SMA Quiz Word

MODULE 1
1. What are the four key causes of change in the business environment?
A. Big data, Innovation, Resources and Sustainability.

B. Globalisation, Innovation, Sustainability and Technology.
C. Globalisation, Internal structures, Sustainability and Technology.
 C is correct because the four causes of change discussed are globalisation, internal
structures, sustainability and technology.
2. What are the two main reasons for increased trade across international boundaries?
A. Increased competition and lower transport costs.

B. Reduced trade barriers and higher transport costs.
C. Reduced trade barriers and modern communication systems.
 C is correct because increased trade across international boundaries in recent decades is due
to a combination of reduced trade barriers, modern communication systems and lower transport
costs.
3. Why have organisational hierarchies generally become flatter?
A. To improve operational efficiency.

B. To increase the layers of management.
C. To shift responsibility to senior managers.
 A is correct because flatter hierarchies improve operational efficiency by decreasing the

levels of middle management, and as a result responsibility is shifted to lower level operational
staff - which can also improve operational efficiency.
Which one of the following describes the two primary roles for the SMA in creating sustainable value?
A. Balancing stakeholder needs and supporting strategy.

B. Creating strategy and providing information for effective resource allocation.
C. Supporting strategy and providing information for effective resource allocation.
D. Supporting the formation of strategy and ensuring effective implementation of strategy.
 C is correct because the primary ways that an SMA helps an organisation create sustainable value is by
supporting strategy and by providing relevant information to improve effective resource allocation.
Which one of the following best describes who an organisation is creating value for?
A. Customers
B. Employees
C. Stakeholders
D. Shareholders
 C is correct because an organisation's primary role is to create value for all of its
stakeholders.
What does sustainable value creation refer to?
A. Creating value while not negatively impacting the environment for future generations.
B. Creating value today by focusing on building shareholder value above other stakeholders.
C. Creating value today while not negatively impacting the ability to generate value in the future.
D. Creating value that is sustainable by ensuring only recycled materials are used during
production.
 C is correct because sustainable value is about long-term continued value, that means that you create
value today but ensure that you are not negatively impacting the ability for future value creation.
Which one of the following makes up an organisation value chain?
A. Business roles
B. Business activities
C. Business functions
D. Business departments
 B is correct because it is the key strategic activities that are performed in a business that make up its
organisation value chain.
A is incorrect because business roles are not always the activities that are performed. It is the key strategic
activities performed that make up an organisation value chain.
C is incorrect because functions normally refers to departments, but the main focus of a value chain is the
linking of activities.
D is incorrect because an organisation value chain is broken down into key activities and departments are
too high-level.
Reference:
Module 1
> Part E
> Value analysis
> Organisation value chains
> Page 33
Which one of the following correctly describes the bookkeeping activity in a business that manufactures
steel products from a value chain perspective?
A. Primary activity
B. Support activity
C. Financial activity
D. Non-value adding activity
 B is correct because bookkeeping enables (or supports) the primary activities that are directly
involved in manufacturing the steel products. Support activities are sometimes called secondary
activities.
In an accounting firm, which of the following activities would be considered a primary activity?
A. Preparation of tax returns
B. Human resource management
C. Information systems maintenance
D. Organisation the lease for the office location
 A is correct because preparation of tax returns would be a key activity in providing the service of value
to customers and hence create stakeholder value.
4. What are the two primary roles for the SMA in creating sustainable value?
A. Balancing stakeholder needs and supporting strategy.
B. Creating strategy and providing information for effective resource allocation.
C. Supporting strategy and providing information for effective resource allocation.
5. Who is an organisation creating value for?

A. Customers
B. Stakeholders
C. Shareholders
6. What does sustainable value creation refer to?

A. Creating value while not negatively impacting the environment for future generations.
B. Creating value today by focusing on building shareholder value above other stakeholders.
C. Creating value today while not negatively impacting the ability to generate value in the future.
7. Has the role of strategic management accounting evolved to include more analysis or more
reporting?
A. Analysis
B. Reporting
8. According to the International Federation of Accountants (IFAC) what are the four specific
ways that SMA supports value in an organisation?
A. Allocating, Enabling, Preserving, Supporting
B. Creating, Supporting, Protecting, Reporting
C. Creating, Enabling, Preserving and Reporting
9. Does strategic management accounting receive direct guidance from a governing body?
A. Yes
B. No
10. What makes up an organisation value chain?

A. Business roles.
B. Business activities.
C. Business departments.
11. In a business that manufactures steel products, what type of activity is bookkeeping?
A. Primary
B. Support
C. Non-value adding
12. In an accounting firm, which of the following activities would be considered a primary
activity?
A. Preparation of tax returns.
B. Human resource management.
C. Information systems maintenance.
13. Which of the following is a support activity in the value chain?

A. Research and development
B. Operations
C. Sales
D. Distribution
 A is correct (page 4, Figure 1.3). Support activities include R&D, accounting, HR, IT and
infrastructure. Operations, sales and distribution are all primary activities, also called the business
cycle.
14. Which of the following is the correct sequence for the following activities:
I Strategic planning and choice
II Strategy evaluation
III Strategic analysis
IV Strategy implementation
A. I, II, III then IV
B. I, IV, II then III
C. III, I, IV then II
D. III, IV, II then I
 C is correct (page 6, Figure 1.5). Strategic analysis (both internal and external) is followed by
strategic planning and choice, which is followed by strategic implementation and then strategy
evaluation occurs.
15. Which of the following is the least likely to be a challenge associated with technology in
relation to management accountants?
A. Being able to use it in an effective manner to improve accuracy and efficiencies.
B. Identifying where technology will cause changes in the industry life cycle.
C. Managing data volumes associated with cloud computing and online shopping.
D. Time management associated with implementation of enterprise management systems.
16. Management of the supply chain, cash flows and working capital is associated with which key
challenge facing management accountants?
A. Sustainability.
B. Managing resources.
C. Promoting innovation.
D. Implementing technology.
17. In what way can a management accountant address the challenge of promoting innovation?
A. Allocate budget resources.
B. Conducting market research.
C. Assist with information and analysis.
18. Which of the following is not an example of a traditional management accounting task?
A. Job costing
B. Variance analysis
C. Life cycle analysis
D. Budgets
19. Which of the following fundamental principles from APES 110 Code of Ethics is most at risk
when a management accountant moves from performing a recording type role to a business
advisory or business partner role?
A. Integrity
B. Objectivity
C. Professional competence & due care
D. Independence
20. Risk management is a key management accounting area. Which of the following 4 ways that
management accountants add value that were outlined by IFAC (2011) is most relevant here?
A. Creators of value
B. Enablers of value
C. Preservers of value
D. Reporters of value
21. You have prepared 4 budget scenarios that each have a 25% chance of occurring in the next
12 months. One of them focuses on having slightly lower results because of difficult economic
conditions which are a future possibility. Your manager asks you to confirm this as the final
budget.
Which of the following is most likely to be affected?
A. Your integrity
B. Your objectivity
C. Your professional competence and due care
D. Your independence
22. What are the four key causes of change in the business environment?
A. Big data, Innovation, Resources and Sustainability.
B. Globalisation, Innovation, Sustainability and Technology.
C. Globalisation, Internal structures, Sustainability and Technology.
23. What are the two main reasons for increased trade across international boundaries?
A. Increased competition and lower transport costs.
B. Reduced trade barriers and higher transport costs.
C. Reduced trade barriers and modern communication systems.
24. Why have organisational hierarchies generally become flatter?
A. To improve operational efficiency.
B. To increase the layers of management.
C. To shift responsibility to senior managers.
25. Which one of the following statements about the difference between financial reporting and
management accounting is correct?
A. Management accounting information is consolidated and is produced after the event.
B. Management accounting includes financial results as well as costing and variance analysis.
C. Financial reporting information includes information on benchmarking, performance measurement
and actual compared to plan.
D. Financial reporting is about the future, is produced when needed and is made up of both financial
and non-financial information.
26. Which one of the following correctly represents the external user groups and the decisions
supported by accounting information?
External user groups Decisions supported by accounting information

A. Lenders Are there warranties and after sales support?
B. Suppliers Will there be repeat orders and payment for credit
purchases?
C. Customers Will conciliation and arbitration be required?
D. Government/ Interest groups Will the interest be paid and the amount borrowed
repaid?
A only
A. B only
B. C only
C. D only
27. Which one of the following is not stated as a key challenge facing management accountants?
A. Managing resources
B. Promoting innovation
C. Ensuring information is secure and controlled while promoting and developing e-business
D. Effectively using technology and enabling others
28. XYZ Pty Ltd (XYZ) is considering optimising its business operations to minimise operating
cost. While preparing a business plan, the management accountant noted the following
information:
• Governments no longer rely on legislation and regulation to deliver social and
environmental objectives—this has resulted in the exploration of voluntary and non-
regulatory initiatives instead.
• Changes in the business environment have meant that companies, and in particular small
companies, have a more global reach.
• There is a growing demand for corporate disclosure from stakeholders, with investors now
making decisions based on ethical concerns.
• Many companies are introducing ‘supplier codes of conduct’ to ensure their suppliers
operate in a socially responsible manner.
Given this information, which of the following would be the most important external factor
for XYZ to consider?
A. The increasing trend towards outsourcing non-essential activities and the rapid developments in
information technology.
B. The rise of small companies that have global reach and the increasing focus from stakeholders
on corporate accountability.
C. Global economic events such as the Global Financial Crisis (GFC) and changing organisational
structures resulting in the removal of middle and lower management layers.
D. Growth in the number of employees working from virtual offices and changing organisational
structures resulting in the removal of middle and lower management layers.
29. Which of the following tasks is least likely to be a strategic management accounting task?
A. Evaluating a proposal to outsource printing
B. Calculating the loss on sale of plant and equipment
C. Providing accounting data for the organisation’s strategic plan
D. Advising the managing director on whether the organisation should introduce product-based
profit centres
30. Which of the following statements best describes customer value?

A. Creating and delivering products, services, outcomes or outputs that consumers are willing to pay
for.
B. Aligning the activities within an organisation to make sure the final product is made effectively and
efficiently.
C. The ability to generate superior returns on shareholder funds (or taxpayer funds in the case of public
sector organisations).
D. Using customer account profitability analysis to ensure the organisation focuses on the customers
that provide it with the greatest levels of profit.
31. Has the role of management accountants changed?

A. No, traditional tasks remain and advances in technology and information systems make the
management accountant's role easier.
B. Yes, as technology and information systems now capture routine information and management
accountants can spend more time on variance analysis and budgeting.
C. Yes, as advances in information technology mean management accountants are spending less
time on traditional tasks and more time on analysis of the external environment.
D. No, the role of the management accountant is the same, and management accountants need to
spend more time on reporting on sustainability issues which in recent times is receiving
increased attention.
32. What is the primary objective of strategic management accounting?

A. To create sustainable value and improve organisation outcomes.
B. To create organisation strategy, implementation plans and performance measures.
C. To enable an organisation to determine what types of products it will supply or services it will offer.
D. To ensure that an organisation meets its compliance obligations to shareholders, government and
society.
33. Is the focus of strategic management accounting to provide useful information that supports
operational and strategic management decisions?
A. No, this is the role of financial or external reporting.
B. Yes, as strategic management accounting supports decisions in relation to internal areas such as
supplier selection, strategic choice, and pricing.
C. No, as strategic management accounting does not support management decisions on industry
analysis.
D. Yes, as strategic management accounting information primarily assits financial insituations in
deciding on financial activities
34. Which of the following correctly outlines external factors that have led to changes in the
contemporary business environment and management accounting?
A. The increasing trend towards outsourcing non-essential activities and the rapid developments in
information and communications technology.
B. The emergence of a small companies that have global reach and the increasing and broader focus
from stakeholders on corporate accountability.
C. Global economic events such as the global financial crisis and changing organisational structures
resulting in the removal of layers of middle management.
D. Growth in the number of employees working from virtual offices and the changing organisational
structures resulting in the removal of layers of middle management.
35. A business that takes over a competitor operating in the same business role in the industry
value chain is an example of what type of integration?
A. Vertical. Dọc
B. Horizontal. ngang
C. Backwards. Ngược dòng
D. Downstream. Xuôi dòng
B đúng vì hội nhập theo chiều ngang xảy ra khi một doanh nghiệp tham gia hoặc tiếp quản một đối
thủ cạnh tranh có cùng vai trò trong chuỗi giá trị ngành.
Các tùy chọn khác không chính xác vì tích hợp dọc liên quan đến việc tích hợp với một đối thủ cạnh
tranh thực hiện một vai trò khác trong chuỗi giá trị ngành và xuôi dòng và ngược lại là các loại
tích hợp dọc.
36. How can industry value chain integration benefit a business?

