Copy of SMA Fnal
-
Upload
tharakasandun -
Category
Documents
-
view
237 -
download
0
Transcript of Copy of SMA Fnal
-
8/6/2019 Copy of SMA Fnal
1/202
You are here
ICASL
/ SMA
/ Exams
/ Strategic Management Accounting - December 2010
/ Review of attempt 1
Strategic Management Accounting - December 2010
Review of attempt 1
Top of Form
Finish review
Bottom of Form
Started on Tuesday, 16 November 2010,
12:42 PM
Completed
on
Tuesday, 16 November 2010,
01:34 PM
Time taken 52 mins 6 secs
Strategic Management Accounting
You arelogged in as
DAC
HARSHANI
(Logout)
http://222.165.133.185:8080/onlineexams/http://222.165.133.185:8080/onlineexams/course/view.php?id=12http://222.165.133.185:8080/onlineexams/mod/quiz/index.php?id=12http://222.165.133.185:8080/onlineexams/mod/quiz/view.php?id=139http://222.165.133.185:8080/onlineexams/user/view.php?id=36532&course=12http://222.165.133.185:8080/onlineexams/user/view.php?id=36532&course=12http://222.165.133.185:8080/onlineexams/login/logout.php?sesskey=OKQITbg0z3http://222.165.133.185:8080/onlineexams/course/view.php?id=12http://222.165.133.185:8080/onlineexams/mod/quiz/index.php?id=12http://222.165.133.185:8080/onlineexams/mod/quiz/view.php?id=139http://222.165.133.185:8080/onlineexams/user/view.php?id=36532&course=12http://222.165.133.185:8080/onlineexams/user/view.php?id=36532&course=12http://222.165.133.185:8080/onlineexams/login/logout.php?sesskey=OKQITbg0z3http://222.165.133.185:8080/onlineexams/ -
8/6/2019 Copy of SMA Fnal
2/202
Grade 45 out of a maximum of 100
(45%)
Grade Not Eligible
Question 1
Marks: 5
Gihan Ltd is a manufacturing company manufactures a product Gama. Following
information related to for the month of June 20X1 Standard cost per batch of
product Gama
Materials Materials kilos Price Per Kg-Rs Total Rs
X 20 5 100
Y 15 4 60
Z 10 7 70
45 230
Less:- standard
loss
5
Standard Yield 40
Labour Hours Rate Per hour Total Rs
Deparment X 5 12 60
Deparment B 3 7 21
81 81
311
Budgeted sales for the period are 5266kg at Rs 18 per kg. There were no budgeted
opening or closing inventories of product Gama. The actual materials and labour
used for 130 batches were as follows
-
8/6/2019 Copy of SMA Fnal
3/202
Materials Materials kilos Price Per Kg-Rs Total Rs
X 2240 5.3 11872
Y 2070 3.7 7659
Z 1088 7.5 8160
5398 27691
Less:- standard
loss
920
Standard Yield 4478
Labour Hours Rate Per hour Total Rs
Department X 750 12.7 9525
Department B 404 6.5 2626
21151 21151
39842
All of the production of Gama was sold during the period for Rs 18.85 per kilo.
What was the material yield variance ?
Choose one answer.
a. 604 Fav
b. 2309 Fav
c. 495 Adve
d. 700Fava
Incorrect
-
8/6/2019 Copy of SMA Fnal
4/202
Marks for this submission: 0/5.
Question 2
Marks: 5
Which one of the following is not a cause of variances
Choose one answer.
a. Actual resource usage is different planned resource usage.
b. Budgeted prices are different from actual prices
c. Actual production volume is different from budgeted
production volume.
d. Forecast prices are different from Actual prices
Correct
Marks for this submission: 5/5.
Question 3
Marks: 5
ABC Limited manufactures and sells two product, X and Y. Annual sales are expected
to be in the ratio X:1, Y:3. Total annual sales are planned to be Rs. 420,000. Product
X has a contribution to sales ratio of 40 % , whereas that of product Y is 50%. Annaul
fixed costs are estimated to be Rs 120,000
The budgeted break even sales value (to the nearest Rs 1,000):
Choose one answer.
a. Rs. 196,000
b. Rs. 200,000
c. Rs. 255,000
d. Rs. 253,000
e. Cannot be determined from the
-
8/6/2019 Copy of SMA Fnal
5/202
above
Incorrect
Marks for this submission: 0/5.
Question 4
Marks: 5
The following information has been extracted from a plastic manufacturing
company
which manufactures a plastic component
standard price : Rawmaterial M1- Rs 5 per kg
Rawmaterial M2- Rs 4 per kg
Rawmaterial M3- Rs 3 per kg
Standard Proportion M1 : 60%, M2 ,30% , M3 10% (by weight)
A standard process loss of 10% is anticipated
for the last period , the actual cost, usage and out put were as follows
used : 2450 kg of P1 , costing Rs, 12,200/=
1150 kg of P2 , costing Rs, 4700/=
425 kg of P3 costing Rs 1250/=
Output 3645 Kg of plastic component
scrap sales value is Rs. 0.90 per unit
Material Yield variance
-
8/6/2019 Copy of SMA Fnal
6/202
Choose one answer.
a. 110.25FAV
b. All answers are
wrong
c. 20.5 ADV
d. 110FAV
Incorrect
Marks for this submission: 0/5.
Question 5
Marks: 5
Supun Ltd operates a process costing system using the first in first out method of
valuation.No losses occur in the process. The following information is was available
for the last month
Units Degree of
completion
Value
Opening Work inprogress
100 60% Rs 680
Completed during
the month
900
Closing Work in
progress
150 48%
Cost per equivalent unit of production for last month Rs12/=
What was the total value of the units completed last month ?
Choose one answer.
a. Rs 12344
b. Rs 10760
-
8/6/2019 Copy of SMA Fnal
7/202
c. Rs 10800
d. Rs 12000
Incorrect
Marks for this submission: 0/5.
Question 6
Marks: 5
XYZ Limited has recently introduced an Activity Based Costing system. It manufactures
three products,
details of which are set
out below.
Product X Product Y Product Z
Budgeted annual
production(units)100,000 100,000 50,000
Batch size (units) 100 50 25
Machine set-ups per batch 3 4 6
Machine set-ups per batch 2 1 1
Machine set-ups per batch 2 3 3
Three cost pools have been idntified. Their budgeted costs for the year ending 30th June
2009
are as follows:
Machine set-ups costs Rs. 150,000
Purchasing of materials Rs.70,000
Processing Rs. 80,000
-
8/6/2019 Copy of SMA Fnal
8/202
The budgeted machine set-up cost per unit of product R is
nearest to
Choose one answer.
1. 0.5
2. 6734
3. 50000
4. 6.52
Correct
Marks for this submission: 5/5.
Question 7
Marks: 5
The following data relates of 200kgs of material QP in inventory and needed
immediately for a contracts.
Standards Cost Rs 3220
Replacement cost Rs 3080
Realizable vale Rs 2800
Withing the firm the 200kgs of material QP can be converted in to 200kgs of
material BP at a cost of Rs 140/=
Material BP has many uses in the firm and 200kgs costs Rs 3,080.
What cost should be included for material QP when assessing the viability of the
contracts
Choose one answer.
a. Rs 3080
b. Rs 2940
-
8/6/2019 Copy of SMA Fnal
9/202
c. Rs 2800
d. Rs 3220
Correct
Marks for this submission: 5/5.
Question 8
Marks: 5
Calipania Ltd has details two machines that could fulfil the company's
future production
plans. Only one of these will be purchased.
The'standard' model of costs Rs 50,000 and the Ordinary model Rs. 88,000, payable
immidiately.
Both machines would require the input of Rs. 10,000 working capital throughout their
working
lives, and both have no expected scrap value at the end of their expected working lives
of 4
years for the standard machine and 6 years for the Ordinary
machine.
The forecast pre- tax operating net cash flows (Rs.) associated with the two
machines are
Year Hence
Years 1 2 3
The'standard' model 20,500 22,860 24,210 23,410
The Ordinary model 32,030 26,110 25,380 25,940
-
8/6/2019 Copy of SMA Fnal
10/202
The discount rate for the Ordinary model is 14% per year , 2% higher than the discount rat
standard machine
The company is proposing to finance the purchase of either machine with a term loan at a
rate of 11% per year
Taxation at 35% is payable on operating cash flows one year in arrears, and capital allowan
available at 25% per year
on a reducing
balance basis.
Best option should be
Choose one answer.
a. It is recommended to purchased
the'Ordinary model
b. Cannot be determined from the above
information
c. It is recommended to purchased both the
models
d. It is recommended to purchased
the'standard' model
Incorrect
Marks for this submission: 0/5.
Question 9
Marks: 5
Loto Pvt Ltd mnufactures four products , A,B,C and D.The product uses a series of differentwhich causes a bottleneck.
The standard selling price and standard cost per unit for each products for the forth coming
A B C
-
8/6/2019 Copy of SMA Fnal
11/202
Rs Rs Rs
Selling Price 2000 1500 1500
Direct Materials 410 200 300
Labour 300 200 360Variable Overheads 250 200 300
Profit 680 600 330
Machine Y - hour Per Unit 2 1.667 1.1667
Direct materials is the only unit level manufacturing cost, using a through put accounting a
A B C
1 3rd 1st 2nd
2 1st 4th 3rd
3 3rd 1st 4th
4 2nd 3rd 1st
Choose one answer.
a. 1
b. 2
c. 4
d. 3
Incorrect
Marks for this submission: 0/5.
Question 10
-
8/6/2019 Copy of SMA Fnal
12/202
Marks: 5
The following data are supplied relating to two investment projects only one of which may
be selected
year Project-X Project-Y
Initial capital
expenditure50,000 50,000
Profit(loss) 1 25,000 10,000
2 20,000 10,000
3 15,000 14,000
4 10,000 26,000
Estimated resale
value4 10,000 10,000
The cost of
capital is 10%.
