# Certified Accounting Technician Examination

Topics: Variable cost, Costs, Marginal cost Pages: 156 (42739 words) Published: March 28, 2011
Certified ACCounting teChniCiAn exAminAtion

SAmple multiple ChoiCe queStionS – June 2009

Paper T7 Planning Control and Performance Management
Section A only All questions are compulsory Note: Section B of the actual exam paper will contain four written questions

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the following questions are typical of those that will appear in Section A of the examination paper from June 2009 onwards. there will be a total of ten questions in section A. All questions in Section A will be worth two marks each.

1

Four years ago material X cost \$5 per kg and the price index most appropriate to the cost of material X stood at 150. The same index now stands at 430. What is the best estimate of the current cost of material x per kg? A B C d \$1.74 (\$5 × 150 ÷ 430) \$9.33 (\$5 × (430 – 150) ÷ 150 \$14.33 (\$5 × 430 ÷ 150) \$21.50 (\$5 × 430 ÷ 100) (2 marks)

2

Which of the following is the best description of a rolling budget? A B C d A budget that is continuously updated by adding a further accounting period when the earliest accounting period has expired. A budget that is adjusted for known changes in volume during the accounting period. A budget that, by recognising cost behaviour patterns, is designed to change as volume of activity changes. A budget that is prepared by higher levels of management and then communicated to lower levels of management. (2 marks)

3

In the last year a division’s controllable return on investment was 25% and its controllable profit was \$80,000. The cost of finance appropriate to the division was 18% per annum. What was the division’s controllable residual income in the last year? A B C d \$5,600 \$22,400 \$74,400 \$76,400 \$80,000 × (0.25 – 0.18) \$80,000 – (\$80,000 ÷ 0.25 × 0.18) \$80,000 – (\$80,000 × (0.25 – 0.18) \$80,000 – (\$80,000 × 0.25 × 0.18)) (2 marks)

4

The standard raw material cost for a unit of production is 2 kg at \$4.00 per kg. Purchases for a period were 13,000 kg at an actual cost of \$4.50 per kg. Raw material inventory, which are valued at standard cost, increased by \$8,000 in the period. Budgeted production for the period was 6,000 units but actual production was only 5,000 units. What was the raw material usage variance for the period? A B C d \$20,000 Adverse \$4,000 Adverse \$4,000 Favourable \$12,000 Favourable (5,000 × 2kg – (13,000kg + \$8,000 ÷ \$4.00/kg) × \$4.00 (5,000 × 2kg – (13,000kg – \$8,000 ÷ \$4.00/kg) × \$4.00 (6,000 × 2kg – (13,000kg – \$8,000 ÷ \$4.00/kg) × \$4.00 (13,000kg – 5,000 × 2kg) × \$4.00 (2 marks)

2

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5

A government body uses measures based upon the ‘three Es’ to the measure value for money generated by a publicly funded hospital. It considers the most important performance measure to be ‘cost per successfully treated patient’. Which of the three e’s best describes the above measure? A B C d Economy Effectiveness Efficiency Externality (A measure of cost related to input) (A measure of output related to objectives) (A measure of output related to input) (Not one of the three Es) (2 marks)

6

The following observations have been made of total overhead cost. Output level (units) Total overhead cost (\$) 5,000 14,000 10,000 27,000

The variable element of total overhead cost is known to increase by \$1 per unit at output levels above 7,000 units. What is the variable element of total overhead cost at an output level of 5,000 units? A B C d \$2.00 per unit \$2.60 per unit \$3.20 per unit \$3.60 per unit (\$27,000 – \$14,000 – 3,000 units × \$1) ÷ (10,000 units – 5,000 units) (\$27,000 – \$14,000) ÷ (10,000 units – 5,000 units) (\$27,000 – \$14,000 + 3,000 units × \$1) ÷ (10,000 units – 5,000 units) (\$27,000 – \$14,000) ÷ (10,000 units – 5,000 units) + \$1 (2 marks)

7

The following statements have been made about linear regression analysis: (i) (ii) (iii) (iv) It provides more accurate estimates than the high low...

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