A. Increase competition
B. Reduce transaction costs
C. Increase industry rivalry
D. Reduce complexity
37. If a business takes over a supplier, what type of integration is this an example of?
A. Upstream.
B. Forwards.
C. Horizontal.
A đúng vì tiếp quản một nhà cung cấp là một ví dụ về tích hợp dọc ngược dòng, trong đó doanh nghiệp tiếp
quản một đối thủ cạnh tranh hoạt động trong một vai trò kinh doanh khác gần với điểm bắt đầu (nguồn)
của chuỗi giá trị ngành.
B sai vì tích hợp xuôi liên quan đến đối thủ cạnh tranh hoạt động ở một vai trò khác nhưng gần cuối
(người tiêu dùng) hơn trong chuỗi giá trị ngành.
C sai vì tích hợp theo chiều ngang liên quan đến một đối thủ cạnh tranh hoạt động với vai trò tương tự
trong chuỗi giá trị ngành.
38. Is it true that an industry value chain shows all the activities performed in the industry?
A. Yes
B. No
B is correct because the industry value chain shows the discrete roles that are performed in the industry. It
does not show all the activities that are undertaken.
39. Can an individual organisation operate in more than one role within its industry value chain?
A. Yes
B. No
A đúng vì một tổ chức có thể hoạt động và cạnh tranh với nhiều vai trò trong chuỗi giá trị ngành của mình.
Mỗi vai trò có thể được thực hiện bởi một tổ chức hoặc doanh nghiệp riêng lẻ, nhưng một tổ chức đơn lẻ
cũng có thể chọn đảm nhận nhiều vai trò.
40. Which of the following would not form part of an industry value chain?
A. Retailing.
B. Raw materials.
C. Inbound logistics.
D. Primary manufacture.
C đúng vì hậu cần đầu vào không phải là một phần của chuỗi giá trị ngành. Hậu cần đầu vào là một hoạt
động xảy ra trong chuỗi giá trị của tổ chức. Đây không phải là vai trò chiến lược được thực hiện trong
chuỗi giá trị ngành, tất cả các lựa chọn khác đều là vai trò chuỗi giá trị ngành.
41. A product that holds high market share in a market experiencing high rates of growth would
be considered what type of product according to the BCG matrix?
A. Dog.
B. Star.
C. Cash cow.
D. Question mark.
42. A ‘Question Mark’ product has which one of the following characteristics?
A. Holds high market share.
B. Market has low growth
C. Holds low market share.
43. Is it true that the BCG matrix shows how a product moves through the categories over time?
A. Yes.
B. No.
B is correct because the BCG matrix shows where a product sits with respect to market share and rates of
growth in the market at a point in time. A product does not necessarily move through the categories over
time.
44. Which of the following product life-cycle stages would be expected to yield the lowest cash
flows?
A. Growth.
B. Maturity.
C. Introduction.
45. Is it true that high investment is required for products in the growth stage of the product life-
cycle?
A. Yes.
B. No.
46. In what stage of the product life-cycle is competition likely to be strongest?
A. Growth.
B. Decline.
C. Maturity.
47. Which of the following is true about supplier power?

A. A high concentration of suppliers is likely to decrease supplier power.
B. Supplier power is lower if it is easy for industry players to switch.
C. Suppliers will increase their power by introducing substitute products.
D. Supplier power increases if there is easily accessible information about their products.
B đúng vì nếu người mua (trong trường hợp này là những người chơi trong ngành) có thể dễ dàng chuyển
đổi giữa các sản phẩm của nhà cung cấp thì quyền lực của nhà cung cấp sẽ giảm đi.
A sai vì tập trung cao đồng nghĩa với ít công ty hơn nên trong trường hợp này khả năng là sức mạnh của
họ sẽ tăng chứ không giảm.
C không chính xác vì các nhà cung cấp sẽ không nhất thiết tăng sức mạnh của họ nếu họ làm điều này.
Nếu họ giới thiệu một sản phẩm thay thế, họ có thể thấy rằng họ đã làm phật lòng khách hàng hiện tại và
họ có thể mất các hợp đồng đó. Đó sẽ là một động thái mạo hiểm để thực hiện.
D sai vì khi người mua có nhiều quyền truy cập hơn vào thông tin thì họ có khả năng chuyển đổi sản phẩm
hoặc thậm chí có thể tích hợp ngược và tự sản xuất sản phẩm. Sức mạnh của nhà cung cấp sẽ giảm.
48. Which of the following factors would most likely cause a company to quickly lose some of its
customers?
A. Increasing buyer power.
B. Entry of new competitors.
C. Decreasing supplier power.
D. Decreasing industry rivalry.
49. Which of the following is not true about buyer power?

A. Buyer power is increased if they can easily switch products.
B. A duopoly in an industry will result in lower buyer power.
C. Buyer power is decreased when substitute products are introduced.
D. New competitors entering the industry will likely increase buyer power.
C đúng vì khi các sản phẩm thay thế mới được đưa vào một ngành, người mua bây giờ có một lựa chọn
mới để mua. Đến lượt nó, điều này sẽ tăng sức mạnh của họ vì họ có nhiều khả năng chuyển từ sản phẩm
hiện tại sang sản phẩm thay thế.
50. There are only a few large players in the supermarket industry in Australia. They use their
strong advantage with buying/leasing land in locations where buyer density is high and use
their economies of scale to put profit pressure on smaller competitors who have smaller
volume turnovers.
But with a marketing emphasis on lower prices and a greater range of products, these large
industry players have found that their customers expect this to continue. And their customers
are also more willing to switch to a rival who offers greater value for money. This has
allowed some international competitors like Aldi and Costco to enter the industry and take a
small, but growing market share. At the moment customers are not switching in large
numbers to online grocery shopping.
Which force is likely to be the strongest in the Australian grocery supermarket industry?
A. Threat of new entrants.
B. Threat of substitute products.
C. Rivalry among existing firms.
D. Bargaining power of suppliers.
C đúng vì tỷ suất lợi nhuận ròng trong ngành thấp và khối lượng lớn, các công ty cạnh tranh lẫn nhau
để giành mọi khách hàng tiềm năng và các hành động như "cuộc chiến giá cả" là phổ biến trong
ngành.
A sai vì để gia nhập ngành cần vốn đầu tư rất lớn. Việc tiếp cận các kênh phân phối như mua đất và
cửa hàng ở đúng vị trí địa lý cũng có thể khó khăn.
B không chính xác vì các sản phẩm thay thế chủ yếu được mua trực tuyến hoặc tại một cửa hàng tạp
hóa nhỏ ở địa phương. Cả hai phân khúc này đều chiếm một phần rất nhỏ trong tổng doanh số bán
hàng tạp hóa và không được coi là mối đe dọa trong giai đoạn này.
D không chính xác vì các chuỗi siêu thị đặt hàng với số lượng lớn như vậy, các nhà cung cấp buộc
phải ký hợp đồng trong đó lợi nhuận của họ nhỏ hơn đáng kể so với việc họ bán số lượng nhỏ cho các
cửa hàng độc lập.
51. This is a stretch question! You may need to look up some information using Google to make a
determination on the answer.
Which one of Porter’s Five Forces is most likely to be the strongest in the global canned tuna
industry?
A. Threat of new entrants.
B. Threat of substitute products.
C. Bargaining power of suppliers.
D. Bargaining power of customers.
D đúng vì khách hàng có rất nhiều nhãn hiệu cá ngừ đóng hộp để lựa chọn và vì vậy họ có thể dễ
dàng chuyển đổi. Một số thương hiệu nổi tiếng đã xây dựng được mức độ trung thành của khách
hàng nhưng thường thì mọi người không thể phân biệt được sự khác biệt giữa các loại cá ngừ khác
nhau. Do đó sản phẩm có độ co giãn giá từ trung bình đến cao và khả năng thương lượng của
khách hàng cao hơn.
A không đúng vì để gia nhập ngành đòi hỏi phải có vốn đầu tư và khả năng tiếp cận các kênh phân
phối không dễ dàng. Sẽ không dễ dàng để loại bỏ một thương hiệu lâu đời như cá ngừ Sirena khỏi
kệ hàng tạp hóa và thay thế nó bằng thương hiệu của bạn.
B sai vì cá ngừ là một sản phẩm độc đáo và mặc dù cá hồi có thể được coi là sản phẩm thay thế
nhưng nó có hương vị khác mà không phải khách hàng nào cũng muốn.
C sai vì có nhiều nhà cung cấp cá ngừ sống trên thế giới và mức tiêu thụ cá ngừ lớn đến mức nó
đóng vai trò như một sản phẩm hàng hóa. Các nhà cung cấp về cơ bản lấy giá mà thị trường đưa
ra để họ có quyền lực tăng và giảm khi nhu cầu cá ngừ của họ tăng và giảm
52. Which one of the following is a form of strategic management accounting support for the
operational management task of rewarding?
A. Measuring individual, departmental, team and organisational performance
B. Preparing budgets and forecasts, using costing systems and providing historical data
C. Using budgets to coordinate various departments and communicate organisational priorities to
employees
D. Identifying causes of variances and establishing performance incentives and criteria
A đúng vì hiệu suất của cá nhân, phòng ban, nhóm hoặc tổ chức được đo lường và báo cáo làm cơ sở để
khuyến khích và khen thưởng.
B sai vì chuẩn bị ngân sách và dự báo là một phần của quy trình lập kế hoạch.
C sai vì lập ngân sách, điều phối và truyền đạt các ưu tiên ngân sách là một phần của quá trình thực hiện
ngân sách.
D sai vì đây là các phần của quá trình điều khiển.
Module: 1 > Part: E > Part E: Analytical techniques available to management accountants > Table 1.7 >
Page: 32
53. Which type of accounting information is used by a corporation to make decisions about its
operations?
A. Auditor reports
B. Cash flow statements
C. Budgets and forecasts
D. Statements of financial position
C đúng vì nó xác định ngân sách và dự báo là thông tin được sử dụng để đưa ra các quyết định nội bộ.
A, B và D không chính xác vì thông tin này được sử dụng để ra quyết định bởi các nhóm bên ngoài chứ
không phải chính tổ chức.
Module: 1 > Part: E > Analytical techniques available to management accountants > Page: 32
54. PoshGowns Pty Ltd (PoshGowns) is a clothing manufacturer focusing on the youth fashion
market. Two years ago, an international competitor entered the local market and opened a
chain of stores. The competitor offers ‘fashion at an affordable price’ and has captured a
significant share of PoshGown’s market with this strategy.
Which one of the following analysis techniques would be most relevant to PoshGowns in
countering the threat?
A. PEST analysis
B. Product life cycle analysis
C. Porter's five forces analysis
D. Customer profitability analysis
C đúng vì phân tích năm lực lượng của Porter là một công cụ để phân tích các mối đe dọa trong ngành
của tổ chức—cụ thể là các đối thủ cạnh tranh.
A không chính xác vì nó không giải quyết được mối đe dọa trong thị trường của PoshGown. Nó tập
trung vào các vấn đề kinh tế và xã hội rộng lớn hơn.
B sai vì các mặt hàng thời trang có vòng đời ngắn và hiểu được vòng đời ngắn này sẽ không giúp
chống lại mối đe dọa cạnh tranh.
D không chính xác vì lợi nhuận của khách hàng không phải là vấn đề hiện tại đối với PoshGowns;
đúng hơn, vấn đề là mất thị phần.
Module: 1 > Part: E > Analytical techniques available to management accountants > Porter's five
forces model > Page: 39
55. Which one of the following is a strategic management process?
A. Providing costings and other information as required to guide routine and non-routine decisions.
B. Analysing variances, developing performance and reward systems, and evaluating internal controls.
C. Resource allocation via budgeting, and giving information to employees setting expectations of
activity.
D. Evaluate and rank the feasibility and profitability of strategies, considering both capital budgeting
(discounted cash flow measures) and strategic costs/benefits.
D đúng vì đây là hoạt động gắn liền với nhiệm vụ hoạch định và lựa chọn chiến lược. Tất cả các tùy
chọn khác là 'các nhiệm vụ quản lý vận hành chung'.
Module: 1 > Part: E > Analytical techniques available to management accountants > Page: 32
56. Which one of the following statements regarding risks is not correct?
A. Reputational risk is the risk of damage to an organisation's reputation or brand.
B. Operational risk is the risk of errors or mistakes occurring in the tasks or activities undertaken by an
organisation.
C. Financial reporting risk is the risk of not providing internal management with accurate and clear
information.
D. Quality risk is the risk of failing to design products or services appropriately or failing to ensure
policies and procedures are followed.
C đúng vì rủi ro báo cáo tài chính là rủi ro không cung cấp cho người dùng bên ngoài (không phải ban
quản lý nội bộ) thông tin chính xác và rõ ràng.
Module: 1 > Part: E > Analytical techniques available to management accountants > Strengths,
weaknesses, opportunities and threats > Page: 34
57. Which of the following best describes that part of the strategic management process within
an organisation that examines its competitive position in relation to products, production
facilities, non-current assets, people, organisational structures and current operating results?
A. SWOT analysis
B. Internal analysis
C. External analysis
D. Stakeholder analysis
58. Which of the following statements best describes the purpose of product life cycle analysis?
A. To increase the probability that new products will become ‘stars’
B. To determine the market share and growth potential of an organisation’s products
C. To identify and manage the risks associated with an organisation’s product offerings
D. To understand and plan for the cash flow required by an organisation’s product offerings
C đúng vì mục đích chính của phân tích vòng đời sản phẩm cũng tương tự như phân tích danh mục đầu tư
- để giảm rủi ro. Như vậy, phân tích vòng đời sản phẩm là một phần quan trọng của phân tích chiến lược
cho một tổ chức. Hiểu rủi ro là rất quan trọng để lập kế hoạch chiến lược.
A không chính xác vì 'ngôi sao' là cách phân loại sản phẩm liên quan đến ma trận tăng trưởng/chia sẻ của
Tập đoàn Tư vấn Boston (BCG), chứ không phải phân tích vòng đời sản phẩm.
B không chính xác vì thị phần và các biện pháp tăng trưởng được liên kết với ma trận BCG, không phải
phân tích vòng đời sản phẩm.
D không chính xác vì quản lý dòng tiền chỉ là một khía cạnh của quy trình quản lý rủi ro liên quan đến
việc hiểu danh mục sản phẩm của một tổ chức.
Module: 1 > Part: E > Internal Analysis > Portfolio Theory and Product Life Cycle > Page: 36
59. Which of the following statements does not correctly describe an organisation’s value chain?
A. The primary and support activities from which the organisation can derive a competitive advantage
B. A series of linked and strategically relevant activities that deliver products or services that the
organisation’s customers value
C. A set of interrelated activities that provide opportunities for optimising the collective value derived
from the interdependencies
D. An aggregation of independent and strategically relevant activities that collectively contribute to the
economic value generated by the organization
D đúng vì chuỗi giá trị bao gồm các hoạt động chính và phụ (hoặc hỗ trợ) có liên quan với nhau và
cung cấp các sản phẩm hoặc dịch vụ mà khách hàng của tổ chức đánh giá cao. Do đó, chuỗi giá trị
của một tổ chức không thể là một tập hợp các hoạt động độc lập nhưng có liên quan về mặt chiến
lược, đóng góp chung vào giá trị kinh tế do tổ chức tạo ra.
Các phương án A, B và C không chính xác vì chúng cung cấp các mô tả hợp lệ về chuỗi giá trị, như
đã lưu ý ở trên
Module: 1 > Part: E > Value analysis > Organisation value chains > Page: 33
60. The automobile industry has become increasingly fragmented as the major companies
narrow the scope of their activities to those tasks or functions where they have a competitive
advantage. For example, many automotive companies specialise in the design of new cars and
outsource the manufacture of parts and components used in the assembly of new vehicles.
In designing a vehicle, assume the six major development activities that can be performed by
an automotive maker are as follows:
Development activities
I. Product engineering—designing parts and components
II. Basic engineering—developing the basic technological features of the product
III. Concept generation—conducting market research to identify future market needs, and
combining these needs with the technical possibilities of existing and future technology to
develop a product concept
IV. Pilot run—testing the performance of the manufacturing process prior to entering full-
scale production
V. Product planning—developing the product concept into a product design, including
styling and target costs
VI. Process design—designing manufacturing processes for the new product
Taking a value chain perspective, what is the sequential order in which the six development
activities should be performed by the automotive maker?
A. Activities III, V, II, I, VI and IV
B. Activities V, III, I, II, VI and IV
C. Activities III, II, V, I, VI and IV
D. Activities I, III, V, II, VI and IV
61. Which one of the following is the most likely pairing of an item in the Boston Consulting Group
growth/share matrix and the product life cycle?
A. Star | Growth
B. Dog | Introduction
C. Cash cow | Growth
D. Question mark | Star
MODULE 2
1. There are a range of stakeholders with different information requirements based on the
different decisions that need to be made. Which of the following information requirements
is most closely linked to customers?
A. Working conditions and environmental protection
B. Fair trading standards, covenants and creditworthiness
C. Standards of quality, compliance and income protection
D. Guarantees and warranties, payment terms and customer support
 D is correct because customers need confidence that the product or service they buy is supported by
guarantees or warranties for any issues, problems or mistakes. The payment terms will also allow
for customers to purchase on credit, and customer support determine how the customer will be
treated during and after the sale.
2. Accountants are required to collate data and present information to different stakeholders to
help make effective decisions. Which of the following descriptions is accurate?
A. Information is data that has had a layer of intellectual analysis so that it can be applied to resolve
particular issues
B. Data describes the numbers, images, words that are obtained when we observe or measure
economic events
C. Information combines data and knowledge into meaningful pattern so that it can be interpreted to
understand what has occurred
D. Data can be tacit or explicit and requires the collection of individual pieces of knowledge which
combined together can be described as information
 B is correct as this matches the definition of data given by Hislop (2005).
3. There are four Global Management Accounting principles which have been established based
on the idea that management accounting is at the centre of effective decision-making. Which
of these principles is most closely linked to qualitative characteristics of information?
A. Information is relevant
B. Stewardship builds trust
C. Impact on value is analysed
D. Communication provides insight that is influential
 A is correct because relevance is an important characteristic of useful information.
4. Nike spends over $2.4 billion in marketing each year. Included in this budget is a range of
activities where Nike directly engage their consumers on shoe design as they recognise that
consumers who feel they have input into a product, will show loyalty to the brand.
In which quadrant of the power/interest grid are Nike’s consumers most likely to be placed?
High Interest / Low Power
High Interest / High Power
Low Interest / Low Power
Low Interest / High Power
 A is correct because consumers of Nike's shoes do not have any specific power to impact Nike's
business strategy. However Nike consumers do have a high interest in the product and Nike which is
strengthened by Nike's large marketing spend.
5. OzChild is one of Australia’s oldest foster care agencies, placing children who can no longer live
with their parents into the care of others. They have a small number of employees and larger group
of foster carers, and operate under specific government legislation. Their Board is comprised of
volunteers who are there to provide guidance and governance for their operations. Their customers
are in essence young children who require a safe environment to live in.
Which of the following groups of stakeholders is most likely to have a strong influence on business
strategy for OzChild?
The Board
The children
Government
Foster carers
 A is correct because the Board would have a strong interest in the business strategy set by the CEO and
management, and also the power to direct that strategy.
6.Which of the following stakeholders is most likely to have the least impact on the strategy of a long
haul trucking distribution company?
Customer
Truck drivers
Fuel distributors
Government regulators
C is correct because fuel distributors have a low interest in the company's strategy and also low power to
impact that strategy. The company can easily switch between suppliers.
7. Which of the following is a key challenge of big data?