What are the Net Present values
X Y
i 45860 34142
ii 42315 35212
iii -39876 -45321
iv all answers are wrong
Choose one answer.
a. ii
b. iii
-
8/6/2019 Copy of SMA Fnal
13/202
c. i
d. iv
Correct
Marks for this submission: 5/5.
Question 11
Marks: 5
XYZ Limited has recently introduced an Activity Based Costing system. It manufactures thr
details of which are set out
below.
Product X Product Y Produc
Budgeted annual
production(units)100,000 100,000 50,000
Batch size (units) 100 50 25
Machine set-ups per batch 3 4 6
Machine set-ups per batch 2 1 1
Machine set-ups per batch 2 3 3
Three cost pools have been idntified. Their budgeted costs for the year ending 30th June 20
are as follows:
Machine set-ups costs Rs. 150,000
Purchasing of materials Rs.70,000
Processing Rs. 80,000
The budgeted machine set-up cost per unit of product R is nearest to
Choose one answer.
-
8/6/2019 Copy of SMA Fnal
14/202
1. 0.78
2. 0.52
3. 5.67
4. 6.52
Incorrect
Marks for this submission: 0/5.
Question 12
Marks: 5
Kalum Plc manufactures a product KP using raw materials A and B . Budgeted
production for the period is 1000 units per batch with 10 batches. Other budgeted
data are as follows...
Raw material % quantity Price Per Kg(Rs)
A 40% 40
B 60% 60
Direct labour % of Hours Rate per hour (Rs)
male 30% 75
female 70% 40
Total labour hours 10,000 and fixed overheads for the period was Rs 65,000/=. The
variable overheads is Rs, 5/= per kg and selling price of KP is Rs, 140 per unit.
Actual results are as follows..
Raw material used Quantity-kg Price Per Kg(Rs)
A 4200 39
-
8/6/2019 Copy of SMA Fnal
15/202
B 6800 62
Direct labour Hours Rate per hour (Rs)
male 3000 80
female 8500 35
11 batches of KP were produced and sold at Rs 145 per kg
Fixed overhead cost Rs 75,000
Variable overhead cost Rs 68,100
Operating Profit Varience ?
Choose one answer.
a. 69000F
b. 54000Adv
c. 46000F
d. All answers are
incorrect
Incorrect
Marks for this submission: 0/5.
Question 13
Marks: 5
FBP Ltd produces PPN. The standard ingredients of 1kg of
PPN are :
.65kg of A @Rs 4.00 per kg
.3kg of B @Rs 6.00 per kg
.2kg of C @Rs2.5per kg
1.15kg
Production of 4000kg of PPN was budgeted for January 2010. Since the Production of PPN is
-
8/6/2019 Copy of SMA Fnal
16/202
entirely automated
Production cost s attributed to PPN production comprise only direct materials
and overheads.
Overheads were budgeted for January 2010 for PPN production
operation as follows.
Actiity Total Amount
Recept of deliveries from
suppliersRs
(standard delivery quantity is
460 kg)4000
Despatch of goods to
customers
(standard despatch quantity is
100kg)8000
12000
In January 2010 , 4200kg of PPN were produced and cost details were
as follows:
Material used,
2840kg of A
1210kg of B
860kg of C
Total cost : Rs 20,380/=
Actual overhead costs
Twelve supplier deliveries(cost Rs 4,800) were made, and 38 customer despatches (cost
Rs 7,800) were
processed.
-
8/6/2019 Copy of SMA Fnal
17/202
Material usage variance
Choose one answer.
a. 151FAV
b. 190 ADV
c. All answers are
wrong
d. 100FAV
Correct
Marks for this submission: 5/5.
Question 14
Marks: 5
Pure Ltd has two divisions X and Y. X produces a Product X which is used in
production of Product Y at division Y. Division X also sells product X to out siders at
Rs 2000 per unit. Last month 50,000 unit of product X were sold to out siders. When
sold to outsiders product X and Product Y both gives a contribution Rs 1000 per unit
to the company. Division Y can also purchase product X at a price Rs 1500 from
outside sources. Pure Ltd proposes to transfer product X to division Y at a price ofRs 2000 per unit. Product Y has a market demand around 100,000 units per month
If the market demand for product X is 50000 unit at this price,what is the best
course of action from the point of view of Pure Ltd as a whole given the company's
capacity limited to 150,000 of units of either X, Y or both ?
Choose one answer.
a. Either Purchase out side or transfer
internally
b. Purchase out side
c. Tranfer Internally
Incorrect
Marks for this submission: 0/5.
-
8/6/2019 Copy of SMA Fnal
18/202
Question 15
Marks: 5
Initial cost of a new investment is Rs 43.75 million. Life time of the project is 10
years. The company is planning to produce and sell 10000 units of the products
annually at a price of Rs, 5,000/= per unit. The Variable cost of a unit is Rs 3,750/=.
Annual fixed cost inclusive of depreciation are estimated at Rs 7.5million . The
sensitivity of the project IRR if the selling price is reduced by 10%...
A). It reduces net cash flows by 5 million annually.
B). IRR is less than company's cost of capital
C). The project is highly sensitive to fall in selling price
D). The project is still feasible
What are the correct statements ?
Choose one answer.
a. A,B,C and D
b. A,B and C
c. All answers are
incorrect
d. A and C
e. B and C
Correct
Marks for this submission: 5/5.
Question 16
Marks: 5
ABC company uses decision tree analysis in order to evaluate potential
projects.
The company has been looking at the launch of a new product which it believe has a 70%
probability of success.
The company is however ,considering undertaking an advertising campaign costing Rs, 50,
probability of success to 95%.
-
8/6/2019 Copy of SMA Fnal
19/202
If successful the product would generate income of Rs, 200,000 otherwise Rs, 70,000
would be received.
What is the maximum that the company would be prepared to pay for the
advertising?
Choose one answer.
a. Rs17500
b. Rs50000
c. Rs29000
d. Rs32500
Correct
Marks for this submission: 5/5.
Question 17
Marks: 5
Baltex PLC is planning to invest funds in financially viable projects. The weighted average c
capital of the
company is 12%. Calculated IRRs of 5 projects are as follows.
Projects IRR
A 20%
B 11%
C 30%
D 14%
E 8%
What projects should be selected
-
8/6/2019 Copy of SMA Fnal
20/202
Choose one answer.
a. B,E
b. E,D,B
c. A,B,C,D
d. A,B,C,D,E
e. A,C,D
Correct
Marks for this submission: 5/5.
Question 18
Marks: 5
The cost of capital is 12% of the company and consideing Rs 10 million investment.The exp
each of the next four years.
Net present value of this project can be
calculated by
Choose one answer.
a. By discounting real cash flows at the nominal discounting
rate.
b. By discounting real cash flows at the real discounting rate.
c. By discounting real cash flows at tax adjusted discounting
rate.
d. By discounting real cash flows at risk and time adjusteddiscounting rate.
Correct
Marks for this submission: 5/5.
Question 19
-
8/6/2019 Copy of SMA Fnal
21/202
Marks: 5
The following data are supplied relating to two investment projects only one of which may
be selected
year Project-X Project-Y
Initial capital
expenditure50,000 50,000
Profit(loss) 1 25,000 10,000
2 20,000 10,000
3 15,000 14,000
4 10,000 26,000
Estimated resale
value4 10,000 10,000
The cost of
capital is 10%.
What are the Payback periods
X Y
i 2 Years & 4 Months3 Years & 7.4
Months
ii 4 Years 4 Years
iii all answers are wrong
iv 1.5 Years 2.4 Years
Choose one answer.
a. ii
b. iii
-
8/6/2019 Copy of SMA Fnal
22/202
c. iv
d. i
Incorrect
Marks for this submission: 0/5.
Question 20
Marks: 5
A project has an initial outflow followed by several years of inflows. What would be
the effect on the IRR of the project and its discounted pay back period of an
increase in the company's cost of capital
Answer IRR Payback
i No Change No Change
ii Increase Increase
iii Increase No Change
iv No Change Increase
Choose one answer.
a. ii
b. i
c. iii
d. iv
Incorrect
Marks for this submission: 0/5.
Top of Form
-
8/6/2019 Copy of SMA Fnal
23/202
Finish review
Bottom of Form
You are logged in as DAC HARSHANI (Logout)
The Institute of Chartered Accountants of Sri Lanka
ABC Ltd manufactures four products. The unit cost , selling price and bottleneck resource details per uniare as follows
Products P Q
Rs Rs
Selling Price 56 67
Material 22 31
Labour 15 20
Variable Overhead 12 15
Fixed Overhead 4 2
Bottle neck resource time 10 10
(minutes)
Assuming that labour is a unit variable cost, if the products are ranked according to their contribution to
sales ratio, the most
profitable products is
Choose one answer.
a. R
b. S
c. p
http://222.165.133.185:8080/onlineexams/user/view.php?id=36532&course=12http://222.165.133.185:8080/onlineexams/login/logout.php?sesskey=OKQITbg0z3http://222.165.133.185:8080/onlineexams/user/view.php?id=36532&course=12http://222.165.133.185:8080/onlineexams/login/logout.php?sesskey=OKQITbg0z3 -
8/6/2019 Copy of SMA Fnal
24/202
d. Q
Incorrect
Marks for this submission: 0/5.
Question 2
Marks: 5Woda Plc uses a standard absorption costing system. The absorption rate is based on labour hours. The f
January 2010.
Budget Actual
Labour hours worked 10000
Standard hours
produced10000
Fixed overhead cost Rs 45000 Rs 46200
The fixed overhead efficiency variance to be reported for January 2010 is nearest to Rs,
Choose one answer.
a. 690ADV
b. 787 ADV
c. 730 ADV
d. 714ADV
IncorrectMarks for this submission: 0/5.
Question 3
Marks: 5
DPL Ltd can choose from five mutually exclusive projects. The projects will each last for one year only
will b determined by the prevailing market conditions. The forcast annual cash inflows and their associat
below.
