F2/FMA Management

Accounting
Mock Exam with Answer

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 SAPP Academy
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F2/FMA Management Accounting Mock Exam

This paper is divided into two sections:

Section A - ALL 35 questions are compulsory and MUST be attempted. Each question carries 2 marks

Section B - THREE questions are compulsory and MUST be attempted. Each question carries 10 marks

You have two hours in which to complete the exam

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 SAPP Academy
6th Floor, No.2, Trai Ca alley, Truong Dinh street, Hanoi
No.31, alley 56/34 Le Van Hien street, Hanoi Tel: 096 972 94 63
No.268 Ly Thuong Kiet street, District 10, HCMC Web: sapp.edu.vn

SECTION A – Thirty-five questions, all of which MUST be attempted

1. The following statements relate to financial accounting and to management accounting:

(i) The main users of financial accounting information are external to the organization
(ii) Management accounting is that part of financial accounting which records the cash received and
payments made by an organization
A. Neither statement is true
B. Statement (ii) only is true
C. Both statement are true
D. Statement (i) only is true

2. A sample of people is taken with the same proportion of individuals in separate age as in the
population as a whole
This is an example of which type of sampling?
A. Cluster sampling
B. Stratified sampling
C. Random sampling
D. Systematic sampling

3. An organization has the following costs at two activity levels:

Activity level (units) 16,000 22,000
Total costs ($) 135,000 170,000
The variable cost per unit is constant within this range of activity but there is a step up of $5,000 in the
total fixed costs when the activity exceeds 17,500 units.
What is the total cost at an activity of 20,000 units
A. $158,000
B. $155,000
C. $160,000
D. $163,000

4. A semi-variable cost is one that, in the short-term, remains the same over a given range of activity
but beyond that increases and then remains constant at the higher level of activity.
Is this statement true or false?
A. False
B. True

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 SAPP Academy
6th Floor, No.2, Trai Ca alley, Truong Dinh street, Hanoi
No.31, alley 56/34 Le Van Hien street, Hanoi Tel: 096 972 94 63
No.268 Ly Thuong Kiet street, District 10, HCMC Web: sapp.edu.vn

5. The purchase price on an inventory item is $25 per unit. In each three month period the usage of
the item is 20,000 units.
The annual holding costs associated with one unit equals to 6% of its purchase price. The cost of placing
an order for the item is $20
What is the economic order quantity (EOQ) for the inventory item, to the nearest whole unit?
A. 1,461
B. 730
C. 1,633
D. 894

6. Sky Limited wishes to minimize its inventory costs. At the moment its reorder quantity is 1,000 units.
Order costs are $10 per order and holding costs are $0.10 per unit per month. Sky Limited estimates
the annual demand to be 15,000 units
What is the optimal reorder quantity (to the nearest 100 units)?
A. 500 units
B. 1,200 units
C. 1,700 units
D. 1,000 units

7. Which of the following types of workers would be classified as indirect labour?

A. Assembly workers in a factory making calculations
B. Machine repairers in a factory that makes desks by machine
C. Machine operators in a factory that makes desks by machine
D. Painters in a decorating company

8. An employee is paid on a piecework basis as follows:

1 to 500 units $0.50 per unit
501 to 1,000 units $0.75 per unit
1,0001 to 1,500 units $1.00 per unit

Only the additional units qualify for the higher rates, and rejected units to do qualify for payment.
During one day an employee produced 1,200 units of which 32 were rejected
How much did the employee earn for the day?
A. $1,200
B. $1,168
C. $793
D. $625

9. The process of cost apportionment is carried out so that:

A. Common costs are shared among cost centres
B. Costs may be controlled
C. Cost unit gather overheads as the pass through cost centres
D. Whole items of cost can be charged to cost centres

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 SAPP Academy
6th Floor, No.2, Trai Ca alley, Truong Dinh street, Hanoi
No.31, alley 56/34 Le Van Hien street, Hanoi Tel: 096 972 94 63
No.268 Ly Thuong Kiet street, District 10, HCMC Web: sapp.edu.vn

10. A van delivered wood to two firms in a week. The following details are availables
Firm P – 200kg delivered; distance travelled 250 kilometres
Firm Q – 500 kg delivered; distance travelled 800 kilometres
The van costs $675,000 to operate for the week. Each delivery was carried separately and there are no
other deliveries during the week
What is the cost per kg/kilometre of wood delivered in the week? (to the nearest $0.01)
A. $642.86
B. $964.29
C. $0.92
D. $1.50

11. A company had opening inventory of 48,500 units and closing inventory of 45,500 units. Profits
based on marginal costing were $315,250 and on absorption costing were $288,250. What is the fixed
overhead absorption rate per unit?
A. $5.94
B. $6.34
C. $6.50
D. $9.00