Being able to build predictive models
Having redundant information
Information that is out of date
It is just too big to handle
 A is correct (page 69). Two key challenges are being able to build predictive models and managing the
data. Redundant information and out of date information are characteristics of a data warehouse.
8. Which of the following is a ‘feedback’ function of an information system?

comparison of actual sales to budget sales
Triggering a reorder of inventory when sales of inventory reach a certain level
Daily transaction report for sales on particular product groups
Analysis of sales to identify seasonal factors that may influence inventory decisions
 B is correct (page 56, Table 2.3). The feedback here is that when inventory levels or sales reach a
certain level then stock will be running low, and this will trigger a 're-order' of inventory.
9. Which of the following systems is most focused on dealing with the creation of customer invoices,
the entering of supplier invoices, making payments and financial reporting?
Customer relationship management system
Management accounting system
Enterprise resource planning system
Transaction processing system
 D is correct (page 56, Figure 2.3). Transaction processing systems produce invoices, payments, audit
trails and financial reporting.
10. Which of the following best describes triangulation?

Obtaining data from multiple sources to get a clearer picture of the area under examination
Forming estimates by using proxy data to get the whole story
Using existing data to create new performance measures
Analysing data to create ratios, averages, index and other variables
 A is correct (page 62, Table 2.6). Triangulation is the use of multiple sources of information to "fill in
the gaps".
11. Which of the following is a major limitation of external information?

It is usually non-financial
The data is often based on extended periods of time
The data may have been collected using different measures and bases
The data may not be reliable
 C is correct (page 64). 3 major limitations of external data is the where non-uniform bases and measures
result in information that is not comparable. The data may also be incomplete or only for a limited period
(not an extended period of time) and the data may have originally been collected for other purposes, so it is
not tailored to the issues being reviewed.
12. How is a data warehouse different from a traditional database?

Traditional databases have redundant information while a data warehouse is always up to date
Data warehouse information is not updated whereas traditional databases are constantly updated
Data warehouses only contains structured data but big data has both structured and unstructured data
Data warehouses are the foundation of building predictive models
 B is correct (page 69). Data warehouse information is designed to aggregate data over time, so it is not
updated, but new data is always being added.
13. Which of the following best describes which function of an information system is most closely
linked to source documents such as contracts, invoices and purchase orders?
Input
Processing
Feedback
Control
A is correct (page 56, Table 2.3). Input provides data into the system which will come from source
documents such as invoices, receipts and purchase orders.
14. For organisations that are voluntarily providing CSR and Integrated reporting with their
Financial Statements, how might a Management Accountant assist in this process?
Preparation of Financial Statements would be performed exclusively by Financial Accountants - a
Management Accountant would not be involved in this task.
Management Accountants are best placed to provide commentary on the Financial Statements, and they
would typically prepare the detailed notes to the financial statements.
Management Accountants would work alongside Financial Accountants to ensure that budget variances
are understood and can be explained to relevant stakeholders.
Management Accountants would be best placed to contribute to non-financial reporting on areas
relating to environmental and social matters.
 D is correct because Management Accountants are typically more familiar with non-financial
information than Financial Accountants. So they are well placed to classify and report on business
activities from a social and environmental perspective, not just financial.
15. Harry is working on a project that seeks to provide detailed analysis and reporting on employees
of the sales team. William has recently joined the company as a junior sales executive, and is
concerned about the additional scrutiny that will be applied to his performance.
Using Mendelow’s Stakeholder Grid, how would you classify Willam?

Low Power / Low Interest
Low Power / High Interest
High Power / Low Interest
High Power / High Interest
 B is correct because William will be impacted by the project, so his interest would be considered 'high'.
However as he is a relatively junior employee, he would not hold much power in the organisation, so his
power level would be 'low'.
16. Which type of information system aims to capture an organisation’s internal transactional,
accounting, customer, supplier and other forms of data into a single standalone system?
Decision Support System (DSS)
Management Accounting System (MAS)
Enterprise Resource Planning System (ERP)
Customer Relationship Management System (CRM)
 C is correct because an ERP is a single system that captures data relating to a wide range of business
activities, such as inventory, accounting, customers, suppliers, and production planning.
17. GrowIt! is a wholesale nursery that produces vegetable seedlings and sells them to nurseries.
They are keen to capture more detail and better understand their sales numbers.
Which of the following types of data would allow them to ‘drill down’ into their sales totals at a more
granular level?
Customer order history
Remaining inventory levels
Days taken until settlement
The type and quantity of vegetable sold
 D is correct because being able to drill down into product level sales would be useful information for
management to know, and as all sales will relate to a product, it is achievable.
18. Which of the following statements regarding the source of information is correct?
Management accountants should consider the limitations of any financial and non-financial information
that they source and use in their reporting.
Primary sources of information are always preferable to secondary sources as they are gathered within
the organisation and the validity is therefore guaranteed.
Validity is a measure of reliability, and it relates to how much reliance can be placed on the information
in question.
Information sourced from a credible government agency will typically have a high degree of accuracy
and will therefore be relevant for management accounting purposes.
 A is correct because all information can have limitations, so this needs to be considered by the
management accountant.
19. SellYRGoods Pty Ltd (SellYRGoods) is a merchandising organisation that sells on credit. The
regional managers have asked Brenda Thomson, the management accountant at SellYRGoods, to
provide them with detailed financial information about customer sales.
Which of the following would be most useful for Brenda to provide to the managers?
Inventory turnover by line item
Revenue for each product and product group by customer.
Budgeted sales by day, week, fortnight and month for each customer.
Productivity of sales employees calculated as total revenue divided by number of employees
 B is correct because it will be most useful to have the actual revenue numbers but not just the total
amount. Presenting the revenue based on each product and product group by customer gives you
information about both the total amount that each customer has purchased and also the actual products they
purchased, which gives insight into what products are performing well. This also meets the requirement of
being 'financial information'. Revenue is stated in the statement of profit or loss (P&L).
20. Adriana Silva is the management accountant at MakeGoodsCo, a manufacturing organisation

that produces products to customer specifications with strict completion dates.
Which of the following is the most useful non-financial information that Adriana could provide to
MakeGoodsCo’s production manager?
Expenses analysed into selling, general and administrative costs.
Unit cost of each product (product line) produced during the period.
Customer satisfaction with the quality of the manufactured product.
Profitability of each product line measured using cost of goods sold (COGS).
 C is correct because customer satisfaction is unambiguously non-financial and provides feedback to
MakeGoodsCo on whether its products are valued by customers.
21. Catering & Hampers Pty Ltd (C&H) sells gourmet hampers and also provides catering for up-
market picnic events. C&H currently has a strategy aimed at improving customer satisfaction.
Changming Liu, the management accountant at C&H, wants to provide the managers with
information that gives a broad view in all three dimensions (domain, type and source) to help them
make decisions to implement a new strategy.
Which of the following should Changming provide?
Internal information on customer food preferences based on purchase orders.
External socioeconomic and demographic information from a recent census.
Internal information from transactions in a period from source documents such as customer orders.
External information from customer surveys outlining preferences, loyalty and willingness to purchase
products and services.
 D is correct because detailed information is required to support the strategy and customers can be the
most important source of this information.
22. Dalmeet Singh, the management accountant at ExampleCo, wants to provide information about
expenses to Brian Kelly, the sales manager, who wants information that meets his needs of
comparability, verifiability, timeliness and understandability.
Which of the following is most likely to meet these four information needs?
Information that allows the last period to be compared with the corresponding previous period using the
ratio of costs as a percentage of sales three days into the next period.
Information from the previous quarter that has been certified by the internal auditor, together with
results supplied by the industry association for the entire market.
A list of expenses based on the previous month with variances that can be measured against expenses in
some earlier quarters.
The figures for expenses discounted by 20 per cent to match the corresponding period last year—
because last year there was a power outage so production was stopped for five of the normal 20 days’
manufacturing for the month.
 A is correct because it fulfils Brian's needs of:
• comparability—last period compared with prior period
• verifiability—checking from cost of goods sold and sales accounts
• timeliness—in three days
• understandability—use of percentages that are understandable.
22. NichePrams Pty Ltd (NichePrams) is a non-listed company based in Sydney that manufactures
high-quality baby prams and accessories. NichePrams is planning to open a new manufacturing
plant in a country town and is considering borrowing the funds for the venture. NichePrams believes
the town is attractive because it has a suitable pool of unskilled workers (due to a high
unemployment rate) and opening the factory would boost employment in the town.
Which of the following actions would fall in the high-power and high-interest quadrant of the
stakeholder grid and thus guide NichePrams’s management on whom to attend to when providing
information about the proposed factory?
Confirming the unemployed people in the town are seeking work and the new factory will have no
detrimental effects on the environment.
Reassuring current employees that their jobs are secure and there is no intention of closing the factory
in Sydney
Ensuring that the lender has full information about the town.
Conducting a public meeting to give early notice about the proposed factory to ensure community
support for the development.
C is correct based on Figure 2.2 (page 104) which shows the stakeholder grid. The lender will have high-
power because without the lender the project cannot go ahead. The lender will also have high-interest
because if anything goes wrong it will lose a significant amount of money.
23. If you are advised to show consideration to a particular group of stakeholders they are most
likely to have which of the following?
High power and High interest in your activities\
Low power and Low interest in your activities
High power but Low interest in your activities
Low power and High interest in your activities
 D is correct (page 50, Figure 2.2). The stakeholder grid suggests that those with lower power but high
interest should be kept informed and you should show consideration to those stakeholders.
24. Which of the following defines a data custodian?