Market Conditions Poor Good Excellent
Probability 0.2 0.5
Rs 000 Rs 000 Rs 000Project-A 500 470
Project-B 400 550
Project-C 450 400
Project-C 360 400
Project-D 600 500
The value of perfect information about the state of the market is
-
8/6/2019 Copy of SMA Fnal
25/202
Choose one answer.
a. Rs 180,000
b. Rs 40,000
c. Rs 56,000
d. Nil
e. Rs 5,000
Incorrect
Marks for this submission: 0/5.
Question 4
Marks: 5
The overhead costs of XY limited have been found to be accurately represented
by the formula
y= Rs 10,000 + Rs 0.25 x
where y is the monthly cost and x represents the activity level measured in machine
in hours.
Monthly activity levels, in machine hours, may be estimated using a combined
regression analysis and time series model:
a = 100,000 + 30b
where a reperesents the de- seasonalized monthly activity level and b represents
the month number.
in month 240 , when the seasonal index value is 108, the overhead cost (to the
nearest RS. 1000) is expected to beChoose one answer.
a. Rs.36,000
b. Rs. 35,000
c. Rs. 39,000
d. Rs. 40,000
Incorrect
Marks for this submission: 0/5.
Question 5
Marks: 5The following data are supplied relating to two investment projects only one of which may be selected
year Project-X Project-Y
Initial capital
expenditure50,000 50,000
Profit(loss) 1 25,000 10,000
-
8/6/2019 Copy of SMA Fnal
26/202
2 20,000 10,000
3 15,000 14,000
4 10,000 26,000
Estimated resale value 4 10,000 10,000The cost of capital is
10%.
What are the Net Present values
X Y
i 45860 34142
ii 42315 35212
iii -39876 -45321
iv all answers are wrong
Choose one answer.
a. iv
b. i
c. iii
d. ii
Correct
Marks for this submission: 5/5.
Question 6
Marks: 5
A Ltd is planning to obtain a term loan to invest in a project. Loan amount is Rs 2,000,000/= at a fixed in
annum
and should repay in end of every year by five equal annual installments withinterest.
Value of an installment should be,
Choose one answer.
a. 640,000
-
8/6/2019 Copy of SMA Fnal
27/202
b. 554,785
c. 456,789
d. 400,000
e. 678,340
Correct
Marks for this submission: 5/5.
Question 7
Marks: 5
H Ltd makes leather purses.It has drawn up the following budget for its next financial period.
Selling price per unit Rs. 11.60
Variable production cost per unit Rs.3.40
Sales commission 5% of selling price
Fixed production cost Rs. 430,500
Fixed selling and administration costs Rs 198,150
Sales 90,000 units
The margin of safty
representsChoose one answer.
a. 8.3% of budgeted sales
b. 11.6% of budgeted sales
c. 5.6% of budgeted sales
d. 16.8% of budgeted sales
Incorrect
Marks for this submission: 0/5.
Question 8
Marks: 5
ABC company uses decision tree analysis in order to evaluate potential
projects.
The company has been looking at the launch of a new product which it believe has a 70% probability of
success.The company is however ,considering undertaking an advertising campaign costing Rs, 50,000 which wo
success to 95%.
If successful the product would generate income of Rs, 200,000 otherwise Rs, 70,000 would be
received.
-
8/6/2019 Copy of SMA Fnal
28/202
What is the maximum that the company would be prepared to pay for the advertising?
Choose one answer.
a. Rs29000
b. Rs50000c. Rs17500
d. Rs32500
Correct
Marks for this submission: 5/5.
Question 9
Marks: 5
XYZ Limited has recently introduced an Activity Based Costing system. It manufactures three
products,
details of which are set out
below.
Product X Product Y Product Z
Budgeted annual
production(units)100,000 100,000 50,000
Batch size (units) 100 50 25
Machine set-ups per batch 3 4 6
Machine set-ups per batch 2 1 1
Machine set-ups per batch 2 3 3
Three cost pools have been idntified. Their budgeted costs for the year ending 30th June 2009
are as follows:
Machine set-ups costs Rs. 150,000
Purchasing of materials Rs.70,000
Processing Rs. 80,000
The budgeted machine set-up cost per unit of product R is nearest to
Choose one answer.
a. 0.78
b. 0.52
c. 5.67
d. 6.52
Incorrect
Marks for this submission: 0/5.
-
8/6/2019 Copy of SMA Fnal
29/202
Question 10
Marks: 5
Apsolt Plc has two division A and B. One of the products manufactured by the A division is in
This intermediate product for which there is no external market and it is transferred to B divisi
for sale in the external market. One unit of the intermediate product is used in the production o
The expected units of the final products which the B division estimates ,it can sell at various se
Net selling Price Quantity sold Unit
Rs
100 1000
90 2000
80 3000
70 4000
60 5000
50 6000
30 7000
The cost of each division are as follows :
A division
Variable cost per unit(Rs) 11
Fixed cost Attributable to the products(Rs) 60,000
The transfer price of the intermediate product has been set at 35/= based on a full cost plus a mark-up
Apsolt Plc maximises the profit at an out put level of ,
Choose one answer.
a. 4,000
b. 7,000
c. 3,000
d. 5,000
Incorrect
Marks for this submission: 0/5.
Question 11Marks: 5
ABC Limited makes a product which has variable production cost and sales costs
per unit of Rs. 8 and Rs. 2 respectively. Fixed costs are Rs. 40,000/= per annum ,the
sales price is Rs.18 per unit and the current volume of output/sales is 6,000 units per
-
8/6/2019 Copy of SMA Fnal
30/202
annum.
The company is considering whether it should acquir a new machine for production.
A annual hire costs of the machine would be Rs. 10,000/= and it is expected that variableproduction costs per unit would drop to Rs.6/=.
What is the minimum quantity should be made and sold by the ABC Ltd to accept the
aquiring of the new machine
Choose one answer.
a. 4,000
b. 6,000
c. 5,000
d. 5,800
Incorrect
Marks for this submission: 0/5.
Question 12
Marks: 5
Calipania Ltd has details two machines that could fulfil the company's future
production
plans. Only one of these will be purchased.
The'standard' model of costs Rs 50,000 and the Ordinary model Rs. 88,000, payable immidiately.
Both machines would require the input of Rs. 10,000 working capital throughout their working
lives, and both have no expected scrap value at the end of their expected working lives of 4
years for the standard machine and 6 years for the Ordinary machine.
The forecast pre- tax operating net cash flows (Rs.) associated with the two machines
are
Year Hence
Years 1 2 3 4
The'standard' model 20,500 22,860 24,210 23,410The Ordinary model 32,030 26,110 25,380 25,940 38
The discount rate for the Ordinary model is 14% per year , 2% higher than the discount rate for the stand
-
8/6/2019 Copy of SMA Fnal
31/202
The company is proposing to finance the purchase of either machine with a term loan at a fixed interest r
year
Taxation at 35% is payable on operating cash flows one year in arrears, and capital allowances are availa
yearon a reducing balance
basis.
Best option should be
Choose one answer.
a. It is recommended to purchased the'Ordinary model
b. Cannot be determined from the above information
c. It is recommended to purchased both the models
d. It is recommended to purchased the'standard' model
Incorrect
Marks for this submission: 0/5.
Question 13
Marks: 5
FBP Ltd produces PPN. The standard ingredients of 1kg of PPN
are :
.65kg of A @Rs 4.00 per kg
.3kg of B @Rs 6.00 per kg
.2kg of C @Rs2.5per kg
1.15kg
Production of 4000kg of PPN was budgeted for January 2010. Since the Production of PPN is entirely au
Production cost s attributed to PPN production comprise only direct materials and overheads.
Overheads were budgeted for January 2010 for PPN production operation as
follows.
Actiity Total Amount
Recept of deliveries from suppliers Rs
(standard delivery quantity is 460
kg)4000
Despatch of goods to customers(standard despatch quantity is
100kg)8000
12000
In January 2010 , 4200kg of PPN were produced and cost details were as follows:
Material used,
-
8/6/2019 Copy of SMA Fnal
32/202
2840kg of A
1210kg of B
860kg of C
Total cost : Rs 20,380/=
Actual overhead costsTwelve supplier deliveries(cost Rs 4,800) were made, and 38 customer despatches (cost Rs 7,800)
were
processed.
Material Yield variance
Choose one answer.
a. 341 ADV
b. 457 FAVc. 235 ADV
d. 190ADV
Incorrect
Marks for this submission: 0/5.
Question 14
Marks: 5
The following information has been extracted from a plastic manufacturing
company
which manufactures a plastic component
standard price : Rawmaterial M1- Rs 5 per kg
Rawmaterial M2- Rs 4 per kg
Rawmaterial M3- Rs 3 per kg
Standard Proportion M1 : 60%, M2 ,30% , M3 10% (by weight)
A standard process loss of 10% is anticipated
for the last period , the actual cost, usage and out put were as follows
used : 2450 kg of P1 , costing Rs, 12,200/=
-
8/6/2019 Copy of SMA Fnal
33/202
1150 kg of P2 , costing Rs, 4700/=
425 kg of P3 costing Rs 1250/=
Output 3645 Kg of plastic component
scrap sales value is Rs. 0.90 per unit
Material mix variance
Choose one answer.
a. 112.5FAVb. 12.5 ADV
c. All answers are wrong
d. 110.25FAV
Incorrect
Marks for this submission: 0/5.
Question 15
Marks: 5
Halibon PLC has three products Soft, Hard , Thick. Currently sales, cost and selling price details and pro
time requirments are as follows.
Products Soft,
Annual sales(units) 600
selling Price Rs 2
Unit cost 1
Processing Time
required per unit(hour)
The factory is working at full capacity(13500 Processing hours per year). Fixed manufacturing overhead
absorbed in to unit costs by a charge of 200% of variable cost. This procedure fully absorbs the fixed ma
Assuming that
-
8/6/2019 Copy of SMA Fnal
34/202
i) Processing time can be switched from one product line to another,
ii)The demand at current selling price is ,
Soft, 11000
and
Selling prices are not to be altered.