12. The following budgeted information relates to a manufacturing company for next period:
Production 14,000
Sales 12,000
Fixed production cost $63,000
Fixed selling cost $12,000

The 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 the profit for the next period be using marginal costing?
A. $27,000
B. $47,000
C. $25,000
D. $45,000

13. In process costing, if an abnormal loss arises, the process account is generally:
A. Credited with the scrap value of the abnormal loss units
B. Credited with the full production cost of the abnormal loss units
C. Debited with the full production cost of the abnormal loss units
D. Debited with the scrap value of the abnormal loss units

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 SAPP Academy
6th Floor, No.2, Trai Ca alley, Truong Dinh street, Hanoi
No.31, alley 56/34 Le Van Hien street, Hanoi Tel: 096 972 94 63
No.268 Ly Thuong Kiet street, District 10, HCMC Web: sapp.edu.vn

14. Process B had no opening stock. 13,500 units of raw materials were transferred in at $4.50 per unit.
Additional material at $1.25 per unit was added in process. Labour and overheads were $6.25 per
completed unit and $2.50 per unit incomplete.
If 11,750 completed units were transferred out, what was the value of the closing work-in-progress in
Process B?
A. $25,375.00
B. $14,437.50
C. $12,250.00
D. $6,562.50

15. What is by-product?

A. A product produced at the same time as other products which has no value
B. A product produced at the same time as other products which requires further processing to
put it in a saleable state
C. A product produced at the same time as other products which has a relatively low volume
compared with the other products
D. A product produced at the same time as other products which has relatively low value
compared with the other products

16. Which of the following statements are true: (Select all that apply)
A. Quantitative data are data that cannot be measured
B. Population data are data arising as a result of investigated a group of people or objects
C. Continuous data can take on any value
D. Secondary data are data collected especially for a specific purpose

17. Which of the following best describes a flexible budget?

A. A budget which shows variable costs only
B. A budget which shows sales revenue and costs at a different levels of activity
C. A budget that is updated halfway through this year to incorporate the actual results for the first
half of the year
D. A monthly budget which is changed to reflect number of days in the month

18. Which of the following statements relating to aspects of budget administration are correct (select
all that apply)?
A. The first task in budget preparation is the preparation of a master budget
B. An important task of a budget committee is to ensure that budgets are properly coordinated
C. A budget manual is the document produced at the end of the budget setting process

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 SAPP Academy
6th Floor, No.2, Trai Ca alley, Truong Dinh street, Hanoi
No.31, alley 56/34 Le Van Hien street, Hanoi Tel: 096 972 94 63
No.268 Ly Thuong Kiet street, District 10, HCMC Web: sapp.edu.vn

19. Regression analysis is being used to find the line of best fit (y = a + bx) from eleven pairs of data.
The calculations have produced the following information: ∑ =440, ∑ =330, ∑ =17,986,
∑ =10,336, ∑ =13,467 and b = 0.69171
What is the value of ‘a’ in the equation for the line of best fit (to 2 decimal places)?
A. 0.69
B. 5.33
C. 2.33
D. 0.63

20. Are the following statements which refer to documents used in the material procurement
procedure of a company, true or false
All purchase orders are prepared in the purchasing department and are then sent to supplier T/F
All goods received notes are prepared by the supplier and sent with the goods T/F

21. 5 years ago an item was costing $10

The relevant index number 5 years ago was 125
The same index now stands at 220
What is the current cost of the item?
A. $12.50
B. $22.00
C. $5.68
D. $17.60

22. In a time series analysis, the additive model is used to forecast sales and the following seasonal
variations apply:
Quarter 1 2 3 4
Seasonal variation +5.8 -8.4 +10.2 ?
What must be the seasonal variation for quarter 4:
A. +8.1
B. -7.6
C. +7.6
D. -8.1

23. What is the present value of $6,000 per annum first receivable immediately, and thereafter in
perpetuity, with interest at 9.5% per annum?
A. $66,000
B. $69,158
C. $60,000
D. $63,158

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 SAPP Academy
6th Floor, No.2, Trai Ca alley, Truong Dinh street, Hanoi
No.31, alley 56/34 Le Van Hien street, Hanoi Tel: 096 972 94 63
No.268 Ly Thuong Kiet street, District 10, HCMC Web: sapp.edu.vn

24. A credit card company charges interest at the rate of 1.5% per month.
What is the effective annual rate of interest (or APR)?
A. 17.80%
B. 21.36%
C. 18.00%
D. 19.56%

25. A company is considering investing in a new machine that will cost $270,000 and will last for 4
years with a scrap value at the end of 4 years of $20,000.
It is expected to generate operating cash inflows each year as follows:
Year 1: $50,000
Year 2: $180,000
Year 3: $100,000
Year 4: $50,000
The cost of capital is 12% per annum.
What is the net present value of the machine (to the nearest $’000)?
A. $32,450
B. $31,640
C. $21,110
D. $33,830