Someone who is responsible for the information content, context and application of business rules
Someone who is responsible for authorised access and acceptable integrity of the stored data
Someone who focuses on the governance requirements of storing data
Someone who focuses on effectively using data to automate business processes
Module: 2 > Part: C > Roles of the management accountant > Custodian of information > Page: 79
25. Senior management have requested information about a competitors latest product offering, and
have asked for a recommendation if the organisation should launch something similar.
How would you classify the requested information?

Strategic Tactical Operational Financial
 A is correct because there are several things that indicate this information is strategic in nature. Firstly,
new product development is forward looking. It is looking at future opportunities rather than day-to-day
information about the business in it's current format. Also, information for senior management is often (but
not always) in relation to strategic matters.
26. What is the performance management approach in relation to strategy implementation?

The downward flow of financial budgets through to lower level organisational units.
The upward flow of transactional data through the management accounting system.
Measuring the achievement of strategic priorities using non-financial information, such as efficiency
measures.
Measuring the achievement of strategic priorities using financial information, such as sales and
expenditure analysis.
C is correct because the performance measurement approach is the consideration of non-financial
measures, such as operational performance and efficiency.
27. What is the purpose of a preliminary assessment in the context of upgrading or replacing a
management accounting system?
To assess the information requirements of current stakeholders.
To determine the adequacy of the current system and processes for current stakeholders.
To map features of the existing system to the proposed replacement.
To understand what information stakeholders are currently receiving, and highlight any information
that is unused.
B is correct because the preliminary assessment seeks to understand the current information needs and
processes of the business. It will consider what works well, what doesn't work well, and what
improvements can be made.
28. Meg is the management accountant for a small magazine publisher. The organisation is
considering the implementation of an ERP, replacing multiple systems and spreadsheets that have
been used for management reporting purposes.
When evaluating the project, what intangible benefits might be real, but difficult for Meg to
quantify?
Reduced staff turnover
Less refunds for dissatisfied customers
A higher retention rate of magazine subscribers
Improved stakeholder relationships between Finance staff and senior management
D is correct because staff turnover, refund levels and subscription retention rates are all items that can be
measured quite easily.
29. Amazon captures information on every transaction such as customer, purchase time, and
products purchased.
What type of information is this classified as?
Tactical Information
Strategic Information
Operational Information
Organisational Information
C is correct because operational information is produced from the day-to-day activities of the business,
including sales transactions.
30. WeBuildOffices Pty Ltd (WeBuildOffices) is a construction organisation that undertakes projects
that take an average of 18 to 30 months to complete. Riccardo Mancini, the management accountant
at WeBuildOffices, has been asked to recommend a suitable enterprise resource planning (ERP)
system.
Which of the following shows the first steps that Riccardo should take to inform his
recommendation?
Assess the adequacy of the current systems, the needs of stakeholders and whether any foreseeable
changes to the business will require a different software package.
Establish what functions the ERP software can perform, the cost of purchase and installation, and
which is the cheapest available software package the business can afford.
Ask managers whether the capture of real-time information will provide them with too much
information and whether the organisation should consider business intelligence or data warehouse software
instead.
Recommend to senior managers and the board that they consider engaging a consultant who has
expertise in ERP who will be able to obtain savings that offset the costs.
A is correct because it begins by assessing the current state of the systems, which includes how well they
are providing information and whether the way they share information is adequate.
31. EverydayProducts Pty Ltd (EverydayProducts) is owned by shareholders and is publicly listed on
the stock exchange. Senior managers at EverydayProducts complain to Sarah Jones, the
management accountant, that the reports they receive do not help them to make decisions in the best
interests of the organisation.
Which of the following would be the best course of action for Sarah to improve the reports for senior
management?
Conduct individual interviews with managers who say they receive too little information for their
operational, tactical and strategic decisions.
Create a survey to find out what information for managers’ operational, tactical and strategic decisions
is unnecessary or excessive.
Meet with managers to discuss the critical success factors (CSFs) associated with their role and
responsibilities and validate these through discussion with subordinates.
Observe managers making decisions to discover the information flows and use made of the
information.
C is correct because in the ideal world the information used by managers in making their decisions can
be discovered by investigating what CSFs have been defined for their specific role and responsibilities.
32. Online Mall Pty Ltd (Online Mall) is preparing to set up a virtual department store. It will offer
customers a discount when buying online. It is proposing to modify its existing bricks-and-mortar
store system by adding an online web browser interface. Details of all transactions will be
transferred to its accounting information system (AIS) to produce profit reports.
Which of the following alternative recommendations is most appropriate for Online Mall’s
management accountant to forward to management?
Obtain legal advice on asking customers for personal information, to ensure that Online Mall’s AIS
records contain personal information that is correct.
Submit a budget for the new hardware, software and communications technologies for the new systems.
Create a prototype that uses low-cost data capture analysis, using macros in a spreadsheet program to
obtain simple profiles of product sales and customer buying preferences that go beyond inventory
management
Investigate the information needs of key stakeholders. This investigation forms part of the Initiation
and proposal Feasibility Analysis based on the likelihood that the technology to do the data capture will be
outsourced, which would be a new strategy for Online Mall.
D is correct because the type of information system proposed is quite new to Online Mall, and therefore
investigating information needs by stakeholder will be a more manageable project.
MODULE 3
1. Which type of budget would capture detailed forecasts for sales in the coming 12 month period?
Master budget
Rolling budget
Financial budget
Operating budget
D is correct as the operating budget is where the sales forecast would initially be captured. The sales
forecasts would roll up into the Financial budget, which is a set of budgeted financial statements for the
period in question. The Master budget is a comprehensive forecast made up of both the Financial and
Operating budgets. A rolling budget is not a separate type of budget - it refers to the frequency of
preparation and updating.
2. Roosli & Kaduthanam (2018) describe a budget as ‘a financial plan and a financial target at the
same time’. What does this mean?
Budgets are the same as targets
Budgets are driven by KPI's and are prepared independent of strategy
Budgets need to be achievable or they can have a negative impact on morale within the organisation.
Budgets are used to allocate scarce resources within an organisation, and are a tool to evaluate if the
resources have been used efficiently
D is correct because this describes the role of budgets, and they are one tool (but not the only one) to
measure performance against.
3. What type of responsibility centre would a HR director be in charge of?

Cost Centre Profit Centre Revenue Centre Investment Centre
A is correct because the HR department will be responsible for managing employees - they do not
generate any revenue or profit, nor do they control any assets (as an investment centre would).
4.Big Vans Pty Ltd imports caravans from America and sells them in Australia and New Zealand.
When estimating the number of caravan sales for the upcoming period, which of the following
factors would influence the forecasting process:
I) open leads in the organisation’s CRM.
II) revenue recognition changes in accounting standards
III) actions of a direct competitor
IV) previous year sales
I and IV only II and III only I, III and IV only I, II, III and IV
C is correct because it is unlikely that changes to accounting treatment would influence the purchasing
behaviour of the organisations customers and so II is not a valid statement. It might influence how they are
presented in the financial statements, but for the purpose of forecasting raw caravan sales numbers, this
would be insignificant. All other items listed would strongly influence the forecasts for the budgeted
period.
5. The CEO of an online retail business has said that cash budgets are irrelevant because all
customer purchases are paid up front. Therefore the sales budget is adequate for planning purposes.
Is she correct?
Yes, because there will be no timing difference between the sale and the collection of cash. No,
because the cash budget will also identify other cash inflows and outflows, and is therefore useful as a
planning tool.
Yes, so long as the company maintains other controls over it's cash, such as and approval process for
payments and regular reconciliations.
No, because cash budgets can help detect errors and fraudulent transactions through the organisations
bank accounts.
B is correct because there is still a benefit from preparing a cash budget. Organisations have multiple
inflows and outflows, not just sales. So understanding the timings of these will allow the organisation to
plan their cash management in terms of borrowing funds, or investing excess funds when they are
available.
6. ACC Accounting (ACC) has five professional staff, with a budgeted chargeable hour capacity level
of 240 hours each per month. ACC charges all accountants out to clients at an equal rate of $200 per
hour.
The actual chargeable hours for last year were 200 hours per accountant per month at an actual cost
of $125 per hour each.
ACC expects an increase of 5 per cent in the actual chargeable rate and an increase of 20 per cent in
the actual chargeable hours.
What is ACC’s revenue budget for the next month?

$157,500 $189,000 $240,000 $252,000
D is correct because the revenue budget for next month is $252,000.
There are 3 steps. 1. Calculate the new actual charge rate ($210). 2. Calculate the estimated billable hours
per staff member (240 hours). 3. Multiply this by 5 staff. $210 x 240 hours x 5 staff = $252,000
Step 1: The current actual charge rate is $200 per hour. There is a 5% increase expected in actual
chargeable rate. • $200 x 5% = $10. So, $200 + $10 = $210. • ($200 x 1.05 = $210)
Step 2: Actual chargeable hours for last year were 200 hours per accountant per month. There is a 20%
increase expected in actual chargeable hours. • 200 hours x 20% = 40 hours. So, 200 + 40 = 240 hours per
month per staff member. • (200 x 1.20 = 240)
Step 3: New chargeable rate is $210 per hour x 240 hours per month of chargeable hours. There are 5 staff.
• $210 x 240 hours = $50,400 per staff member • 5 staff x $50,400 = $252,000 • ($200 x 1.05) x (1.2 x 5 x
200) = $252,000
An alternative approach is to calculate the total hours per month: • 5 staff x 240 hours each = 1,200 hours
per month. • 1,200 hours x $210 chargeable rate = $252,000.
Note that the actual cost was $125 per hour is not relevant because we are focusing on the revenue budget,
not the expenses budget.
7. Kantaki Ltd (Kantaki) has a policy to have finished goods inventory of 20 per cent of the next
month’s sales at the end of any month.
Kantaki presents the following information:
April May June

Sales in
18,000 20,000 22,000
units
Which of the following is the budgeted number of units that will have to be produced during May?
19,100 19,600 20,400 20,900
 C is correct because production during May is based on: 1. Total sales in May: 20,000 2. Adjustment for
opening inventory (20% of May sales of 20,000 = 4,000 units) 3. Adjustment for closing inventory needed
on 31 May for June sales (20% of June sales of 22,000 = 4,400 units)
Calculation: 20,000 units to produce for the estimated sales of 20,000 in May – 4,000 units of opening
inventory already available + 4,400 units required for closing finished goods 31 May = 20,400 units to
produce in May.
8. Jamala Ltd (Jamala) has developed a new product. The strategic plan is to dominate the market
within the next two years, which will require Jamala to expand its operations and purchase another
factory. For the next year, Jamala wants to trial the product.
The sales manager believes Jamala can sell 1,000 units per month at $100 each. However, the
production manager pointed out that the current factory only has spare capacity to manufacture 900
units per month.
The budgeted cost to manufacture each unit is $80.
Under these circumstances, which of the following figures should the sales manager use to prepare
the sales revenue budget for the upcoming year?
$864,000 $960,000 $1,080,000 $1,200,000
C is correct based on the following calculation: 900 units per month × 12 months × selling prices of
$100 per unit.
Forecast units: The most reliable estimate is 900 units per month as the factory only has spare capacity of
900 even if the sales manager is correct and 1,000 units could be sold.
Forecast sales price: $100 is the most reliable forecast price.
9. Which of the following is correct regarding planning?

Operational planning focuses on long-term planning and contains both long-term and short-term
objectives.
Operational planning focuses on short-term planning and contains both long-term and short-term
objectives.
Strategic planning focuses on long-term planning and contains long-term objectives.
Strategic planning focuses on long-term planning and contains both long-term and short-term
objectives.
D is correct because an organisation’s strategy consists of both long-term and short-term plans and
objectives.
10. Which one of the following statements best describes how an organisation’s strategic plan is
related to operational plans, budgets and forecasts?
After the strategic plan is developed, organisations focus on long-term decisions that determine the
future activities for the chosen course of action.
Budgets define how the organisation will achieve its annual goals, are coordinated with the strategic
plan, and are linked long-term goals.
Forecasts in the strategic plan are set out in detail, while estimates in the operational plan are much
broader in scope.
The management accountant adds value to an organisation’s budgeting process by analysing and
including financial information.
B is correct as it describes the relationship between an organisation’s strategic plan and operational
plans, budgets and forecasts
11. Food Ltd make icecream. It makes large (20kg) catering sized tubs of ice-cream that it sells to
restaurants and ice-cream parlours.
The following data is available in relation to direct materials for the month of May:
Budgeted price per for 10 litre milk carton $12.00
Actual price for 10 litre milk carton $11.00
5,900
Quantity purchased and used
cartons
6,000
Budgeted quantity allowed for actual output
cartons
Actual output of ice-cream tubs for sale 1,000 units
What is budgeted quantity of direct materials per unit for Food Ltd?
5.9 cartons 6.0 cartons 6.2 cartons 6.5 cartons 7.0 cartons
 B is correct based on the following calculations:
Actual output of 1,000 tubs requires a budgeted quantity of 6,000 cartons.
6,000 cartons / 1,000 tubs = 6 cartons per tub.
5,900
cartons
6,000
cartons
What is the direct material efficiency variance for Food Ltd?

$1,200 Favourable
$1,200 Unfavourable
$2,600 Favourable
$3,800 Unfavourable
$6,200 Favourable
 A is correct because the Budgeted quantity is 6000 but only 5,900 cartons were used. So 6000 - 5,900 =
100 cartons variance.
100 cartons x $12 budgeted price = $1,200 Favourable.
The amount used was less than the budgeted amount so this is a favourable variance as it shows the
company was more efficient.
We can use the formula (AQ x BP) - (BQ allowed for AQ x BP)
AQ: 5,900
BP: $12
BQ allowed for actual quantity: 6,000
(5,900 x $12) - (6,000 x $12)
5,900
cartons
6,000
cartons
What is the direct material price variance for Food Ltd?