The best production programme for the next operating period should be ?
Soft, Hard , Thick
1 11000 8000 2000
2 1500 8000 2000
3 6000 6000 750
4 11000 500 1500
5 11000 0 1250
Choose one answer.
a. 2
b. 1
c. 4
d. 3
e. 5
Incorrect
Marks for this submission: 0/5.
Question 16
Marks: 5
The following information has been extracted from a plastic manufacturing company
which manufactures a plastic component
standard price : Rawmaterial M1- Rs 5 per kg
-
8/6/2019 Copy of SMA Fnal
35/202
Rawmaterial M2- Rs 4 per kg
Rawmaterial M3- Rs 3 per kg
Standard Proportion M1 : 60%, M2 ,30% , M3 10% (by weight)
A standard process loss of 10% is anticipated
for the last period , the actual cost, usage and out put were as follows
used : 2450 kg of P1 , costing Rs, 12,200/=
1150 kg of P2 , costing Rs, 4700/=
425 kg of P3 costing Rs 1250/=
Output 3645 Kg of plastic component
scrap sales value is Rs. 0.90 per unit
Material Yield variance
Choose one answer.
a. All answers are wrong
b. 20.5 ADV
c. 110.25FAV
d. 110FAV
Incorrect
Marks for this submission: 0/5.
Question 17Marks: 5
Baltex PLC is planning to invest funds in financially viable projects. The weighted average cost of capita
company is 12%. Calculated IRRs of 5 projects are as follows.
Projects IRR
A
-
8/6/2019 Copy of SMA Fnal
36/202
B
C
D
E
What projects should be selected
Choose one answer.
a. B,E
b. A,C,D
c. A,B,C,D,E
d. A,B,C,D
e. E,D,B
Correct
Marks for this submission: 5/5.
Question 18
Marks: 5
AB plc has recently developed a new product.
The nature of AB Plc 's work is
repetitives, and it is usual for there to be an
80% learning effect when a newproduct is developed.
The time taken for the the first unit was 22 minutes.
Assuming
that an 80 % learning effect applies, the time
to be taken for the fourth unit is
nearest to
Choose one answer.
a. 15.45 minutes
b. 14.08 minutes
c. 10.91 minutes
d. 9.97 minutes
e. 16.60 minutes
Correct
Marks for this submission: 5/5.
Question 19
Marks: 5
-
8/6/2019 Copy of SMA Fnal
37/202
ABC Limited makes a product which has variable production cost and sales costs
per unit of Rs. 8 and Rs. 2 respectively. Fixed costs are Rs. 40,000/= per annum ,the
sales price is Rs.18 per unit and the current volume of output/sales is 6,000 units per
annum.
The company is considering whether it should acquir a new machine for production.
A annual hire costs of the machine would be Rs. 10,000/= and it is expected that variable
production costs per unit would drop to Rs.6/=.
If the machine is acquired how many unit must be made and sold to maintain the profit at its
existing level
Choose one answer.
a. 48,000 units
b. 6,000units
c. 5,000 units
d. 5,800 units
Incorrect
Marks for this submission: 0/5.
Question 20Marks: 5
ABC Ltd manufactures four products. The unit cost , selling price and bottleneck resource details per uni
follows
Products P Q R S
Rs Rs Rs Rs
Selling Price 56 67 89 96
Material 22 31 38 46
Labour 15 20 18 24
Variable Overhead 12 15 18 15Fixed Overhead 4 2 8 7
Bottle neck resource time 10 10 15 15
(minutes)
If the company adopted throughput accounting and the products were ranked according to product return
-
8/6/2019 Copy of SMA Fnal
38/202
be
Choose one answer.
a. Q
b. Sc. R
d. P
Toyo Ltd manufactures components for the vehicle industry. The following annual information
regarding
three of its key customer is
available:
ROSI SOSI TOSI
Gross
Margin (Rs)1100000 1750000 1200000
General
dministration cost
(Rs)
40000 80000 30000
Unit sold 1750 2000 1500
Orders placed 1000 1000 1500
Sales Visits 110 100 170
Invoices Raised 900 1200 1500
The company uses an activity based costing system and the analysis of customer related costs is
as follows
Sales visits Rs 500 per visit
Order ProcessingRs 100 per order
placed
Dispatch Costs
Rs 100 per order
placedBilling and
Collections
Rs 175 per invoice
raised
-
8/6/2019 Copy of SMA Fnal
39/202
Using customer profitability analysis, the ranking of the customers would be:
ROSI SOSI TOSI
1 1 st 2 nd 3 rd
2 2 nd 1 st 3 rd
3 3 rd 1 st 2 nd
4 3 rd 2 nd 1 st
Choose one answer.
a. 1
b. 4
c. 3
d. 2
Incorrect
Marks for this submission: 0/5.
Question 2
Marks: 5
The expected inflation will be 6% in each of the next five years.
Net present value of a project can be calculated by
Choose one answer.
a. By discounting nominal cash flows at the nominal discounting rate.
b. By discounting nominal cash flows at the real discounting rate.
c. By discounting real cash flows at risk and time adjusted discounting rate.
d. By discounting real cash flows at tax adjusted discounting rate.
Correct
Marks for this submission: 5/5.
Question 3
Marks: 5
XYZ Company manufactures and sells two poducts P and Q . Forcast data for a year are:
Product P Product Q
Sales(units) 80,000 20,000
Sales Price(per unit) Rs. 12 Rs. 8
Variable Cost (per unit) Rs.8 Rs.3
-
8/6/2019 Copy of SMA Fnal
40/202
Annual fixed cost are estimated
at Rs 273,000.
What is the break even point in sales revenue with the current sales mix
Choose one answer.
a. Rs. 570,000b. Rs. 679,467
c. Rs. 728,000
d. Rs. 606,667
Incorrect
Marks for this submission: 0/5.
Question 4
Marks: 5
Ahindas plc is cosidering investing in a manufacturing project that would have a three year life span. The
an immediate cash outflow of Rs50,000 and have a zero residual value. In each of the three years, 4000 usold
The contribution per unit , based on current prices is Rs 5/=. The company has an annual cost of capital o
rate
will be 3% in each of the next three years.
If the annual inflation rate is now projected to be 4%, the maximum monetory cost of capital for this proj
to remain viable, is (to the nearest 0.5%)
Choose one answer.
a. 14.0%
b. 12.0%
c. 14.5%
d. 13.5%
e. 16.0%
Incorrect
Marks for this submission: 0/5.
Question 5
Marks: 5
Woda Plc uses a standard absorption costing system. The absorption rate is based on labour hours. The f
January 2010.
Budget Actual
Labour hours worked 10000
Standard hours
produced10000
Fixed overhead cost Rs 45000 Rs 46200
-
8/6/2019 Copy of SMA Fnal
41/202
The fixed overhead efficiency variance to be reported for January 2010 is nearest to Rs,
Choose one answer.
a. 730 ADV
b. 714ADV
c. 690ADV
d. 787 ADV
Correct
Marks for this submission: 5/5.
Question 6
Marks: 5
FBP Ltd produces PPN. The standard ingredients of 1kg of PPN are :
.65kg of A @Rs 4.00 per kg
.3kg of B @Rs 6.00 per kg
.2kg of C @Rs2.5per kg
1.15kg
Production of 4000kg of PPN was budgeted for January 2010. Since the Production of PPN is entirely au
Production cost s attributed to PPN production comprise only direct materials and overheads.
Overheads were budgeted for January 2010 for PPN production operation as follows.
Actiity Total Amount
Recept of deliveries from suppliers Rs
(standard delivery quantity is 460 kg) 4000
Despatch of goods to customers
(standard despatch quantity is 100kg) 8000
12000
In January 2010 , 4200kg of PPN were produced and cost details were as follows:
Material used,
2840kg of A
1210kg of B
860kg of C
Total cost : Rs 20,380/=
Actual overhead costs
Twelve supplier deliveries(cost Rs 4,800) were made, and 38 customer despatches (cost Rs 7,800) were
-
8/6/2019 Copy of SMA Fnal
42/202
processed.
Overhead Expenditure variance
Choose one answer.
a. 600ADV
b. 190ADV
c. 300FAV
d. 400 ADV
Incorrect
Marks for this submission: 0/5.
Question 7
Marks: 5
FBP Ltd produces PPN. The standard ingredients of 1kg of PPN
are :
.65kg of A @Rs 4.00 per kg
.3kg of B @Rs 6.00 per kg
.2kg of C @Rs2.5per kg
1.15kg
Production of 4000kg of PPN was budgeted for January 2010. Since the Production of PPN is entirely au
Production cost s attributed to PPN production comprise only direct materials and overheads.
Overheads were budgeted for January 2010 for PPN production operation as
follows.
Actiity Total Amount
Recept of deliveries from suppliers Rs
(standard delivery quantity is 460
kg)4000
Despatch of goods to customers
(standard despatch quantity is
100kg)8000
12000
In January 2010 , 4200kg of PPN were produced and cost details were as follows:
Material used,
2840kg of A
1210kg of B
860kg of C
Total cost : Rs 20,380/=
-
8/6/2019 Copy of SMA Fnal
43/202
Actual overhead costs
Twelve supplier deliveries(cost Rs 4,800) were made, and 38 customer despatches (cost Rs 7,800)
were
processed.
Material Yield variance
Choose one answer.
a. 341 ADV
b. 457 FAV
c. 190ADV
d. 235 ADV
Correct
Marks for this submission: 5/5.
Question 8
Marks: 5
Baltex PLC is planning to invest funds in financially viable projects. The
weighted average cost of capital of the
company is 12%. Calculated IRRs of 5 projects are as follows.
Projects IRR
A20
%
B
11
%
C30
%
D14
%
E 8%
What projects should be selectedChoose one answer.
a. A,B,C,D
b. E,D,B
c. A,B,C,D,E
d. B,E
-
8/6/2019 Copy of SMA Fnal
44/202
e. A,C,D
Correct
Marks for this submission: 5/5.