26. When a manufacturing company operates a standard marginal costing system, then are no fixed
production overhead variances.
Is this statement true or false?
A. True
B. False

27. A company operates a standard marginal costing system. Last month actual fixed overhead
expenditure was 2% below budget and the fixed overhead expenditure variance was $1,250.
What was the actual fixed overhead expenditure for last month?
A. $63,750
B. $62,500
C. $61,250
D. $62,475

28. A company operates a standard costing system. The variance analysis for last month shows a
favourable materials price variance and an adverse labour efficiency variance.
Which two of the following four statements, which make comparison with standards, are most
consistent with the variance analysis?
A. Higher graded workers were used on production
B. Superior quality materials were purchased and used
C. Inferior quality materials were purchased and used
D. Lower graded workers were used on production
29. The accounts of ABC plc for the year ended 31 December 2016 include the following information:

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 SAPP Academy
6th Floor, No.2, Trai Ca alley, Truong Dinh street, Hanoi
No.31, alley 56/34 Le Van Hien street, Hanoi Tel: 096 972 94 63
No.268 Ly Thuong Kiet street, District 10, HCMC Web: sapp.edu.vn

Revenue 7,200
Gross profit 2,376
Net profit 1,080
Inventories 300
Trade receivables 624
Cash 1,608
Trade payables 1,890

What is the net profit percentage?

A. 33%
B. 66%
C. 15%
D. 85%

30. Which of the following key performance indicators would not be an indicator of quality for a
railway company?
A. A survey of customer satisfaction
B. The percentage of trains arriving at their destination within 15 minutes of the scheduled arrival
time
C. The number of accidents per 1,000 journeys
D. The number of complaints received per 1,000 passengers

31. Which of the following is not a perspective associated with the balanced scorecard?
A. Process efficiency
B. Financial success
C. Quality
D. Growth

32. An investment division currently has net assets of $500,000 and is earning profits of $70,000 per
annum. The divisional manager is considering a new investment which will cost $20,000 and will
generate additional profits of $2,200 per annum.
The company has a cost of finance of 10%
What is the return on investment (ROI) for the division, with the new investment?
A. 11%
B. 14%
C. 13.85%
D. 12%

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 SAPP Academy
6th Floor, No.2, Trai Ca alley, Truong Dinh street, Hanoi
No.31, alley 56/34 Le Van Hien street, Hanoi Tel: 096 972 94 63
No.268 Ly Thuong Kiet street, District 10, HCMC Web: sapp.edu.vn

33. A cost centre is:

A. A production or service location, function, activity or item of equipment for which costs are
accumulated
B. A unit of product or service in relation to which costs are ascertained
C. An amount of expenditure attributable to an activity
D. A centre for which an individual budget is drawn up

34. A company manufactures two products L and M in a factory divided into two cost centres, X and Y.
The following budgeted data are available:

X Y
Allocated and apportioned fixed $88,000 $96,000
overhead costs
Direct labour hours per unit
Product L 3.0 1.0
Product M 2.5 2.0
What is the budgeted fixed overhead cost per unit for Product M?
A. $11
B. $12
C. $10
D. $13

35. A company absorbs overheads on machine hours which were budgeted at 11,250 with overheads
of $258,750. Actual results were 10,980 hours with overheads of $254,692.
What was the over or under absorption of overheads?
A. Under-absorbed by $4,058
B. Under-absorbed by $2,152
C. Over-absorbed by $4,058
D. Over-absorbed by $2,152

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 SAPP Academy
6th Floor, No.2, Trai Ca alley, Truong Dinh street, Hanoi
No.31, alley 56/34 Le Van Hien street, Hanoi Tel: 096 972 94 63
No.268 Ly Thuong Kiet street, District 10, HCMC Web: sapp.edu.vn

SECTION B – Three questions, all of which MUST be attempted

1. Able Ltd is considering a new project for which the following information is available:

Initial cost - $300,000

Expected life – 5 years

Estimated scrap value - $20,000

Additional revenue from the project - $120,000 per year

Incremental costs of the project - $30,000 per year

Cost of capital – 10%

(a) Calculate the Net Present Value of the project (to the nearest $)
(b) Calculate the Accounting Rate of Return of the project (to the nearest %)
(c) Calculate the Payback Period for the project
(d) This other project will have a negative/positive Net Present Value at Able’s Cost of Capital

2. Cherry Ltd sells books over the internet

(a) Beech Ltd has budgeted on producing 12,000 desks during April. Their standard cost card shows the
standard usage of wood to be 1.5 metres per desk at a standard cost of $5 per metre