$5,900 Favourable
$5,900 Unfavourable
$6,000 Favourable
$6,000 Unfavourable
$6,200 Favourable
A is correct because the price variance is $1 per carton ($12 budgeted price - $11 actual price). Actual
quantity purchased and used is 5,900 cartons, so total price variance is 5,900 x $1 = $5,900 favourable.
It is favourable because the price paid is lower than the budgeted price.
The formula is (AQ x AP) - (AQ x BP)
(5,900 x $11) - (5,900 x $12)

$64,900 - $70,800 = $5,900 Favourable
14. Which of the following will measure a price variance?

AQ x (AP - BP)
BP x (AQ - BQ)
BQ x (AP - BP)
AQ x (AQ - BQ)
(AQ x BP) - (BQ allowed for AQ x BP)
15. Which of the following will measure an efficiency variance?

AQ x (AP - BP)
BQ x (AP - BP)
AQ x (AQ - BQ)
(AQ - BQ) - (BQ x BP)
(AQ x BP) - (BQ allowed for AQ x BP)
16. Which of the following factors would cause an unfavourable direct labour price variance?
Using higher quality materials
Using low-efficiency workers
Using more unskilled workers
Using more highly skilled workers
Using poorly maintained machinery
D is correct because highly skilled workers are more likely to be paid more per hour than unskilled
workers or those who have low efficiency.
Although a higher price may be paid it would be expected that there would be a favourable efficiency
variance because of the higher skill level (and less mistakes / waste / rework).
The quality of materials and poorly maintained machinery are not directly relevant here.
17. Which of the following would be the most likely cause of an unfavourable material efficiency
variance?
Using poorly maintained equipment
Using higher quality materials
Using more highly skilled workers
Receiving discounts for purchasing in bulk
Failing to place orders for materials on time
 A is correct because using poorly maintained equipment is likely to lead to mistakes, rework and delays.
This will reduce the efficiency because more raw material will be required to produce the units.
18. If the actual labour price is greater than the budgeted labour price and the actual labour hours
worked are greater than the number of hours that were budgeted for, then which of the following
accurately describes the:
I Direct labour price variance
II Direct labour efficiency variance
I: Favourable II: Favourable
I: Favourable II: Unfavourable
I: Unfavourable II: Favourable
I: Unfavourable II: Unfavourable
 D is correct as the price per hour was higher than budgeted and so was the total hours required to
perform the work. These are both going to be unfavourable for the organisation as they will pay more
money per hour worked, and pay more money because more hours were worked than originally planned.
19. During January the total actual direct labour hours worked was 20,000. The budgeted cost was
$5 per hour. If the direct labour price variance for January was $4,000 Unfavourable, which of the
following is the actual cost per direct labour hour?
$4.60 $4.80 $5.00 $5.20
D is correct based on the following calculations.
The actual hours worked x budgeted cost is 20,000 x $5 = $100,000.
We know that this was unfavourable by $4,000 from the case facts so it means the actual cost based on the
20,000 hours was $104,000.
Calculation: $100,000 + $4,000 = $104,000.
Actual cost of $104,000 / 20,000 hours of work = $5.20 per hour.
20. “During April a company produces 80,000 units. The budgeted quantity of raw material allowed
per unit was 2 kilograms and the budgeted cost was $5 per kilogram.
If there was a favourable efficiency variance of $40,000 for April then which of the following is the
actual quantity of materials used?
76,000 kilograms
84,000 kilograms
152,000 kilograms
168,000 kilograms
C is correct based on the following calculations.
80,000 units produced x 2 kilograms per unit is 160,000 kilograms.
160,000 kg x $5 = $800,000.
The variance was favourable, so this means $800,000 - $40,000 = $760,000 was the amount paid.
$760,000 / $5 = 152,000 kilograms were purchased.
21. In management accounting we prefer to use a flexible budget instead of a static budget.
Which one of the following describes a Flexible Budget?

A budget that gets updated monthly based on a detailed variance analysis.
A budget that reflects the sensitivities of each element, given a different level of activity.
Different versions of the Master Budget, prepared where stakeholders cannot agree on a single version.
An alternative to regular budgets, where all elements from the prior year actuals are adjusted by a
statistical factor.
B is correct because flexible budgets will consider multiple scenarios, such as a best case, worst case,
expected case. And then they model that scenario across each budget in the master budget to determine the
impact across the organisation.
22. Big Vans Pty Ltd imports caravans from America and sells them in Australia and New Zealand.
Their budgeted and actual figures are below: – Quantity sold 350 (budgeted 300) – Selling Price
$25,000 AUD (budgeted $28,000 AUD) What is the selling price variance?
$150,000 Favourable
$150,000 Unfavourable
$1,050,000 Favourable
$1,050,000 Unfavourable
D is correct because The formula for the selling price variance is:
(Actual selling price - budgeted selling price) x actual units sold
($25,000 - $28,000) x 350 = $-1,050,000
This is unfavourable because the selling price is $3,000 less per unit.
In summary, the selling price difference per unit is $3,000 and this multiplied by the 350 units sold is the
$1.05m price variance.
23. In a manufacturing organisation, who would typically be held responsible for an unfavourable
efficiency variance?
Production manager
Purchasing manager
Procurement manager
Sales & Marketing manager
A is correct because the production manager is going to be linked to the efficiency of operations in terms
of units produced in the time frame. Efficiency here will be based on having well trained staff operating
machines quickly and effectively. If there are delays, the production manager should work to minimise
these and prevent them.
24.Fraise Ltd (Fraise) presents the following variance analyses:

Actual results Flexed budget Flexible budget Static budget
Direct material $65,000 $78,000 $84,000 $80,000
Which of the following variances will justify a bonus being paid to Fraise’s production manager?
$6,000 favourable direct material efficiency variance
$13,000 favourable direct material price variance
$15,000 favourable flexible budget variance
$19,000 favourable flexible budget variance
A is correct because the efficiency variance is under the control of the production manager and it is
favourable ($84,000 – $78,000).
25. Modena Ltd (Modena) presents the following information:

Budget Actual results
Direct material cost $120 per kg $110 per kg
Direct material usage 7 kg per unit 6.5 kg per unit
Direct labour rate $43 per hour $45 per hour
Direct labour hours 200 hours 220 hours
As management accountant for Modena, you are required to make a recommendation about whether
the production manager is entitled to a bonus that is linked to their performance.
Which of the following indicates that the production manager of Modena has managed the
production department well?
The actual direct material cost being lower than the budgeted cost per kilogram.
The actual direct labour rate being higher than the budgeted rate.
The actual direct material used being lower than the budgeted forecast.
The actual direct labour hours exceeding the budgeted hours.
C is correct because less direct materials than planned occurred (6.5kg actual compared to 7kg budget),
which is a favourable variance and indicates efficiency in an area where the production manager has
oversight.
26. During the year, SpecialCo Pty Ltd (SpecialCo) produced 10,000 units, used 20,000 direct labour
hours and incurred variable overhead of $90,000.
Budgeted variable overhead for the year was $88,000. The hours allowed per unit are 2.1.
The budgeted variable overhead rate is $4.00 per direct labour hour.
Which of the following is the variable overhead spending variance?

$2,000 unfavourable
$6,000 unfavourable
$10,000 unfavourable
$4,000 favourable
C is correct based on the formula for the variable overhead spending variance (AQ x AP) – (AQ x BP)
AQ x AP of $90,000 – AQ x BP of $80,000 = $10,000 unfavourable variance. This is calculated as
follows:
Step 1: (Actual Quantity x Actual Price) Instead of using the formula AQ x AP to calculate the actual
variable manufacturing costs, this amount is given as $90,000 in the case facts. Although it is not necessary
from this question we can work out AP as we know the AQ is 20,000 direct labour hours we can determine
the AP is $4.50 [90,000 / 20,000] (AQ 20,000 x AP $4.50 = $90,000).
Step 2: (Actual Quantity x Budgeted Price) AQ is 20,000 direct labour hours and BP is the budgeted
variable overhead rate of $4.00 per direct labour hour.
AQ x BP = 20,000 hours x $4.00 per DLH = $80,000.
Step 3: (AQ x AP) – (AQ x BP) vAQ x AP of $90,000 – AQ x BP of $80,000 = $10,000 unfavourable
variance.
Alternatively you can calculate the answer based on (AP – BP) x AQ:
AP of $4.50 – BP of $4.00 = $0.50 per DLH unfavourable variance.
$0.50 x 20,000 DLH = $10,000 unfavourable variance3.
The $88,000 budgeted variable overhead and the 2.1 hours allowed per unit are irrelevant.
27. Which of the following might cause dysfunctional behaviour in an organisation in regard to their
budget setting process?
Rewarding those staff who provide accurate budget estimates.
Clear alignment of budgets with the organisations strategic goals.
Consulting lower level staff and management in the budget setting process.
Linking financial incentives exclusively to the achievement of budgeted results.
D is correct because linking incentives purely to financial budgets can create poor behaviour, such as
padding budgets, power struggles within the organisation and blame shifting between departments when
targets are not met.
28. The CEO of your organisation thinks that budgets are unnecessary and wants to make the
process as quick as possible. They have instructed you to just take last years actual results, and
adjust all components by 5%. Which of the following best describes this approach?
Incremental budgeting
Zero Based budgeting
Actuals Based budgeting
Activity Based Budgeting
A is correct because setting the budget based on results from the prior year is a form of incremental
budgeting.
29. LuxuryCo Pty Ltd (LuxuryCo) sells luxury gift hampers. It previously budgeted to sell 50,000
units at $100 each in a regional area. The actual sales for that period for the region were 60,000 units
at $110 each.
Following extensive research and development, LuxuryCo now only manufactures and sells a new
and improved product at the same price as the previous product.
However, there has been an economic slowdown, and the regional sales representative anticipates
there will be a 10 per cent decrease in both the actual sales quantity and the selling price per unit.
In another development, due to LuxuryCo’s success, a major competitor has entered the market and
plans to sell a similar product at $120 each.
Which of the following is the most achievable and realistic sales revenue forecast?
$5,000,000 $5,346,000 $6,600,000 $7,200,000
B is correct ($5.346m) because the regional sales representative with first-hand knowledge about the
region expects a 10 per cent decrease in both actual sales volume and selling price per unit.
Sales unit forecast: Last year: 60,000 units x 10% = 6,000 unit reduction
• Forecast: 60,000 units – 6,000 reduction = 54,000 units. [60,000 units × 0.9]
Sales price forecast: Last year price: $110 x 10% = $11 reduction
• Forecast: $110 – $11 reduction = $99 per unit. [$110 × 0.9]
Sales revenue forecast: 54,000 units × $99 = $5,346,000
30. Bob is the manager of a profit centre for BudgetCo Pty Ltd (BudgetCo), and he has received a
poor performance evaluation for not meeting the 2019 budget.
BudgetCo plans to continue business as usual and therefore did not make any changes to its strategic
and operational plans. There were also no changes in the market conditions.
Bob provided the following budget for 2020:

2020 ($,000) 2019 ($,000)
Budget Actual
Revenue $26,000 $28,000
Variable costs $17,000 $15,000
Fixed costs $8,000 $8,000
Operating
$1,000 $5,000
profit
Which of the following best explains the decrease in the budgeted operating profit for 2020
compared with 2019?
The 2020 budget is padded in an effort to predict uncertainties and unforeseen and unanticipated
events.
Top management padded the 2020 budget to help Bob to achieve the budget.
The 2020 budget shows budgetary slack because Bob deliberately underestimated revenue and costs.
The 2020 budget shows budgetary slack as Bob deliberately underestimated revenue and overestimated
variable costs.
D is correct because the market conditions are not expected to change and the business is not making
strategic or operational changes either. So, it would be expected that at least a similar performance should
occur, not a decline in $4 million. Budgetary slack is a deliberate action of underestimating revenue and
overestimating costs, and both of these are demonstrated in this budget.
31. The Beyond Budgeting (BB) approach is based on empowering employees and managing
organisations without budgets. This is achieved by using which of the following systems?
Centralised decision-making, with minimal input from decentralised functions, that eliminates annual
budgets.
Centralised decision-making, with minimal input from decentralised functions, that eliminates budgets.
Decentralised decision-making, with minimal input from centralised functions, that eliminates annual
budgets.
Decentralised decision-making, with minimal input from centralised functions, that eliminates budgets.
C is correct because BB is managing without budgets using decentralised decision-making, and it
eliminates annual budgets but not budgets entirely.
32. Although Better Office Products had a successful financial year in 20X9, senior management was
concerned about staff exhibiting negative behaviour throughout the year. When a meeting that
included all staff was convened, staff members revealed that they were dissatisfied with having little
or no involvement with the budget process, especially considering that the budget affects everyone in
the company.
Which of the following changes to the budget process is most likely to reduce this negative behaviour
for the next financial year?
Give everybody in the organisation a reward for achieving budget goals
Top management sets challenging targets, which it feels are achievable
Provide regular feedback to managers on their performance
Reward good performance with salary increases, bonuses and promotions
C is correct. Targets and budgets are more likely to be achieved if managers receive regular feedback and if
the achievement of targets is accompanied by monetary and non- monetary rewards of value.
33. A company has decided to use the top-down approach to budgeting. Which of the following is a
correct statement about this approach?
Middle and junior managers are committed to achieve the budgets
Senior managers have more knowledge of the firm’s business environment than managers who work
directly in their responsibility centres
The top-down approach encourages coordination and communication among managers since they have
control in setting budgets
Top management sets high targets to encourage improved performance, but this may discourage lower-
level managers
D is correct because it is actually a disadvantage of the top-down approach.
34. Which one of the following is the most significant drawback of the top-down approach to
budgeting?
Although it is less time consuming, it is not cost-effective.
Lower-level managers may pad their budgets.
Budget targets can be set at challenging levels.
Senior managers may lack an in-depth understanding at an operational level.
D is correct because senior managers may have little to no experience at the operational level.
35. BudCo. Pty Ltd (BudCo.) has introduced a bottom-up approach to the development of budgets.
Lower-level managers are required to submit budgets for their departments and these budgets are
combined to form BudCo.’s operational budget. The overall budget is then submitted to the budget
committee for revision and approval.
Which one of the following is a likely negative consequence of BudCo.’s budgeting approach?
Budgetary goals may become the managers’ personal goals.
If the budget committee revisions are significant, managers may pad their budgets in future.
Lower-level managers will underestimate their costs or overestimate their revenues to ensure budget
achievement.
BudCo.’s budget will be unrealistic as lower-level managers lack understanding of the organisation’s
processes.
B is correct because managers will anticipate cuts to their budgets and likely pad them to guard against
resource shortages. Also, they may anticipate increased revenue targets and under budget to ensure bonus
sales targets are achievable.
36. Which one of the following practices should an organisation adopt when applying the Beyond
Budgeting (BB) approach?
Treat rolling forecasts the same as rolling budgets
Attach financial compensation to each business unit’s performance
Adopt measures that encourage managers to feel responsible for organisation-wide performance
Apply more centralised management control and leadership to ensure organisation-wide focus on
performance goals
C is correct. The BB approach encourages manager responsibility for performance of the whole
organisation and discourages internal rivalry among business units.
TỔNG HỢP M1-M3
1. Which one of the following is more closely linked to traditional management accounting?
Life cycle analysis
Value chain analysis
Job costing and process costing
Product costing and activity-based costing
 C is correct. Refer to Table 1.2.
2. Which one of the following is most likely to cause a favourable efficiency variance?
More skillful workers than budgeted.
Negotiating lower wages with employees.
Lower quality raw materials than budgeted.
Effective negotiations with suppliers reducing input prices.
A is correct. Refer to Figure 3.7.
3. Which one of the following describes the three types of decisions made within an organisation?
Strategic | Tactical | Informational
Strategic | Tactical | Operational
Strategic | Analytical | Operational
Strategic | Informational | Operational
B is correct. Refer to Figure 2.7.
4. Which one of the following causes of change relates to the global economy?
Virtual offices
Joint ventures
Economic turmoil
Outsourcing / offshoring
C is correct. Refer to Figure 1.6.
5. Which one of the following responsibility centres has the greatest level of responsibility?
Cost
Profit
Revenue
Investment
D is correct. Revenue centres only have revenue, cost centres only have costs or expenses. Profit centres
have revenue and expenses. Investment centres have revenue, expenses and assets.
6. According to the stakeholder grid, which one which of the following stakeholders would you keep
informed?
High power | Low interest
High power | High interest
Low power | Low interest
Low power | High interest
D is correct. Refer to Figure 2.2.
7. Which one of the following is an example of a responsibility centre?