Question 9
Marks: 5Nazdaz Ltd regularly uses material K and currently has in stock 600kg , for which it paid Rs 1500 two m
If this were to be sold as raw material it could be sold today for Rs 2 per kg and 5% trade discount also a
You are aware that the material can be bought on the open market for Rs 3.25 per kg but it must be purch
What is the relevent cost of 600kg of material K to be used in a job for a customer.
Choose one answer.
a. 1200
b. 3250
c. 1140
d. 1950e. 1325
Correct
Marks for this submission: 5/5.
Question 10
Marks: 5
Calipania Ltd has details two machines that could fulfil the company's future production
plans. Only one of these will be purchased.
The'standard' model of costs Rs 50,000 and the Ordinary model Rs. 88,000, payable immidiately.
Both machines would require the input of Rs. 10,000 working capital throughout their workinglives, and both have no expected scrap value at the end of their expected working lives of 4
years for the standard machine and 6 years for the Ordinary machine.
The forecast pre- tax operating net cash flows (Rs.) associated with the two machines are
Year Hence
Years 1 2
The'standard' model 20,500 22,860 24,210
The Ordinary model 32,030 26,110 25,380
The discount rate for the Ordinary model is 14% per year , 2% higher than the discount rate for the stand
The company is proposing to finance the purchase of either machine with a term loan at a fixed interest r
Taxation at 35% is payable on operating cash flows one year in arrears, and capital allowances are availa
on a reducing balance basis.
-
8/6/2019 Copy of SMA Fnal
45/202
Payback periods should be approximately years
The'standard' model The Ordinary model
i 2 4
ii 4 3
iii 3 4
iv 3 3
Choose one answer.
a. iv
b. i
c. ii
d. iii
Incorrect
Marks for this submission: 0/5.Question 11
Marks: 5
A company P sells 3 products P,Q and R. Sales information for May 2009 was as
follows
Budeted Sales Budgeted Price Actual Sales Actual Price
Units per unit-Rs units per unit-Rs
P 100 100 108 104
Q 150 50 165 47R 250 35 221 37
The expected size of the market for May 2009 was 2500 units.The actual market size was 2650 units.
Sales Mix Variance
Choose one answer.
a. 1690 Fav
b. 850Fav
c. 850 Adv
d. 1690 Adv
Correct
Marks for this submission: 5/5.
Question 12
-
8/6/2019 Copy of SMA Fnal
46/202
Marks: 5
KMN PLC is about to launch a new product. Facilities will allow the company to produce up to 20 unit p
The
marketing department has estimated that at a price of Rs 8000/= no unit will be sold, but for each Rs 150
additional
unit per week will be sold. Fixed costs associated with manufacture are expected to be Rs 12000/= per w
Variable costs are expected to beRs, 4000/= per unit for each of the first 10 units
thereafter each unit will cost Rs 400/= more than preceeing one
The most profitable level of output per week for the new product is
Choose one answer.
a. 13 Units
b. 14Units
c. 20 Unitd. 11 Units
e. 10 Units
Incorrect
Marks for this submission: 0/5.
Question 13
Marks: 5
The following data are supplied relating to two investment projects only one of which may be selected
year Project-X Project-Y
Initial capital
expenditure50,000 50,000
Profit(loss) 1 25,000 10,000
2 20,000 10,000
3 15,000 14,000
4 10,000 26,000
Estimated resale value 4 10,000 10,000
The cost of capital is
10%.
What is the best project
-
8/6/2019 Copy of SMA Fnal
47/202
Choose one answer.
a. X
b. X & Y Both are best
c. Y
d. None is best
Incorrect
Marks for this submission: 0/5.
Question 14
Marks: 5
A Plc makes a single product which it sells for Rs. 16 per unit. Fixed costs are Rs. 76,800 per
month and the product has a contribution to sales ratio of 40%.
In a period when actual sales were Rs. 224,000. A Plc's margin of saftey , in units was
Choose one answer.a. 2000
b. 14000
c. 12000
d. 6000
e. 8000
Incorrect
Marks for this submission: 0/5.
Question 15
Marks: 5
X Plc operates a single retail outlet selling direct to the public. Profit statements for
October and
November are as follows:
October November
Rs Rs
Sales 80,000 90,000
Cost of sales 50,000 55,000
Gross profit 30,000 35,000
Less:
Selling and distribution 8,000 9,000
Administration 15,000 15,000
Net Profit 7,000
-
8/6/2019 Copy of SMA Fnal
48/202
If the selling price is increased by 10% in December, monthly break even sales should be
Choose one answer.
a. 55,000
b. 110,000
c. 62,500
d. 50,000
Correct
Marks for this submission: 5/5.
Question 16
Marks: 5
Apsolt Plc has two division A and B. One of the products manufactured by the A division is in
This intermediate product for which there is no external market and it is transferred to B divisifor sale in the external market. One unit of the intermediate product is used in the production o
The expected units of the final products which the B division estimates ,it can sell at various se
Net selling Price Quantity sold Unit
Rs
100 1000
90 2000
80 3000
70 4000
60 500050 6000
30 7000
The cost of each division are as follows :
A division
Variable cost per unit(Rs) 11
Fixed cost Attributable to the products(Rs) 60,000
The transfer price of the intermediate product has been set at 35/= based on a full cost plus a mark-upWhat is the maximum profit of B division?
Choose one answer.
a. Rs,123500
b. Rs,24000
c. Rs,26000
-
8/6/2019 Copy of SMA Fnal
49/202
d. Rs,22000
Correct
Marks for this submission: 5/5.
Question 17
Marks: 5A product is being considered which has the following details
(a) Capital outlay Rs. 3,000,000
(b) Annual sales 500 units
(c) Salling price Rs. 2,200 per unit
(d) Variable cost Rs. 400 per unit
(e) Fixed cost Rs. 250,000 per year
The project life is 10 years and the cost of capital is 14%.
If there is a 10% adverse variance in each of the above five elements (a) to (e)
What is the new NPV
Choose one answer.
a. (819,670)
b. (1,119,670)
c. (587,375)
d. 187,576
Incorrect
Marks for this submission: 0/5.
Question 18
Marks: 5
Apsolt Plc has two division A and B. One of the products manufactured by the A division is in
This intermediate product for which there is no external market and it is transferred to B divisi
for sale in the external market. One unit of the intermediate product is used in the production o
The expected units of the final products which the B division estimates ,it can sell at various se
Net selling Price Quantity sold Unit
Rs100 1000
90 2000
80 3000
70 4000
60 5000
50 6000
30 7000
-
8/6/2019 Copy of SMA Fnal
50/202
The cost of each division are as follows :
A division
Variable cost per unit(Rs) 11
Fixed cost Attributable to the products(Rs) 60,000
The transfer price of the intermediate product has been set at 35/= based on a full cost plus a mark-up
The A division maximises the profit at an out put level of ,
Choose one answer.
a. 6,000
b. 3,000
c. 7,000
d. 5,000
Incorrect
Marks for this submission: 0/5.
Question 19
Marks: 5
Y plc currently sells products " P","Q" and "R" in equal quantities and at the same selling
price per unit. The contribution to sales ratio for product P is 40%: for product Q it is
50% and the total is 48%. If fixed costs are unaffected by mix and currently 20% of sales, the
effect of changing the product mix to:
P 4
Q 2
R 3
is that the total contribution /total sales ratio change to
Choose one answer.
a. 47.4%
b. 45.3%c. 48.4%
d. 68.4%
e. 27.4%
Incorrect
Marks for this submission: 0/5.
Question 20
-
8/6/2019 Copy of SMA Fnal
51/202
Marks: 5
A fertiliser is made by mixing and processing three ingredients, A, B,and C, the standard cost data
are as follows
ingredientStandardProportion
standardcost Rs
P 50% 20
N 40%
Q 10% 42
A standard process loss of 5%
is anticipated
For the last 3month the out put was 93.1 tonnes and input were as follows:
ingredientActual
Usage
Actual
Price
Rs
P 49 tonnes16 per
tonne
N 43tonnes27 per
tonne
Q 8 tonnes48 per
tonne
Material Yield variance
Choose one answer.
a. 29 FAV
b. 24.2 FAV
c. 48.4 ADV
d. 122.75 ADV
-
8/6/2019 Copy of SMA Fnal
52/202
A fertiliser is made by mixing and processing three ingredients, A, B,and C, the standard cost data are as
ingredient Standard Prop
P
Q
A standard process loss of 5% is anticipated
For the last 3month the out put was 93.1 tonnes and input were as follows:
ingredient Actual UsageP 49 tonnes
N 43tonnes
Q 8 tonnes
Material price variance
Choose one answer.
a. 24.2 FAVb. 19.4 FAV
c. 42.6 ADV
d. 62 FAV
Incorrect
Marks for this submission: 0/5.
Question 2
Marks: 5
Rambo Ltd manufactures three products ,the selling price and cost details of which are given below:
Products DA DB DC
Selling price per unit 75 95 95
Direct material(Rs 5 per
kg)2Kg 1 kg 3 kg
Normal loss-Input material 30% 20%
Direct labour (Rs 4 per 16 24 20
-
8/6/2019 Copy of SMA Fnal
53/202
hour)
Variable overhead 8 12 10
Fixed Overhead 24 36 30
In a period when direct materials are restricted in supply, the most and the least profitable uses of direct m
Most Profitable Least Profitable
i DB DA
ii DB DC
iii DC DA
iv DC DB
v DA DB
Choose one answer.
a. iii
b. i
c. iv
d. v
e. ii
Correct
Marks for this submission: 5/5.
Question 3
Marks: 5
DPL Ltd can choose from five mutually exclusive projects. The projects will each last for one year only a
will b determined by the prevailing market conditions. The forcast annual cash inflows and their associat
Market Conditions Poor Good Excellent
Probability 0.2 0.5
Rs 000 Rs 000 Rs 000
Project-A 500 470
Project-B 400 550
Project-C 450 400
Project-C 360 400
Project-D 600 500
The value of perfect information about the state of the market is
Choose one answer.
a. Rs 5,000
-
8/6/2019 Copy of SMA Fnal
54/202
b. Rs 56,000
c. Rs 180,000
d. Rs 40,000
e. Nil
Correct
Marks for this submission: 5/5.
