  1. If production levels far exceed those anticipated, relying on a fixed budget is likely to result in massive variances
  2. Flexible budgets assist management control by providing dynamic, comparable information
  3. Flexible budgets are always superior to fixed budgets

Which statements are true?

8 / 25

Which of the following statements are true?

  1. A flexed budget allows businesses to evaluate a manager's performance more fairly
  2. A fixed budget is useful for defining the broad objectives of the organisation
  3. Relying on fixed budgets alone would usually give rise to massive variances

9 / 25

The following extract is taken from the production cost budget of S Co.

Production (units) 2,000 3,000
Production cost ($) 11,100 12,900

What is the budget cost allowance for an activity level of 4,000 units?

10 / 25

If a company has no production resource limitations, in which order would the following budgets be prepared?

  1. Material usage budget
  2. Sales budget
  3. Material purchase budget
  4. Finished goods inventory budget
  5. Production budget
  6. Material inventory budget

11 / 25

A company plans to sell 24,000 units of product R next year. Opening inventory of R is expected to be 2,000 units and PQ Co plans to increase inventory by 25 per cent by the end of the year.

How many units of product R should be produced next year?

______ units

12 / 25

Each unit of product Zeta requires 3 kg of raw material and 4 direct labour hours. Material costs $2 per kg and the direct labour rate is $7 per hour.

The production budget for Zeta for April to June is as follows.

April May June
Production units 7,800 8,400 8,200

Wages are paid 75% in the month of production and 25% in the following month.

What is the figure to be included in the cash budget for May in respect of wages?

$_______

13 / 25

A company manufactures a single product, M. Budgeted production output of product M during August is 200 units. Each unit of product M requires 6 labour hours for completion and PR Co anticipates 20 per cent idle time. Labour is paid at a rate of $7 per hour.

What is the direct labour cost budget for August?

14 / 25

Each unit of product Echo takes five direct labour hours to make. Quality standards are high, and 8% of units are rejected after completion as sub-standard. Next month's budgets are as follows.

Opening inventories of finished goods 3,000 units
Planned closing inventories of finished goods 7,600 units
Budgeted sales of Echo 36,800 units

All inventories of finished goods must have successfully passed the quality control check.

What is the direct labour hours budget for the month?

15 / 25

The quantity of material in the material purchases budget is greater than the inferred from quantity of material in the material usage budget.

Which of the following statements can be this situation?

16 / 25

BDL plc is currently preparing its cash budget for the year to 31 March 20X8. An extract from its sales budget for the same year shows the following sales values.

$
March 60,000
April 70,000
May 55,000
June 65,000

40% of its sales are expected to be for cash. Of its credit sales, 70% are expected to pay in the month after sale and take a 2% discount; 27% are expected to pay in the second month after the sale, and the remaining 3% are expected to be bad debts.

What is the value of sales receipts to be shown in the cash budget for May 20X7?

17 / 25

When preparing a production budget, what does the quantity to be produced equal?

18 / 25

Which of the following BEST describes the purpose of a flexible budget?

19 / 25

Each unit of product Zeta requires 3 kg of raw material and 4 direct labour hours. Material costs $2 per kg and the direct labour rate is $7 per hour.

The production budget for Zeta for April to June is as follows.

April May June
Production units 7,800 8,400 8,200

Raw material opening inventories are budgeted as follows.

April May June
3,800 kg 4,200 kg 4,100 kg

The closing inventory budgeted for June is 3,900 kg.
Material purchases are paid for in the month following purchase.

What is the figure to be included in the cash budget for June in respect of payments for purchases?

20 / 25

Each unit of product Alpha requires 3 kg of raw material. Next month's production budget for product Alpha is as follows.

Opening inventories:
   Raw materials 15,000 kg
   Finished units of Alpha 2,000 units
Budgeted sales of Alpha 60,000 units
Planned closing inventories:
   Raw materials 7,000 kg
   Finished units of Alpha 3,000 units

How many kilograms of raw materials should be purchased next month?

______ kgs

21 / 25

Extracts from a company's budget are as follows:

August September
Production units 12,600 5,500
Fixed production overhead cost incurred $9,440 $7,000

The standard variable production overhead cost per unit is $5. Variable production overhead is paid 70 per cent in the month incurred and 30 per cent in the following month.

Fixed production overhead cost is paid in the month following that in which it is incurred and includes depreciation of $2,280 per month.

What is the payment for total production overhead cost shown in the cash budget for September?

22 / 25

An accountant wishes to use the following spreadsheet to calculate budgeted production units.

A B C D
1 Jul Aug Sep
2 units units units
3  Sales 1,000 2,000 3,000
4  Opening inventory finished goods 100 200 300
5  Production

Which formula should be entered in cell B5?

23 / 25

The following details have been extracted from the payables' records of X Co:

Invoices paid in the month of purchase 25%
Invoices paid in the first month after purchase 70%
Invoices paid in the second month after purchase 5%

Purchases for July to September are budgeted as follows:

July $250,000
August $300,000
September $280,000

For suppliers paid in the month of purchase, a settlement discount of 5% is received.

What is the amount budgeted to be paid to suppliers in September?

24 / 25

X department is a division of W Plc. X department usually has a quarterly wages cost of $4,500,000. Quarterly material costs are usually around $2,000,000. W Plc made a central decision to award all employees a wages increase of 2%.

Which of the following variances for the latest quarter are worth investigating?

  1. Direct material price variance $400 (A)
  2. Labour rate variance $90,000 (A)
  3. Sales volume variance $4,000,000 (F)

25 / 25

What does a master budget comprise?

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