Investment centres
Innovation centres
Employee centres
Management centres
 A is correct. Refer to Figure 1.7.
8. Which one of the following describes triangulating as an approach to aggregation of data?

Combining existing information
Using multiple sources of information
Preparing high-level summary measures
Presenting different types of information together
9. Which one of the following describes the time period involved for strategic planning?
0 - 1 year
1 - 2 years
2 - 5 years
At least 5 years
D is correct. Refer to Table 3.1.
10. Which one of the following describes a data steward?

A data steward is responsible for the information content, context and application of business rules.
A data steward is the same as a data custodian and therefore is responsible for everything data related.
A data steward is responsible for the authorised access and acceptable integrity of the stored data,
including its transport or communication.
A data steward is the way information is organised in the various information systems according to
accessibility and usefulness.
11. Which one of the following is not a key challenge facing management accountants?
Managing resources
Promoting innovation
Using technology effectively
Benchmarking of operational processes
12. Which one of the following describes budgeting where budgets are prepared from scratch?
Zero-based
Incremental
Activity-based
Beyond Budgeting
13. Which one of the following describes the strategic management process?
Strategic analysis | Strategy planning and choice | Strategy implementation | Strategy evaluation
Strategic analysis | Operational management | Strategy implementation | Strategy evaluation
Strategic analysis | Strategy planning and choice | Strategy implementation |Strategic management
accounting
Strategic management | Strategy planning and choice | Strategy implementation | Strategy evaluation
14. Which one of the following describes the four quadrants of the Boston Consulting Group (BCG)
matrix?
Stars | Cash cows | Maturity | Dogs
Stars | Cash cows | Question Marks | Dogs
Low hanging fruit | Cash cows | Question marks | Dogs
Stars | Cash cows | Question marks | Substitute products
15. Which one of the following describes how beyond budgeting avoids dysfunctional behaviour of
traditional budgeting?
Relative performance contracts with hindsight.
Structured analysis linking targets, budgets and bonuses.
Using budgets as targets as the foundation of performance evaluation.
Centralising management control to enable clarity and a focus on strategy.
16. Which one of the following is the formula used to calculate the direct labour price variance?
(AQ - BQ) × Bcm
(BQ x BP) - (AQ x BP)
(AQ × AP) - (AQ × BP)
(AQ × BP) - (BQ allowed for AQ × BP)
17. Interpretability, format, coherence and compatibility are all examples of which one of the
following information classifications?
Intrinsic
Contextual
Accessibility
Representational
D is correct. Refer to Figure 2.4.
18. Organisations try and create value for stakeholders, and this is sometimes difficult to balance. If
production is moved to a cheaper offshore location which one of the following stakeholder groups
will be most affected?
Suppliers
Employees
Customers
Society
19. Which one of the following is a weakness of detailed interviews when gathering information?
May specify information that does not relate to any specific decisions.
Focusing on a single issue, and assuming it is a major and repetitive when it might not be.
Observes behaviour without seeking insight or helping examine expertise to assess needs.
Focusing on the past and present but not future needs, and assuming a stable environment.
B is correct. Refer to Table 2.12.
20. Which one of the following information systems has an interactive capability and is able to
answer ad hoc questions as well as perform simulations, sensitivity or ‘what if?’ analyses?
Decision support systems
Knowledge management systems
Production planning and control systems
Customer relationship management systems
21. Which one of the following is the formula used to calculate the sales volume variance?
(AP - BP) × AQ
(AQ - BQ) × Bcm
BQ allowed for AQ × BP
(AQ × AP) - (AQ × BP)
22. Which one of the following is more closely linked to operational management rather than
strategic management?
Ambiguous
Non-routine activities
Short and medium term focus
Manages critical success factors
C is correct. Refer to Table 1.1.
23. Which one of the following best describes the functions of an information system?
Input | Processing | Output | Control
Input | Processing | Feedback | Control
Input | Processing | Output | Feedback | Control
Input | Processing | Analysis | Output | Feedback | Control
C is correct. Refer to Table 2.3.
24. Which one of the following is the formula used to calculate the variable overhead costs efficiency
variance?
(AP - BP) × AQ
(AQ - BQ) × Bcm
(AQ × AP) - (AQ × BP)
(AQ × BP) - (BQ allowed for AQ × BP)
25. Which one of the following levels of information is most likely to be linked to a semi-structured
decision?
Tactical External Strategic Operational
 A is correct. Refer to Table 2.9.
26. Which one of the following is an advantage of the bottom-up approach to budgeting?
It is a faster way to set a budget.
It minimises manipulation of targets and goals.
It can create a sense of responsibility and foster creativity.
It ensures the targets are set high enough to achieve organisational goals.
27. Which one of the following describes the four specific ways in which management accountants
support an organisation according to IFAC 2011?
Users of value | enablers of value | preservers of value |reporters of value
Creators of value | disablers of value | preservers of value | reporters of value
Creators of value | enablers of value | utilisers of value | reporters of value
Creators of value | enablers of value | preservers of value | reporters of value
28. Which one of the following correctly classifies stakeholders as either internal or external
stakeholders?
Customers - external | Government - external | Production/logistics - internal | Investors – internal
Customers - external | Government - external | Production/logistics - internal | Investors – external
Customers - external | Government - external | Production/logistics - external | Investors – internal
Customers - internal | Government - external | Production/logistics - internal | Investors – external
B is correct. Refer to Tables 2.1 & 2.2.
29. Which one of the following is a characteristic of the decline stage of the product life cycle?
Market is saturated(*)
Competition increases
New investment is low
Sales volumes increase very slowly
D is correct. Refer to Figure 1.10. Other items can be relevant to this stage, but this is the key component
of Decline as shown in this Figure.
30. Which one of the following describes the myopia that can arise when there is an overemphasise
on monetary incentives?
Milking the cash cow.
Lack of congruence with strategic goals.
Lack of holistic evaluation of performance.
Focus on short-term financial performance.
REVISION
1. Which one of the following is the defining characteristic of operational management?

It creates value by carrying out activities.
It is concerned only with specific objectives.
It is not concerned with organisational strategy.
It is the implementation phase of strategic management.
D is correct because operational management is concerned with the implementation of strategy.
2. Kaaj is a management accountant working for a long-established taxi company. The company
continues to use its older legacy systems, including relying solely on phone bookings, and has
experienced a steady decline in profit. Kaaj researches industry data for presentation at an
upcoming management meeting. He discovers that increasingly, customers prefer to order their taxis
via an app on their mobile phones.
Which one of the following would be most useful for Kaaj to present at the management meeting?
A budget for the implementation of an online booking system
Recommended discounts and incentives to attract customers
Proposal to conduct further market research
A benchmarking analysis for the taxi company
C is correct because it focuses on the customer perspective and will provide appropriate information for
management decision-making in this area.
3. BigMineCo Pty Ltd (BigMineCo.) is a mining company. The company’s management is in the
process of developing the organisation’s strategic plan.
As BigMineCo.’s management accountant, which one of the following would be the most useful types
of information to provide to the management team?
A capital budget and a corporate social responsibility report
A five-year operational budget including production forecasts
A report on competitors and emerging technology in the industry
An analysis of organisational activities that do not add value to the organization
C is correct because strategic planning is externally focussed and oriented towards the long term.
Competitors and emerging technologies are significant external and long-term influences on a mining
company.
4. An electronics retailer is concerned that their product lines may not be meeting their customers’
‘hard’ or technical requirements. The company’s management accountant has collected information
about substitute products that might provide a threat to, or an opportunity for, the organisation.
Furthermore, the management accountant has obtained technical information from potential
suppliers about their products’ features.
How would you characterise the information the management accountant has gathered?
Domain, type and source
Primary, internal and financial
Upstream, strategic and historical
Non-financial, external and comparable
D is correct. The product features are non- financial; they come from an external source; and technical
features will generally be comparable/measurable.
5. ExpandMines Pty Ltd (ExpandMines) is a major mining company that is seeking to secure debt
finance for a new iron ore mine.
As ExpandMine’s management accountant, which one of the following is the most useful type of
information to include in the loan application?
Cash flow, liquidity and security