Question 4
Marks: 5
The following information has been extracted from the record of NYK chemical
company
which manuactures product "H"
standard price : Rawmaterial P- Rs 2 per kg
Rawmaterial Q- Rs 10 per kg
standard Mix : P : 75%, Q 25% (by weight)
standard Yield : 90%
for the last month , the actual cost, usage and out put were as follows
used : 2200 kg of P , costing Rs, 4,650/=
800 kg of Q , costing Rs, 7,850/=
Output 2850 kg of H
Material Yield variance
Choose one answer.
a. 400ADV
b. All answers are wrong
c. 667FAV
-
8/6/2019 Copy of SMA Fnal
55/202
d. 267FAV
Incorrect
Marks for this submission: 0/5.
Question 5
Marks: 5The following information has been extracted from a local biscuite
company
which manufactures high protein biscuite
standard price : Rawmaterial P1- Rs 5 per kg
Rawmaterial P2- Rs 4 per kg
Rawmaterial P3- Rs 3 per kg
standard Mix : P1 : 60%, P2 ,30% , P3 10% (by weight)
standard Yield : 90%
for the last period , the actual cost, usage and out put were as follows
used : 2450 kg of P1 , costing Rs, 12,200/=
1150 kg of P2 , costing Rs, 4700/=
425 kg of P3 costing Rs 1250/=
Output 3600kg of high protein biscuite
scrap sales value is Rs. 0.90 per unit
Material price variance
Choose one answer.
a. 25 ADV
b. 125 ADV
c. 50FAV
-
8/6/2019 Copy of SMA Fnal
56/202
d. 150 ADV
Correct
Marks for this submission: 5/5.
Question 6
Marks: 5ADB plc is organised on a divisional basis. Two of the divisions are the Components division and the Pr
division
The Components division produces components P, Q, R. The Components are sold to a wide variety of c
including
Product division at the same price. The Product division uses one unit of component P,Q,and R respectiv
K,L and M.
Recently Product division has been force to work below capacity because of limits in the supply of comp
from Component division. ADB's Managing Director has therefore directed component divisions to sell
product division.
Price , Cost and output data for Components division are as follows
Componant P Q R
Rs Rs Rs
Unit Selling Price 20 20
Unit variable cost 7 12
Period Fixed Cost 50000 100000
Components division has a maximum out put capacity 50,000 of which each component must number at
10,000.
Price , Cost and output data for Products division are as follows
Products K L M
Rs Rs Rs
Unit Selling Price 56 60
Unit variable cost 10 10
Period Fixed Cost 100,000 100,000 200,000
product division has been forced to operate at 20,000 units below capacity because of lack of component
coming
from Component division. Product division is able to sell all the out put it can produce at the current sell
price.
-
8/6/2019 Copy of SMA Fnal
57/202
Assuming all components are supplied to Product division, What is the different component and product
that would maximise the profit of :Products division
P/K Q/L R/M
1 30,000 10,000 10,000
2 10,000 30,000 10,000
3 10,000 10,000 30,000
4 all answers are wrong
Choose one answer.
a. 1
b. 3
c. 4
d. 2
Incorrect
Marks for this submission: 0/5.
Question 7
Marks: 5
Calipania Ltd has details two machines that could fulfil the company's future production
plans. Only one of these will be purchased.
The'standard' model of costs Rs 50,000 and the Ordinary model Rs. 88,000, payable immidiately.Both machines would require the input of Rs. 10,000 working capital throughout their working
lives, and both have no expected scrap value at the end of their expected working lives of 4
years for the standard machine and 6 years for the Ordinary machine.
The forecast pre- tax operating net cash flows (Rs.) associated with the two machines are
Year Hence
Years 1 2
The'standard' model 20,500 22,860
The Ordinary model 32,030 26,110
The discount rate for the Ordinary model is 14% per year , 2% higher than the discount rate for the stand
The company is proposing to finance the purchase of either machine with a term loan at a fixed interest r
Taxation at 35% is payable on operating cash flows one year in arrears, and capital allowances are availa
on a reducing balance basis.
-
8/6/2019 Copy of SMA Fnal
58/202
Net present value should be
The'standard' model The Ordinary model
i 1425 1285ii 6632 6312
iii 5412 5673
iv 5136 5510
Choose one answer.
a. ii
b. i
c. iv
d. iiiIncorrect
Marks for this submission: 0/5.
Question 8
Marks: 5
XYZ Limited has recently introduced an Activity Based Costing system. It manufactures three
products,
details of which are set out
below.
Product X Product Y Product Z
Budgeted annual
production(units)100,000 100,000 50,000
Batch size (units) 100 50 25
Machine set-ups per batch 3 4 6
Machine set-ups per batch 2 1 1
Machine set-ups per batch 2 3 3
Three cost pools have been idntified. Their budgeted costs for the year ending 30th June 2009are as follows:
Machine set-ups costs Rs. 150,000
Purchasing of materials Rs.70,000
Processing Rs. 80,000
The budgeted machine set-up cost per unit of product R is nearest to
-
8/6/2019 Copy of SMA Fnal
59/202
Choose one answer.
a. 6.52
b. 6734
c. 50000
d. 0.5
Incorrect
Marks for this submission: 0/5.
Question 9
Marks: 5
A company is considering investing in a new project that would have a five year life span. The invest me
expected annual net inflow is Rs 1.5 million in every year end.The expected inflation will be 5% in each
years.
the cost of capital of the company is
10%.
The real discount rate should be
Choose one answer.
a. 4.76%
b. 15.00%
c. 10.00%
d. 6.85%
Incorrect
Marks for this submission: 0/5.
Question 10
Marks: 5
ABC Limited makes a product which has variable production cost and sales costs
per unit of Rs. 8 and Rs. 2 respectively. Fixed costs are Rs. 40,000/= per annum ,the
sales price is Rs.18 per unit and the current volume of output/sales is 6,000 units per
annum.
The company is considering whether it should acquir a new machine for production.
A annual hire costs of the machine would be Rs. 10,000/= and it is expected that variable
production costs per unit would drop to Rs.6/=.
-
8/6/2019 Copy of SMA Fnal
60/202
What is the minimum quantity should be made and sold by the ABC Ltd to accept the
aquiring of the new machine
Choose one answer.
a. 5,800
b. 5,000
c. 4,000
d. 6,000
Correct
Marks for this submission: 5/5.
Question 11
Marks: 5KMN PLC is about to launch a new product. Facilities will allow the company to produce up to 20 unit p
The
marketing department has estimated that at a price of Rs 8000/= no unit will be sold, but for each Rs 150
additional
unit per week will be sold. Fixed costs associated with manufacture are expected to be Rs 12000/= per w
Variable costs are expected to beRs, 4000/= per unit for each of the first 10 units
thereafter each unit will cost Rs 400/= more than preceeing one
The most profitable level of output per week for the new product isChoose one answer.
a. 20 Unit
b. 11 Units
c. 14Units
d. 13 Units
e. 10 Units
Incorrect
Marks for this submission: 0/5.
Question 12
Marks: 5
The overhead costs of XY limited have been found to be accurately represented
by the formula
y= Rs 10,000 + Rs 0.25 x
where y is the monthly cost and x represents the activity level measured in machine
-
8/6/2019 Copy of SMA Fnal
61/202
in hours.
Monthly activity levels, in machine hours, may be estimated using a combined
regression analysis and time series model:
a = 100,000 + 30b
where a reperesents the de- seasonalized monthly activity level and b represents
the month number.in month 240 , when the seasonal index value is 108, the overhead cost (to the
nearest RS. 1000) is expected to be
Choose one answer.
a. Rs. 39,000
b. Rs. 35,000
c. Rs.36,000
d. Rs. 40,000
Incorrect
Marks for this submission: 0/5.
Question 13
Marks: 5
ABC Limited manufactures and sells two product, X and Y. Annual sales are expected
to be in the ratio X:1, Y:3. Total annual sales are planned to be Rs. 420,000. Product
X has a contribution to sales ratio of 40 % , whereas that of product Y is 50%. Annaul
fixed costs are estimated to be Rs 120,000
The budgeted break even sales value (to the nearest Rs 1,000):
Choose one answer.
a. Rs. 255,000
b. Rs. 196,000
c. Cannot be determined from the above
d. Rs. 200,000
e. Rs. 253,000
Incorrect
Marks for this submission: 0/5.
Question 14Marks: 5
The following information has been extracted from a plastic manufacturing company
which manufactures a plastic component
-
8/6/2019 Copy of SMA Fnal
62/202
standard price : Rawmaterial M1- Rs 5 per kg
Rawmaterial M2- Rs 4 per kg
Rawmaterial M3- Rs 3 per kg
Standard Proportion M1 : 60%, M2 ,30% , M3 10% (by weight)
A standard process loss of 10% is anticipated
for the last period , the actual cost, usage and out put were as follows
used : 2450 kg of P1 , costing Rs, 12,200/=
1150 kg of P2 , costing Rs, 4700/=425 kg of P3 costing Rs 1250/=
Output 3645 Kg of plastic component
scrap sales value is Rs. 0.90 per unit
Material Yield variance
Choose one answer.
a. All answers are wrong
b. 20.5 ADV
c. 110.25FAV
d. 110FAV
Incorrect
Marks for this submission: 0/5.Question 15
Marks: 5
P Ltd has 3 division the information for the year ended December 2009 is as follows
Rs (000)
Division A B C
Sales 350 420 150
-
8/6/2019 Copy of SMA Fnal
63/202
Variable Costs 280 210 120
Total fixed cost is Rs 262,500/= . General fixed overhead are allocated to each division on the basis of sa
60% of the total fixed costs incurred by the company are specific to each division been split equally betw
Using relevent costing techniques, which divisions should remain open if P Ltd wishes to maximise prof
Choose one answer.
a. A and B only
b. B only
c. A, B and c
d. B and C only
Incorrect
Marks for this submission: 0/5.
