IAF Business College

19 January 2015

Class Test 2 Paper MA1 Management Information

20 questions 2 marks each = 40 marks. Time: 45 minutes
1. Which of the following items of information might be produced by a management
accounting system?
A. Income tax
B. Accounts Receivables
C. Current bank balance
D. Profitability of product items

2.
A.
B.
C.
D.

Which of the following is not management accounting information?

Sales budget
Variance report
Payroll report
Profitability report

3.
1.
2.
3.
A.
B.
C.
D.

Which of the following are primary data?

Information on wages timesheets
Information on government publication of inflation rates
Information from a trade publication listing suppliers of raw materials
1 and 2
1 and 3
1 only
1, 2, 3.

4. Which of the following is in the correct chronological sequence for a credit purchase
document?
A. Purchase order Invoice GRN Delivery note - Cheque requisition
B. Delivery note GRN Cheque requisition - Purchase order Invoice
C. Purchase order Delivery note GRN Invoice Cheque requisition
D. Cheque requisition - GRN Delivery note Purchase order Invoice

5. Which one of the following is least likely to be carried out by the accounts
department?
A. Credit collection from credit customers
B. Issuing purchase orders
C. Processing expense claims
D. VAT calculation and payment

6. Which of the following measures is most likely to prevent errors with the input of
inventory code number for an inventory transaction using a real-time computer-held
inventory control system?
A. Existence check
B. Dual input check
C. Verification check
D. Check digit check

7.
A.
B.
C.
D.

Which of the following is most likely to be a variable cost?

Insurance
Interest rates
Depreciation based on straight line method
Materials used in production

8.
A.
B.
C.
D.

Production overhead comprises:

Variable overheads only
All indirect costs related to production activity
Indirect expenses only
Indirect labour and material related to production activity

9. For a company operating a fleet of intercity passenger buses, which of the following
cost units would be most useful?
A. Cost per passenger
B. Cost per driver hour
C. Cost per tonne mile
D. Cost per passenger mile

10.What is the full production cost per unit of a manufactured product?

A. Direct material cost plus direct labour cost per unit
B. Prime cost plus production overhead cost per unit
C. Prime cost variable production overhead per unit
D. Production overhead cost per unit

11.Identify the statement below that does not describe one of the advantages of
centralisation of office work
A. It is usually more economical in terms of space and cost
B. Expensive machinery and equipment can be purchased and used economically
C. Specialised staff can be employed
D. Better service is given to department management

12.Which of the following employees in an organisation is the finance manager unlikely

to have responsibility for?

A.
B.
C.
D.

Cost accountant
Chief cashier
Wages clerk
Transport clerk

13.Which of the following is not correct?

A. Cost accounting can be used for inventory valuation to meet the requirements of
internal reporting only.
B. Management accounting provides appropriate information for decision-making,
planning, control and performance evaluation.
C. Routine information can be used for both short-term and long-run decisions.
D. Financial accounting information can be used for internal reporting purposes.

14.A fixed cost is one which:

A. increases in direct proportion to output
B. remains constant per unit irrespective of the level of output
C. remains constant in total irrespective of the level of output
D. increases throughout the year

15.An indirect cost is:

A. a cost which cannot be influenced by its budget holder
B. a cost which can be economically identified with a specific cost unit
C. a cost which needs to be apportioned between cost centres
D. the highest proportion of total cost of a product

16.Which of the costs listed below is not a variable cost?

A. Royalties paid to the designer of a product
B. Wages paid on an hourly basis
C. Depreciation based on straight-line method
D. Materials used in production

17.The accounting system normally contains codes to identify which of the following:
1. the type of cost
2. the responsibility centre
3. the supplier
A. 1 only
B. 2 only
C. 2 & 3 only
D. 1, 2 and 3.

18.An indirect cost should:

A. be coded to a cost unit

B. be coded to the different cost centres that incur the cost

C. be coded to an overhead cost centre
D. not be coded at all

19.The following data relate to two output levels of a department:

Labour hours
25,000
Overheads
$152,800
$267,800

50,000

If fixed overheads are estimated to be $37,800, what is the estimated overhead cost
at an activity level of 72,000 labour hours?
A.
B.
C.
D.

$306,090
$369,000
$450,000
$600,000

20.A cost centre is:

A. a unit of product or service for which costs are calculated
B. an amount of profit attributable to an activity
C. a function or location within an organisation for which costs are accumulated
D. a section of the organisation for which budgets are prepared and control is
exercised