Customer demand and competitors
Profitability, net assets and turnover
Expansion strategy, technology and the iron ore market
A is correct because financiers are mainly interested in a company’s ability to pay interest and repay
capital. They will require security in the case of default.
6. Which one of the following is not an activity that would be part of the strategic management
process?
Measuring and monitoring progress
Setting up clear and detailed operational goals to be achieved within a year
Designing an appropriate organisational structure to implement the desired strategy
Scanning the organisational environment using various management tools, such as BCG matrix and
PEST analysis
B is correct because setting up specific operational goals is not part of the strategic management process.
Instead, it belongs to operational management. Strategic goals are often long-term oriented (more than one
year), high-level and can be ambiguous at times.
7. Which one of the following statements is correct in relation to the strategic management process?
Understanding and interpreting the performance strategy is an important part of the strategic analysis
phase
Operational management must execute strategies set by strategic management to achieve the desired
outcome
The phases in the strategic management process are distinct steps, where one is completed before the
next commences
A key tool in the strategy planning and choice stage is the use of a strength, weaknesses, opportunities
and threats (SWOT) analysis
 B is correct because once strategies are set by strategic management at the higher levels of the
organisation, operational management must execute those strategies on a day- to-day basis if the desired
outcomes are to be achieved.
8. Which one of the following statements best describes the major reason driving the change of the
management accountants’ role in today’s business environment?
Technological advancement requires management accountants to increasingly act as business partners
The need to communicate with stakeholders requires management accountants to switch to being
business partners
A requirement placed on all professional accountants by the International Accounting Education
Standards Board (IAESB)
The uncertain environment requires management accountants to stay up to date with the latest
knowledge and changes to continuously create value for the organization
D is correct because the role change is triggered by the significant changes resulting from globalisation,
digital transformation, regulations and competition. All these uncertainties demand management
accountants step up and become involved with strategic decisions while protecting the bottom line.
9. Bearconn is a key manufacturing partner for a leading American electronic technology company,
ABC, that specialises in smartphone technology. Bearconn is currently considering setting up a new
manufacturing facility in India to assemble ABC’s top-end smartphone models, instead of using its
existing production base in China. This is considered as a critical step for both companies to mitigate
the risk of the Sino-American trade war and also allow ABC to enter the world’s fastest-growing
mobile phone market.
However, market investors were taken back by the lower-than-expected forecast released by ABC
for the October-December quarter, and the news certainly unsettled the parts suppliers across the
world. The management accountant at Bearconn has performed a stakeholder grid analysis to
determine the information need and support for various stakeholder groups.
Which of the following group of stakeholders is one that the management accountant needs to
provide relevant information and keep them informed?
Part suppliers
Senior management of Bearconn
ABC Board of Directors
Bearconn’s employees working on the low-end phone model
A is correct because part suppliers need to be informed and supported as they often have highly valuable
insights and high interest into organisational functioning, but little power to enact changes.
10. XYZ Ltd has been manufacturing only one type of 3D printer, the Plain model. The company is
considering making some modifications in order to produce a more advanced model to meet the
market needs.
Two options are available: Wireless and Colour. Both the Wireless and Colour models will start with
the same processes as the Plain model, but with additional advanced functions. The Wireless model
and the Colour model can both connect the printer wirelessly, and the Colour model has the inkjet
technology to create bright and colourful 3D models. The senior management team of XYZ Ltd
needs to choose between making the Wireless or the Colour model.
What is the most relevant information the management accountant should provide to support this
decision-making?
The cost of building the Wireless model
The cost of producing the Plain model
The cost of developing the colour inkjet technology
The price of a basic 3D printer from other competitors
C is correct because the cost of developing the colour inkjet technology is specific to the Colour model,
and hence, it is important to consider the information when making the decision.
11. Lyon is a sandwich bar that advocates fresh and healthy eating. The store bakes its baguettes in
house with a filling of grilled chicken and fresh salad. Due to its popularity, Lyon’s owner wanted to
conduct a trial to extend the opening hours by two hours from the beginning of the month.
The business hours are now from 12pm to 9pm after the change. As a result, an additional 2,000
sandwiches were sold at the regular price during additional opening hours this month, and the
business had to hire one extra kitchen hand to deal with the demand.
What is the most appropriate information assessment when preparing the monthly performance
report to the shop owner?
It is acceptable to compare actual results to budget because the decision to extend the opening hours
could be temporary.
The additional hours should be cancelled, as the net profit margin is likely to decrease due to the extra
labour cost.
A comparison of the differential revenue and costs of the additional business hours should be
undertaken to assess the success of the change.
There is no need to verify with customers about the sustainability of the extra hours, as the additional
sales speak for itself.
C is correct because it integrates relevant financial data and undertakes further analysis.
12. Silom Llc (Silom) manufactures window frames in Singapore for the housing market. Senior
management at Silom are considering expanding their manufacturing facilities due to growing
demand both domestically and internationally. They are considering whether to build the new
facilities in Singapore or Malaysia.
Senior management requested Silom’s management accountant, Sam Elboc, to prepare budgets for
each location, including budgeted sales, gross margin and overhead allocation, and to present these
at the next senior management meeting in one month’s time. Knowing that senior management are
financially literate and experienced, Sam prepares the requested budgets, using current information
and consistent accounting methods in each budget. He also includes information to support his
calculations.
Which one of the following options lists the characteristics of the budgeted information provided by
Sam?
Reliable, timely, valid
Comparable, timely, valid
Comparable, timely, understandable
Comparable, reliable, understandable
C is correct as the information is comparable, timely and understandable.
The information is comparable as Sam has used consistent accounting methods in each budget, which
means they can be compared against each other.
The information is also timely as it is based on current estimates and has been provided in a timely manner
as requested by the management team.
The information is understandable because Sam has considered the users of the information and ensured
that they will be able to understand it.
13. Which of the following best describes the major difference between traditional and strategic
management accounting?
Traditional management accounting Strategic management accounting
I Focuses on the manufacturing environment. Focuses on the public sector and service
organisations.
II Focuses on planning, evaluating and Focuses solely on strategic-level issues.
controlling.
III Focuses on product costing. Incorporates both financial and non-
financial performance measures.
IV Provides useful information to support Broadens the role to focus on value
managers. creation for all significant stakeholders.
I is correct
II is correct
III is correct
IV is correct
D is correct because it emphasises the key importance of value creation for all significant stakeholders
(both internal and external) in strategic management accounting.
14. Which of the following is a form of strategic management accounting support for the operational
management task of planning?
Measuring individual, departmental, team and organisational performance.
Preparing budgets and forecasts, using costing systems and providing historical data.
Using budgets to coordinate various departments and communicate organisational priorities to
employees.
Identifying causes of variance, establishing performance incentives and criteria, reconciliations and
internal controls.
B is correct because budgeting is a tool used by management accountants to support operational
management in creating and enhancing value. Budgeting is strategic when it is focused on value creation.
15. The role of the management accountant has evolved to have a more strategic focus.
Which of the following activities is not appropriate to the role of the strategically oriented
management accountant?
Designing information systems that enable users to access information for themselves.
Designing control systems that promote ethical behaviour and corporate social responsibility (CSR).
Acting as a business partner and consultant to management with a focus on improving results and
creating value.
Acting as the overseer of management, and avoiding any involvement in activities that might create a
conflict of interest.
D is correct. While the Study guide points to some controversy in this area, it is clear that the
management accountant’s role is that of a business partner, with a focus on enhancing performance. D is an
important consideration for accountants, but this is a control function and, as such, applicable to an
accountant’s conformance responsibilities rather than their strategic role. The conformance role is often
assigned to financial accountants rather than management accountants. These matters are discussed further
in the section of Module 2 on governance.
16. BudCo. Pty Ltd (BudCo.) has introduced a bottom-up approach to the development of budgets.
Lower-level managers are required to submit budgets for their departments and these budgets are
combined to form BudCo.’s operational budget. The overall budget is then submitted to the budget
committee for revision and approval.
Which one of the following is a likely negative consequence of BudCo.’s budgeting approach?
Budgetary goals may become the managers’ personal goals.
If the budget committee revisions are significant, managers may pad their budgets in future.
Lower-level managers will underestimate their costs or overestimate their revenues to ensure budget
achievement.
BudCo.’s budget will be unrealistic as lower-level managers lack understanding of the organisation’s
processes.
B is correct because managers will anticipate cuts to their budgets and likely pad them to guard against
resource shortages. Also, they may anticipate increased revenue targets and under budget to ensure bonus
sales targets are achievable.
17. Which one of the following is the most significant drawback of the top-down approach to
budgeting?
Although it is less time consuming, it is not cost-effective.
Lower-level managers may pad their budgets.
Budget targets can be set at challenging levels.
Senior managers may lack an in-depth understanding at an operational level.
D is correct because senior managers may have little to no experience at the operational level.
18. A professional organisation in England initiates a project to renew its professional training
program. It contracts the job to a major international publisher. The publisher then partnered with
an Australian university to author the training materials.
Which one of the following best describes the organisational structure of the project?
Joint venture (JV) Virtual project Project organisation Public private project
A is correct because the university and the publisher are each providing key resources to the project.
19. What is the scheduling risk associated with a project activity if the activity has a pessimistic time
of 24 days, a most likely time of 15 days and an optimistic time of 12 days.
4 days 12 days 16 days 24 days
A is correct because according to the formula VAR = ((P – O)/6)^2:
((24 – 12) / 6)^2 = 4
20. LunaGen Laboratories, a research-based pharmaceutical company that specialises in cardiac

medications, is currently developing a new drug that it wants to bring to market in a timely manner.
The company has put a risk management team in place to help navigate the complexities of clinical
trials, drug approval and global commercial practices.
Which one of the following activities is least likely to be part of the company’s risk management
strategy?
Monitoring for unexpected results in the clinical trials
Making sure the project has the right skills within the team of scientists
Making sure appropriate funding and key resources are available for the project
Assessing how the project team is performing against its key risk indicators (KRIs)
C is correct because this is a risk assessment process performed prior to the start of the project.
21. A mining company is planning a major mining development project.
Which one of the following best explains the need for good planning to help ensure project success?
The project has a fixed budget and deadlines that cannot be changed.
The company wants to be able to compare the original project plan to the finished project.
The company must prepare in case new legislation involves detailed planning guidelines for the project.
The efficient and effective use of society’s resources
A is correct because without proper planning, it would be extremely difficult to optimise cost and meet
project deadlines.
22. Big Dog Ltd (Big Dog) is considering a project with a life of three years, an initial investment of
$300,000 and expected annual net cash flows of $120,000. Big Dog can take out a bank loan to fund
the project at an interest rate of 8 per cent per annum and Big Dog’s current weighted average cost
of capital (WACC) is 12 per cent per annum. The project is considered low risk, compared to the
overall risk profile of the company.
Which of the following is the correct net present value (NPV) of the project using both the bank loan
interest rate and WACC to determine the discount factor, and select the option that best explains the
appropriate NPV to use in assessing the project.
I The NPV using the loan interest rate, is $9,251. This NPV should be used to assess the project because the NPV
WACC as the discount rate is negative.
II The NPV using the loan interest rate, is $9,251. This NPV should be used to assess the project because the loan r
directly to the project, and the project has a different risk profile to the overall risk profile of the company, and th
the relevant cost of capital for the project.
III The NPV using the loan interest rate, is ($11,780). This NPV should be used to assess the project because the loa
IV The NPV using WACC, is ($11,780). This NPV should be used to assess the project because WACC is the most
appropriate discount rate to use when the risk profile of the project differs to the overall risk profile of the compa
therefore is the relevant cost of capital for the project.
I II III IV
B is correct. The project is lower risk than the company’s overall risk profile and it is, therefore, not
appropriate to use WACC in this circumstance. As Big Dog is taking out a loan for the project, it is
appropriate to use the interest rate for the loan as the discount rate. The NPV calculation is shown as
follows:
Interest rate on 8%
loan
Time period 0 1 2 3
Initial
($300,000.00)
investment
Net cash flow $120,000.00 $120,000.00 $120,000.00
Discount factor 1.08 1.17 1.26
PV $111,111.11 $102,880.66 $95,259.87
NPV $9,251.64
Module: 4 > Part: C > Financial analysis-single project > Net present value > Page: 172
23. Which one of the following processes can help determine why a project might incur additional
costs and fall behind schedule?
Risk assessment
Risk management
Resource requirements
Stakeholder management
 A is correct because risk assessment involves determining the impact of falling behind schedule and
incurring cost over-runs as well as identifying stakeholders. This needs to occur before you can perform
risk management activities (mitigating / eliminating the risk).
24. A company has decided to use the top-down approach to budgeting. Which of the following is a
correct statement about this approach?
Middle and junior managers are committed to achieve the budgets
Senior managers have more knowledge of the firm’s business environment than managers who work
directly in their responsibility centres
The top-down approach encourages coordination and communication among managers since they have
control in setting budgets
Top management sets high targets to encourage improved performance, but this may discourage lower-
level managers
D is correct because it is actually a disadvantage of the top-down approach.
25. Which one of the following practices should an organisation adopt when applying the Beyond
Budgeting (BB) approach?
Treat rolling forecasts the same as rolling budgets
Attach financial compensation to each business unit’s performance
Adopt measures that encourage managers to feel responsible for organisation-wide performance
Apply more centralised management control and leadership to ensure organisation-wide focus on
performance goals
 C is correct. The BB approach encourages manager responsibility for performance of the whole
organisation and discourages internal rivalry among business units.
26. Although Better Office Products had a successful financial year in 20X9, senior management was
concerned about staff exhibiting negative behaviour throughout the year. When a meeting that
included all staff was convened, staff members revealed that they were dissatisfied with having little
or no involvement with the budget process, especially considering that the budget affects everyone in
the company.
Which of the following changes to the budget process is most likely to reduce this negative behaviour
for the next financial year?
Give everybody in the organisation a reward for achieving budget goals
Top management sets challenging targets, which it feels are achievable
Provide regular feedback to managers on their performance
Reward good performance with salary increases, bonuses and promotions
C is correct. Targets and budgets are more likely to be achieved if managers receive regular feedback
and if the achievement of targets is accompanied by monetary and non- monetary rewards of value.
27. Which one of the following statements best describes how an organisation’s strategic plan is
related to operational plans, budgets and forecasts?
After the strategic plan is developed, organisations focus on long-term decisions that determine the
future activities for the chosen course of action.
Budgets define how the organisation will achieve its annual goals, are coordinated with the strategic
plan, and are linked long-term goals.
Forecasts in the strategic plan are set out in detail, while estimates in the operational plan are much
broader in scope.
The management accountant adds value to an organisation’s budgeting process by analysing and
including financial information.
B is correct as it describes the relationship between an organisation’s strategic plan and operational
plans, budgets and forecasts
28. FancyDine is a high-end restaurant. It wants to improve its performance—in particular, its
customer satisfaction with food and service as shown in online reviews on the independent website
FoodReview.
Currently, FancyDine’s rating is 3.5, and the rating of its most successful competitor is 4.5.
If it pursues the goal of matching this competitor’s rating, what would be the best technique for
FancyDine to use to achieve this?
Benchmarking best practice
Internal benchmarking
Industry benchmarking
Incremental improvement
C is correct because the target is set on the basis of successful competitors in the industry.
29.
Which one of the following statements is correct in relation to this strategy map?
Occupancy is a lagging indicator for growth in market share, sales revenue and profitability
Improving occupancy is a combination of marketing and operational capacity
Shareholder value depends mainly on growth in market share
Profitability is a lagging indicator in relation to EPS and TSR growth
B is correct because occupancy is linked to two factors - brand promotion (marketing) and total rooms
available (operational capacity).
30. SameOld Company (SameOld) sells a particular consumer product for $3 per unit.
Manufacturing costs are $1 per unit. NewEarth Company (NewEarth) develops an environmentally
friendly version of this product that costs $2 per unit to manufacture.
Market research indicates that customers will pay up to $6 per unit for the environmentally friendly
product but only up to $4 per unit for the SameOld version. NewEarth wants to set a price for its
product that is competitive with the SameOld product, while providing a higher estimated profit per
unit than that earned by SameOld.
Which selling price should NewEarth set for the product?

$3.00 $4.00 $4.50 $5.50
C is correct as it is the best available option given the two constraints. First, the price must be high
enough so that NewEarth can make a greater profit per unit than SameOld. SameOld's profit is $2 per unit
and NewEarth's costs are $2 per unit, so a price greater than $4 is needed. Second, NewEarth needs to be
competitive so the consumer surplus has to be at least as great as SameOld's (i.e. $4 - $3 = $1).
Therefore, the highest price NewEarth can set is $5 (i.e. $6 - $1 = $5). If NewEarth sets the price at $4.50
per unit, the customer surplus is $1.50, and the profit is $2.50. This provides a high profit, and it sets the
customer surplus at a higher amount as the SameOld product, which increases the likelihood that the
customers will choose the NewEarth product.
31. A manufacturer has used traditional costings for many years. Senior management currently
believes this method has resulted in inaccurate costing data and is now evaluating both activity-
based costing (ABC) and time-driven activity-based costing (TDABC) as possible costing models.
Which one of the following statements best describes an advantage of TDABC over ABC for this
company?
Cost per unit of activity is adjusted based on changes in the volume of parts orders
The time spent on machine setup and inspections is estimated by surveying the employees
Cost per unit of activity is normalised on an average time to complete that manufacturing step
Non-productive activities such as training time is accounted for by estimating the amount of productive
time available.
D is correct because the primary advantage of TDABC over ABC is that it enables accounting for non-
productive activities, such as training time.
32. An organisation produces two products:

– a low-volume product manufactured using a process that requires multiple machine setups and
inspections
– a high-volume product manufactured using a process that requires only a single setup.
With regard to activity-based costing, which of the following statements is most likely to be correct?
The low-volume product incurs less overhead than the high-volume product.
The costs of multiple setups for the low-volume product are assigned only to that product.
The low-volume product and the high-volume product will have the same cost groupings.
The costs of multiple setups for the low-volume product will increase if the volume of the product
increases.
B is correct because costs for activities that are used for one product are allocated only to that product.
33. The balanced scorecard provides a variety of measures across four key areas, namely learning &
growth, internal process, customer and finance.
Which of the following is an accurate statement in relation to the balanced scorecard?