Question 16
Marks: 5
Y plc currently sells products " P","Q" and "R" in equal quantities and at the same selling
price per unit. The contribution to sales ratio for product P is 40%: for product Q it is
50% and the total is 48%. If fixed costs are unaffected by mix and currently 20% of sales, the
effect of changing the product mix to:
P 4
Q 2
R 3
is that the total contribution /total sales ratio change to
Choose one answer.
a. 47.4%
b. 27.4%
c. 68.4%
d. 48.4%
e. 45.3%
Incorrect
Marks for this submission: 0/5.
Question 17
Marks: 5
DPL Ltd can choose from five mutually exclusive projects. The projects will each last for one year only
will b determined by the prevailing market conditions. The forcast annual cash inflows and their associat
-
8/6/2019 Copy of SMA Fnal
64/202
below.
Market Conditions Poor Good Excellent
Probability 0.2 0.5
Rs 000 Rs 000 Rs 000
Project-A 500 470Project-B 400 550
Project-C 450 400
Project-C 360 400
Project-D 600 500
The value of perfect information about the state of the market is
Choose one answer.
a. Rs 56,000
b. Rs 5,000
c. Rs 180,000
d. Rs 40,000
e. Nil
Correct
Marks for this submission: 5/5.
Question 18
Marks: 5
XYZ Company manufactures and sells two poducts P and Q . Forcast data for a year are:
Product P Product Q
Sales(units) 80,000 20,000
Sales Price(per unit) Rs. 12 Rs. 8
Variable Cost (per unit) Rs.8 Rs.3
Annual fixed cost are estimated
at Rs 273,000.
What is the break even point in sales revenue with the current sales mix
Choose one answer.
a. Rs. 606,667
b. Rs. 570,000
c. Rs. 728,000
-
8/6/2019 Copy of SMA Fnal
65/202
d. Rs. 679,467
Incorrect
Marks for this submission: 0/5.
Question 19
Marks: 5Taxi Service is trying to determine the optimal replacement policy for its fleet of hiring vehicles. The tot
purchase price of the fleet is Rs 220,000,million. The running cost and scrap values of the fleet at the end
Year 1 2 3 4
Running cost (Rs Million) 110000 132000 154000 165000 17600
Scrap value(Rs Million) 121000 88000 66000 55000 2500
The cost of capital is 12% per annum
The Taxi Service should replace its fleet of vehicles at the end of
Choose one answer.
a. Year-1
b. Year-4
c. Year-2
d. Year-3
e. Year-5
Correct
Marks for this submission: 5/5.
Question 20
Marks: 5
Calipania Ltd has details two machines that could fulfil the company's future
production
plans. Only one of these will be purchased.
The'standard' model of costs Rs 50,000 and the Ordinary model Rs. 88,000, payable immidiately.
Both machines would require the input of Rs. 10,000 working capital throughout their working
lives, and both have no expected scrap value at the end of their expected working lives of 4
years for the standard machine and 6 years for the Ordinary machine.
The forecast pre- tax operating net cash flows (Rs.) associated with the two machines
are
Year Hence
-
8/6/2019 Copy of SMA Fnal
66/202
Years 1 2 3 4
The'standard' model 20,500 22,860 24,210 23,410
The Ordinary model 32,030 26,110 25,380 25,940 38
The discount rate for the Ordinary model is 14% per year , 2% higher than the discount rate for the stand
The company is proposing to finance the purchase of either machine with a term loan at a fixed interest r
yearTaxation at 35% is payable on operating cash flows one year in arrears, and capital allowances are availa
year
on a reducing balance
basis.
Best option should be
Choose one answer.
a. It is recommended to purchased both the models
b. It is recommended to purchased the'standard' model
c. It is recommended to purchased the'Ordinary model
d. Cannot be determined from the above information
Apsolt Plc has two division A and B. One of the products manufactured by the A division is intermediate
This intermediate product for which there is no external market and it is transferred to B division where
for sale in the external market. One unit of the intermediate product is used in the production of the final
The expected units of the final products which the B division estimates ,it can sell at various selling pric
Net selling Price Quantity sold Unit
Rs
100 1000
90 2000
80 3000
70 400060 5000
50 6000
30 7000
The cost of each division are as follows :
A division
-
8/6/2019 Copy of SMA Fnal
67/202
Variable cost per unit(Rs) 11
Fixed cost Attributable to the products(Rs) 60,000
The transfer price of the intermediate product has been set at 35/= based on a full cost plus a mark-up
The B division maximises the profit at an out put level of ,
Choose one answer.
a. 6,000
b. 7,000
c. 2,000
d. 3,000
Incorrect
Marks for this submission: 0/5.
Question 2
Marks: 5
Calipania Ltd has details two machines that could fulfil the company's future production
plans. Only one of these will be purchased.
The'standard' model of costs Rs 50,000 and the Ordinary model Rs. 88,000, payable immidiately.
Both machines would require the input of Rs. 10,000 working capital throughout their working
lives, and both have no expected scrap value at the end of their expected working lives of 4
years for the standard machine and 6 years for the Ordinary machine.
The forecast pre- tax operating net cash flows (Rs.) associated with the two machines are
Year Hence
Years 1 2
The'standard' model 20,500 22,860
The Ordinary model 32,030 26,110
The discount rate for the Ordinary model is 14% per year , 2% higher than the discount rate for the standThe company is proposing to finance the purchase of either machine with a term loan at a fixed interest r
Taxation at 35% is payable on operating cash flows one year in arrears, and capital allowances are availa
on a reducing balance basis.
Net present value should be
-
8/6/2019 Copy of SMA Fnal
68/202
The'standard' model The Ordinary model
i 1425 1285
ii 6632 6312
iii 5412 5673
iv 5136 5510
Choose one answer.
a. iv
b. i
c. ii
d. iii
Correct
Marks for this submission: 5/5.
Question 3
Marks: 5
The cost of capital is 12% of the company and consideing Rs 10 million investment.The expected inflatio
years.
Net present value of this project can be calculated
by
Choose one answer.
a. By discounting real cash flows at tax adjusted discounting rate.
b. By discounting real cash flows at risk and time adjusted discounting rate.c. By discounting real cash flows at the real discounting rate.
d. By discounting real cash flows at the nominal discounting rate.
Incorrect
Marks for this submission: 0/5.
Question 4
Marks: 5
The following information has been extracted from a plastic manufacturing company
which manufactures a plastic component
standard price : Rawmaterial M1- Rs 5 per kg
Rawmaterial M2- Rs 4 per kg
Rawmaterial M3- Rs 3 per kg
Standard Proportion M1 : 60%, M2 ,30% , M3 10% (by weight)
-
8/6/2019 Copy of SMA Fnal
69/202
A standard process loss of 10% is anticipated
for the last period , the actual cost, usage and out put were as follows
used : 2450 kg of P1 , costing Rs, 12,200/=
1150 kg of P2 , costing Rs, 4700/=
425 kg of P3 costing Rs 1250/
Output 3645 Kg of plastic component
scrap sales value is Rs. 0.90 per unit
Material usage variance
Choose one answer.
a. All answers are wrong
b. 112.5FAV
c. 97.75 FAV
d. 100FAV
Correct
Marks for this submission: 5/5.
Question 5
Marks: 5
P Limited used an incremental budgeting approch to setting its budgets for the
year ending 30 June 2009.
The budget for the company's power costs was determined by analysing the past
relationship between cost and activity levels and then adjusting for
inflation of 6%.The relationship between monthly cost and activity levels, before adjusting for the
6% inflation, was found to be:
Y = Rs(14,000 + 0.0025x2 )
where Y = total cost; and
x = machine hours
-
8/6/2019 Copy of SMA Fnal
70/202
In April 2009, the number of machine hours was 1525 and the actual cost incurred
was Rs. 16,423. The total power cost variance to be reported in nearest to
Choose one answer.
a. Rs.3740 (F)
b. Rs. 4580 (F)
c. Rs.4391(A)
d. Rs.3691(F)
Incorrect
Marks for this submission: 0/5.
Question 6
Marks: 5
ABC company uses decision tree analysis in order to evaluate potential
projects.
The company has been looking at the launch of a new product which it believe has a 70% probability of
success.
The company is however ,considering undertaking an advertising campaign costing Rs, 50,000 which wo
success to 95%.
If successful the product would generate income of Rs, 200,000 otherwise Rs, 70,000 would be
received.
What is the maximum that the company would be prepared to pay for the advertising?
Choose one answer.
a. Rs50000
b. Rs17500
c. Rs32500
d. Rs29000
Correct
Marks for this submission: 5/5.
Question 7
Marks: 5
FBP Ltd produces PPN. The standard ingredients of 1kg of PPN are :
.65kg of A @Rs 4.00 per kg
.3kg of B @Rs 6.00 per kg
.2kg of C @Rs2.5per kg
1.15kg
Production of 4000kg of PPN was budgeted for January 2010. Since the Production of PPN is entirely au
Production cost s attributed to PPN production comprise only direct materials and overheads.
Overheads were budgeted for January 2010 for PPN production operation as follows.
-
8/6/2019 Copy of SMA Fnal
71/202
Actiity Total Amount
Recept of deliveries from suppliers Rs
(standard delivery quantity is 460 kg) 4000
Despatch of goods to customers(standard despatch quantity is 100kg) 8000
12000
In January 2010 , 4200kg of PPN were produced and cost details were as follows:
Material used,
2840kg of A
1210kg of B
860kg of C
Total cost : Rs 20,380/=
Actual overhead costs
Twelve supplier deliveries(cost Rs 4,800) were made, and 38 customer despatches (cost Rs 7,800) were
processed.
Overhead Capacity variance
Choose one answer.
a. 1108 FAV
b. 508FAV
c. All answers are wrong
d. 600 FAV
Incorrect
Marks for this submission: 0/5.