They actually produces 15,000 desks and used 24,000 metres of wood at a cost of $108,000

i. The material price variance is

ii. The material usage variance is

(b) Beech Ltd currently uses absorption costing, but is considering changing to marginal costing.
Which of the following variances would change as a result? Select all that apply
A. Sales volume variance
B. Fixed overhead expenditure variance
C. Materials price variance
D. Sales price variance
E. Materials usage variance

(c) Which of the following could be reasons for having an adverse (Select all that apply)
A. Paying labour a higher rate per hour
B. Using lower grade material
C. Employing lower-skilled workers
D. Employing higher-skilled workers

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 SAPP Academy
6th Floor, No.2, Trai Ca alley, Truong Dinh street, Hanoi
No.31, alley 56/34 Le Van Hien street, Hanoi Tel: 096 972 94 63
No.268 Ly Thuong Kiet street, District 10, HCMC Web: sapp.edu.vn

3. Cherry Ltd sells books over the internet

Sales (all on credit) $500,000

Purchases on credit $200,000
Operating profit $40,000
Capital employed $200,000
Average receivables $30,000
Average payables $16,000

No. of books sold 60,000

No. of book returned 1,200
No. of on-time deliveries 58,200

(a) Calculate the Return on capital employed (to the nearest %)

(b) Calculate the operating profit margin (to the nearest %)
(c) Calculate the asset turnover
(d) Assuming 365 days in a year, calculate the receivables days (to the nearest day)
(e) Calculate the payables days (to the nearest day)
(f) Calculate the % of books returned (to the nearest %)
(g) Calculate the % of books delivered on-time (to the nearest %)
(h) It is important to consider non-financial measures in addition to financial measures, for which of
the following reasons? (Select all that apply)
A. They help to explain the past level of profitability
B. They are better indicators of future performance
C. Customer are interested in receiving the information
D. They help to identify areas where the company needs to improve

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 SAPP Academy
6th Floor, No.2, Trai Ca alley, Truong Dinh street, Hanoi
No.31, alley 56/34 Le Van Hien street, Hanoi Tel: 096 972 94 63
No.268 Ly Thuong Kiet street, District 10, HCMC Web: sapp.edu.vn

KEYS FOR SOLUTIONS

Section A

1. D
Only statement (i) is true
2. B
Stratified sampling involves dividing population into different categories and proportionally
survey each category
3. C
4. A
5. A
6. A
7. B
8. B
9. A
10. D
Total kg/kms: (200 x 250) + (500 x 800) = 450,000
Cost per kg/km = $675,000/450,000 = $1.50
11. D
12. A
13. B
14. B
15. D
16. B, C
It is primary data (not secondary data) that are data collected for a specific purpose.
Quantitative data can be measured.
17. B
18. B
19. C
20. True, False
All purchases orders are prepared in the purchasing department and are then sent to suppliers.
Goods received notes are prepared when the goods are received.
21. D
22. B
23. B
24. D
25. D
26. B
27. C
28. C, D
29. C
30. A
31. C
32. C
33. A
34. D
35. B

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 SAPP Academy
6th Floor, No.2, Trai Ca alley, Truong Dinh street, Hanoi
No.31, alley 56/34 Le Van Hien street, Hanoi Tel: 096 972 94 63
No.268 Ly Thuong Kiet street, District 10, HCMC Web: sapp.edu.vn

Section B

1.

(i) $53,610
(ii) 21%
(iii) 3.33 years
(iv) Positive

2.

(a) i. 12,000 [(5 x 24,000) – 108,000]/Favorable

ii. 7,500 [(15,000x1.5) – 24,000] x5/Adverse
(b) A
(c) B, C

3.

(a) ROCE = (40,000/200,000) x 100 = 20%

(b) Operating profit margin = (40,000/500,000) x 100 = 8%
(c) Asset turnover = 500,000/400,000 = 2.5 times
(d) Receivables days = (30,000/500,000) x 365 days = 22 days
(e) Payables days = 365 days /(200,000/16,000) = 29 days
(f) % of book returned = (1,200/60,000) x 100 = 2%
(g) % of book delivered on-time = (58,200/60,000) x 100 = 97%
(h) B, D

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SAPP Academy
6th Floor, No.2, Trai Ca alley, Truong Dinh street, Hanoi
No.31, alley 56/34 Le Van Hien street, Hanoi Tel: 096 972 94 63
No.268 Ly Thuong Kiet street, District 10, HCMC Web: sapp.edu.vn

sapp.edu.vn | 15
SAPP Academy
6th Floor, No.2, Trai Ca alley, Truong Dinh street, Hanoi
No.31, alley 56/34 Le Van Hien street, Hanoi Tel: 096 972 94 63
No.268 Ly Thuong Kiet street, District 10, HCMC Web: sapp.edu.vn

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