Question 8
Marks: 5
The following details relates to product Rotomax
Level of activity (units) 1000 unit 2000 unit
Rs Rs
Direct materials 4.00 4.00
Direct labour 3.00 3.00
Production overhead 3.50 2.50
Selling overhead 1.00 0.50
-
8/6/2019 Copy of SMA Fnal
72/202
Total 11.50 10.00
The total fixed cost and variable cost per unit are
Total fixed
cost Rs.Variable cost per unit Rs.
1 2000 1.50
2 2000 7.00
3 2000 8.50
4 3000 7.00
5 3000 8.50
Choose one answer.
a. 3
b. 1
c. 2
d. 4
e. 5
Incorrect
Marks for this submission: 0/5.Question 9
Marks: 5
Apsolt Plc has two division A and B. One of the products manufactured by the A division is in
This intermediate product for which there is no external market and it is transferred to B divisi
for sale in the external market. One unit of the intermediate product is used in the production o
The expected units of the final products which the B division estimates ,it can sell at various se
Net selling Price Quantity sold Unit
Rs
100 100090 2000
80 3000
70 4000
60 5000
50 6000
30 7000
-
8/6/2019 Copy of SMA Fnal
73/202
The cost of each division are as follows :
A division
Variable cost per unit(Rs) 11
Fixed cost Attributable to the products(Rs) 60,000
The transfer price of the intermediate product has been set at 35/= based on a full cost plus a mark-up
Apsolt Plc maximises the profit at an out put level of ,
Choose one answer.
a. 4,000
b. 7,000
c. 5,000d. 3,000
Correct
Marks for this submission: 5/5.
Question 10
Marks: 5
X Plc operates a single retail outlet selling direct to the public. Profit statements for October and
November are as follows:
October November
Rs Rs
Sales 80,000 90,000
Cost of sales 50,000 55,000
Gross profit 30,000 35,000
Less:
Selling and distribution 8,000 9,000
Administration 15,000 15,000
Net Profit 7,000 11,000
Total annual fixed cost is
Choose one answer.
-
8/6/2019 Copy of SMA Fnal
74/202
a. 50,000
b. 110,000
c. 300,000
d. 62,500
Correct
Marks for this submission: 5/5.
Question 11
Marks: 5
ABC Limited makes a product which has variable production cost and sales costs
per unit of Rs. 8 and Rs. 2 respectively. Fixed costs are Rs. 40,000/= per annum ,the
sales price is Rs.18 per unit and the current volume of output/sales is 6,000 units per
annum.
The company is considering whether it should acquir a new machine for production.
A annual hire costs of the machine would be Rs. 10,000/= and it is expected that variable
production costs per unit would drop to Rs.6/=.
What would the annual profit be with the machine if the output/sales remain at 6,000 units
Choose one answer.
a. 8,000
b. 50,000
c. 60,000
d. 10,000
Correct
Marks for this submission: 5/5.
Question 12
Marks: 5ABC Ltd manufactures four products. The unit cost , selling price and bottleneck resource details per uni
Products P Q
Rs Rs
Selling Price 56 67
Material 22 31
-
8/6/2019 Copy of SMA Fnal
75/202
Labour 15 20
Variable Overhead 12 15
Fixed Overhead 4 2
Bottle neck resource time 10 10
(minutes)
Assuming that labour is a unit variable cost, if the products are ranked according to their contribution to
profitable products is
Choose one answer.
a. S
b. R
c. p
d. QCorrect
Marks for this submission: 5/5.
Question 13
Marks: 5
Y plc currently sells products " P","Q" and "R" in equal quantities and at the same selling
price per unit. The contribution to sales ratio for product P is 40%: for product Q it is
50% and the total is 48%. If fixed costs are unaffected by mix and currently 20% of sales, the
effect of changing the product mix to:
P 4
Q 2
R 3
is that the total contribution /total sales ratio change to
Choose one answer.
a. 48.4%
b. 68.4%
c. 27.4%
d. 47.4%
e. 45.3%
Correct
Marks for this submission: 5/5.
-
8/6/2019 Copy of SMA Fnal
76/202
Question 14
Marks: 5
The following information has been extracted from the record of NYK chemical company
which manuactures product "H"
standard price : Rawmaterial P- Rs 2 per kg
Rawmaterial Q- Rs 10 per kg
standard Mix : P : 75%, Q 25% (by weight)
standard Yield :
for the last month , the actual cost, usage and out put were as follows
used : 2200 kg of P , costing Rs, 4,650/=
800 kg of Q , costing Rs, 7,850/=
Output 2850 kg of H
Material cost variance
Choose one answer.
a. 500 ADV
b. 100 ADV
c. All answers are wrong
d. 167 FAV
Correct
Marks for this submission: 5/5.Question 15
Marks: 5
ABC Ltd manufactures four products. The unit cost , selling price and bottleneck resource details per uni
Products P Q R
Rs Rs Rs
-
8/6/2019 Copy of SMA Fnal
77/202
Selling Price 56 67 89
Material 22 31 38
Labour 15 20 18
Variable Overhead 12 15 18
Fixed Overhead 4 2 8
Bottle neck resource time 10 10 15
(minutes)
Assuming that labour is a unit variable cost, if the budgeted unit sales are in the ratio P:2 Q:3 R:3, Z :
4 and
monthly fixed costs are budgeted to be Rs 15000, the number of units of P that would be sold at the budg
Choose one answer.
a. 283
b. 106
c. 142
d. 145
Incorrect
Marks for this submission: 0/5.
Question 16
Marks: 5
Ahindas plc is cosidering investing in a manufacturing project that would have a three year life span. The
an immediate cash outflow of Rs50,000 and have a zero residual value. In each of the three years, 4000 u
soldThe contribution per unit , based on current prices is Rs 5/=. The company has an annual cost of capital o
rate
will be 3% in each of the next three years.
The net present value of the project( to the nearest Rs500)
Choose one answer.
a. 5000
b. 3500
c. 4500
d. -3400
Correct
Marks for this submission: 5/5.
Question 17
-
8/6/2019 Copy of SMA Fnal
78/202
Marks: 5
The following information has been extracted from a plastic manufacturing company
which manufactures a plastic component
standard price : Rawmaterial M1- Rs 5 per kg
Rawmaterial M2- Rs 4 per kg
Rawmaterial M3- Rs 3 per kg
Standard Proportion M1 : 60%, M2 ,30% , M3 10% (by weight)
A standard process loss of 10% is anticipated
for the last period , the actual cost, usage and out put were as follows
used : 2450 kg of P1 , costing Rs, 12,200/=
1150 kg of P2 , costing Rs, 4700/=
425 kg of P3 costing Rs 1250/=
Output 3645 Kg of plastic component
scrap sales value is Rs. 0.90 per unit
Material price variance
Choose one answer.
a. 135 ADV
b. 50FAV
c. 25 ADV
d. 155ADV
Correct
Marks for this submission: 5/5.
Question 18
-
8/6/2019 Copy of SMA Fnal
79/202
Marks: 5
ADB plc is organised on a divisional basis. Two of the divisions are the Components division and the Pr
division
The Components division produces components P, Q, R. The Components are sold to a wide variety of c
including
Product division at the same price. The Product division uses one unit of component P,Q,and R respectivRecently Product division has been force to work below capacity because of limits in the supply of comp
from Component division. ADB's Managing Director has therefore directed component divisions to sell
division.
Price , Cost and output data for Components division are as follows
Componant P Q R
Rs Rs Rs
Unit Selling Price 20 20
Unit variable cost 7 12 Period Fixed Cost 50000 100000
Components division has a maximum out put capacity 50,000 of which each component must number at
10,000.
Price , Cost and output data for Products division are as follows
Products K L MRs Rs Rs
Unit Selling Price 56 60
Unit variable cost 10 10
Period Fixed Cost 100,000 100,000 200,000
product division has been forced to operate at 20,000 units below capacity because of lack of component
coming
from Component division. Product division is able to sell all the out put it can produce at the current sell
price.
Assuming all components are supplied to Product division, What is the different component and product
that would maximise the profit of :Component division
-
8/6/2019 Copy of SMA Fnal
80/202
P/K Q/L R/M
1 10,000 10,000 30,000
2 30,000 10,000 10,000
3 10,000 30,000 10,000
4 all answers are wrong
Choose one answer.
a. 2
b. 3
c. 4
d. 1
Incorrect
Marks for this submission: 0/5.
Question 19
Marks: 5
KMP Ltd is highly geared company that wishes to expand its operations. Six possible capital
investemnts have been identified. But the company only has access to a total of Rs 620,000.
The projects are not divisible and may not be postponed until the future period. After
theproject end it is unlikely that similar investment oppertunaties will
occur.
Expected Net Cash Inflows (including salvage value)
Project Year1 (Rs) 2 (Rs) 3 (Rs) 4 (Rs) 5 (Rs) In
P-1 70,000 70,000 70,000 70,000 70,000
P-2 75,000 87,000 64,000
P-3 48,000 48,000 63,000 73,000
P-4 62,000 62,000 62,000 62,000
P-5 40,000 50,000 60,000 70,000 40,000
P-6 35,000 80,000 82,000
Projects P-1 and P-5 are matually exclusive. All projects are believed to be of similar risk to
the companys existing capitital investments.
Any surplus funds may be invested in the money markets to earn a return of 9% peryear.
The maney market may be assumed to be an efficient market.
KMP's cost of capital is 12% per year.
Maximum NPV if the company have adequate funds
-
8/6/2019 Copy of SMA Fnal
81/202
Choose one answer.
a. 27009
b. 21519
c. 24413
d. 32415
e. 19637
Incorrect
Marks for this submission: 0/5.
Question 20
Marks: 5
The expected inflation will be 6% in each of the next five years.
Net present value of a project can be calculated by
Choose one answer.
a. By discounting real cash flows at tax adjusted discounting rate.
b. By discounting nominal cash flows at the real discounting rate.
c. By discounting real cash flows at risk and time adjusted discounting rate.
d. By discounting nominal cash flows at the nominal discounting rate.
1