It is used for day-to-day management rather than management by exception
It balances short-term and longer-term performance
It is helpful but makes it difficult to focus on important variables
While useful it is a complex way of presenting information
B is correct as the range of measures helps focus on specific day-to-day activity as well as longer term
measures in a cause-effect manner.
A, C and D are not valid statements and actually contradict the stated benefits of a balanced scorecard.
These include:
The following benefits have been identified for the BSC:
• It summarises complex information.
• It focuses management attention on the most important variables.
• It enables management by exception and manages areas of underperformance.
• It balances the need for short-term performance with sustainable performance.
• It limits the number of performance measures used.
Module: 5 > Part: B > Models of performance management > The balanced scorecard > Page: 254
34. There are range of tasks required when developing a balanced scorecard. One of the most complicated
components is identifying the cause-effect relationships between activities and therefore between measures,
and determining how strategic goals are interlinked. At which of the following steps should this occur?
Step 1 Step 2 Step 3 Step 4

C is correct because Step 3 is compiling the strategy map, which is where the links between the
perspectives is pieced together (See Table 5.3).
35. Which one of the following is a characteristic of a strategic management approach to

performance management?
Aggregated data on travel expenses
Comparison of this year’s income to prior years
Consolidated data on specific business segments
Hourly sales reports during a busy holiday season
D is correct. Strategic management accounting provides a much more detailed analysis of performance,
such as weekly, daily, or even hourly. This detailed information can be used internally to plan and make
decisions for the business.
36. Which of the following components of strategic management accounting provides

the most detailed analysis of performance?
Consolidated financial data
Reporting for individual business units
Comparison to prior year
Annual external financial statements
B is correct as it identifies the most detailed analysis of performance.
37. Omega Motors is a luxury car production company that has initiated a project to produce a new
model for the international market. The following is information regarding this project.
Total Revenue is expected to be $420 million per annum.
The four main tasks and cost drivers are:
 press metal into car frame shapes – number of cars

 manual assembly of the cars – labour dollars
 robotic assembly of cars – number of robots
 operations and transportation – number of cars
There are two production plants.
Pressing costs for car frame: $90 million (Plant A $55 million | Plant B $35 million)
Labour Assembly costs: $42 million (Plant A $24 million | Plant B $18 million)
Depreciation of production assembly robots: $70 million (Plant A has 22 robots and Plant B has 13
robots)
Operations and Transport costs: $60 million (Plant A produced 4,000 units | Plant B produced 2,000
units)
Provide an activity-based costing (ABC) analysis calculating (9 marks):
(i) the average cost for each cost account
(ii) the cost allocations for each plant
(iii) the unit cost from Production Plant A and Production Plant B.
(iv) the average sale price of each car
(v) the average gross profit per car and gross profit per car from Plant A and Plant B
 Tự luận:
i) Average costs:
a) Pressing costs: The average cost per unit is $15,000 ($90 million / 6,000 units)
Plant A has costs of $55 million divided by 4,000 units = $13,750 per unit
Plant B has costs of $35 million divided by 2,000 units = $17,500 per unit
b) Labour Assembly costs: The average cost per unit is $7,000 ($42 million / 6,000 units)
Plant A has costs of $24 million divided by 4,000 units = $6,000 per unit
Plant B has costs of $18 million divided by 2,000 units = $9,000 per unit
c) Robot depreciation: The average cost per robot is $2 million ($70 million / 35 robots)
Plant A has 22 robots so depreciation is $44 million (22 x $2 million)
Plant B has 13 robots so depreciation is $26 million (13 x $2 million)
d) Operations and transport costs: The average cost per unit is $10,000 ($60 million / 6,000 units)
Plant A has 4,000 units so cost is $40 million (4,000 x $10,000)
Plant B has 2,000 units so cost is $20 million (2,000 x $10,000)
ii) The $262 million in costs is allocated to each plant as follows:
Plant A: $163 million Plant B: $99 million
Plant A: $163 million is based on:
$55 million of pressing costs, $24 million of labour assembly, 22/35 x $70 million for Depreciation and
4,000/6,000 of $60 million for operations.
Plant B: $99 million is based on:
$35 million of pressing costs, $18 million of labour assembly, 13/35 x a$70 million for depreciation and
2,000/6,000 of $60 million for operations.
iii) Cost allocation per car:
Plant A cost per car: Cost per car is $163m / 4,000 = $40,750
Plant B: $99 million Cost per car is $99m / 2,000 = $49,500
iv) Total revenue of $420 million divided by 6,000 units = $70,000 per car
v) Total average cost per car is $262 million divided by 6,000 units = $43,666.67
Average Gross Profit per car: $70,000 - $43,666.,67 = $26,333
Plant A Gross Profit per car: $70,000 - $40,750 = $29,250
Plant B Gross Profit per car: $70,000 - $49,500 = $20,500

MODULE 4
1. Which of the following is not a characteristic of a project?

Solution to a problem
Defined start and end date
Network of unrelated activities
Requirement to coordinate resources
C is correct because one of the characteristics of a project is that it is a network of related activities.
2. Which role sets out the detailed requirements for a project?

Project Manager Project Sponsor Project Team
 is correct because it is the Project Manager who is responsible for setting the detailed project objectives
and requirements.
3. Which project team approach has project team members remaining in their functional unit?
Matrix approach Task-force approach
A is correct. The matrix approach has project team members remaining within their functional unit. The
task-force approach has team members dedicated to the project.
4. Which of the following best describes project management?
Solving customer problems
Managing complex organisational relationships
Managing multiple activities within a specified time period
Addressing the challenges of a highly uncertain environment
C is correct because multiple activities and a specified time period are key characteristics of projects.
5. Assume that a project manager has inherited a project that has inadequate resources.
Which of the following skills of the project manager is going to be most useful in correcting this
situation?
The ability to negotiate
The ability to deal with uncertainty
Strong budgetary and variance analysis skills
The ability to quickly establish which information is relevant in this situation
A is correct because the ability to negotiate for the resources required is the key skill required to correct
the situation.
6. Is $1 in a future year worth more or less than $1 today?

Less More
A is correct. Due to the time value of money $1 today is worth more than $1 in the future.
7. Which of the following rates would we most likely use for the discount rate to calculate the
discount factor?
Consumer Price Index Interest rate on borrowings Weighted average cost of capital
C is correct because we will usually use the WACC as the discount rate as it represents the overall cost
of cash for the organisation.
8. When calculating the Net Present Value do we include the initial investment?
Yes, we sum all cash flows
No, we only sum the present value of future cash flows
A is correct because to calculate NPV we sum all cash flows including the initial investment and the
present value of all future cash flows.
9. Projects Pty Ltd and Working Pty Ltd have contributed cash and assets via a formal agreement to
undertake a large construction project with the aim of generating a profit.
What type of organisational project structure is this an example of?
Joint venture
International
Collaboration
Public private partnership
A is correct because this is a formal agreement between two companies that will share the risks and
profits from the project.
B is incorrect because while this project could be an international one, the structure is two companies
joining together and therefore is a joint venture.
C is incorrect because a collaboration does not involve a formal agreement and is often not for commercial
purposes.
D is incorrect because a public private partnership includes a government organisation as one party,
whereas this example shows two private companies.
10. Which of the following statements regarding risk assessment for projects is true?
It occurs during project implementation
It is not relevant to project selection decisions
It is undertaken prior to project implementation
It is the ongoing process of monitoring project risks
C is correct because risk assessment occurs before a project starts.
11. Bob’s Building Pty Ltd has won the contract to build a large supermarket in a country town in
Western Australia. As part of the project planning process, the project team identified a number of
project risks and designed risk indicators and mitigation actions to be used during project
implementation. Which of the following best defines this type of approach to risk management?
Diagnostic approach to known risks
Diagnostic approach to unknown risks
Interactive approach to unknown risks
Interactive approach to contingency responses
A is correct because determining known risks in the project planning stage and setting up risk indicators
and mitigation actions before the project commences is a diagnostic approach.
B is incorrect because a diagnostic approach is used to manage known risks, not unknown risk.
C is incorrect because an interactive approach is used for unknown risks which are not determined in the
project planning stage.
D is incorrect because interactive action is focused on monitoring of unknown risks and a diagnostic
approach has taken place in this situation.
12. Which of the following is the most likely reason that international projects are different from
local projects?
The need for good planning
The need to manage virtual teams
The need for good implementation
A joint venture (JV) organisational structure
B is correct. Managing virtual teams is particularly important in international projects. It is often
essential because team members are in different geographical locations, so the time and cost involved in
organising face-to-face meetings is prohibitive.
13. Which of the following combinations provides examples of sensitivity and scenario analysis?
Sensitivity analysis Scenario analysis
I The effect of an increase in wages is Examining the effect of an increase in interest rates
examined against project returns. on the viability of a project.
II The effect of an industry downturn is Examining the effect of an increase in wages on the
examined against project returns. viability of a project.
III The effect of an increase in wages is Examining the effect of an industry downturn versus
examined against project returns. strong industry growth on the viability of a project.
IV The effect of economic downturn is Examining the effect of an increase in wages on the
examined against project returns. viability of a project.
I is correct II is correct III is correct IV is correct
C is correct. Sensitivity analysis considers how changes in a key project variable—like wages, interest
rates, inflation or gross domestic product (GDP)—will affect project outcomes. In C, the variable in
question is wages.
Scenario analysis considers how changing a group of related variables (a scenario) affects project
outcomes. Normally, the ‘groups’ of variables considered relate to negative, most likely and positive
scenarios. In C, two scenarios are noted: strong growth and a downturn.
14. Is depreciation expense included in a project’s Net Present Value calculation?

Yes, because all expenses are included
No, because only cash flows are included
Yes, because it shows the true cost of the project
No, because it is not affected by required rate of return
B is correct because NPV is a discounted cash flow calculation and therefore only includes cash flows.
Note that, where relevant, the tax effect of depreciation (i.e. tax shield) would be included in the project
cash flows.
15. When determining whether to proceed with a project, which of the following is considered
the best evaluation method?
Payback period Residual income Net present value Return on investment
C is correct because NPV is based on discounted cash flows and gives the best assessment of overall
increase (or decrease) in value to the organisation.
16. Which one of the following processes can help determine why a project might incur additional
costs and fall behind schedule?
Risk assessment Risk management Resource requirements Stakeholder management
A is correct because risk assessment involves determining the impact of falling behind schedule and
incurring cost over-runs as well as identifying stakeholders. This needs to occur before you can perform
risk management activities (mitigating / eliminating the risk).
17. Big Dog Ltd (Big Dog) is considering a project with a life of three years, an initial investment of
$300,000 and expected annual net cash flows of $120,000. Big Dog can take out a bank loan to fund
the project at an interest rate of 8 per cent per annum and Big Dog’s current weighted average cost
of capital (WACC) is 12 per cent per annum. The project is considered low risk, compared to the
overall risk profile of the company.
Which of the following is the correct net present value (NPV) of the project using both the bank loan
interest rate and WACC to determine the discount factor, and select the option that best explains the
appropriate NPV to use in assessing the project.
I The NPV using the loan interest rate, is $9,251. This NPV should be used to assess the project because the NPV
WACC as the discount rate is negative.
II The NPV using the loan interest rate, is $9,251. This NPV should be used to assess the project because the loan r
III The NPV using the loan interest rate, is ($11,780). This NPV should be used to assess the project because the loa
IV The NPV using WACC, is ($11,780). This NPV should be used to assess the project because WACC is the most
appropriate discount rate to use when the risk profile of the project differs to the overall risk profile of the compa
therefore is the relevant cost of capital for the project.
I II III IV
B is correct. The project is lower risk than the company’s overall risk profile and it is, therefore, not
appropriate to use WACC in this circumstance. As Big Dog is taking out a loan for the project, it is
appropriate to use the interest rate for the loan as the discount rate. The NPV calculation is shown as
follows:
Interest rate on 8%
loan
Time period 0 1 2 3
Initial
($300,000.00)
investment
Net cash flow $120,000.00 $120,000.00 $120,000.00
Discount factor 1.08 1.17 1.26
PV $111,111.11 $102,880.66 $95,259.87
NPV $9,251.64
18. A professional organisation in England initiates a project to renew its professional training
program. It contracts the job to a major international publisher. The publisher then partnered with
an Australian university to author the training materials.
Which one of the following best describes the organisational structure of the project?
Joint venture (JV) Virtual project Project organization Public private project
A is correct because the university and the publisher are each providing key resources to the project.
19. What does PERT stand for?

Project Estimation Review Technique
Project Evaluation Review Technique
Project Estimation Review Time
20. When using the PERT Activity on Node format, what happens when two activities have the same
preceding activity?
The path has split
They follow each other
They are put into the same node
A is correct because when two or more activities have the same preceding activity, the nodes branch
separately from the preceding node and this means that the project path has now split.
21. Which path through a PERT diagram is the critical path?

The longest path The shortest path
A is correct because the longest path through the PERT diagram is the critical path. This is because you
cannot complete the project any sooner than the time it takes to complete the longest path.
22. Which is the correct formula to calculate estimated time for an activity?
Optimistic + Most Likely + Pessimistic divided by 3
Optimistic + 4 times Most Likely + Pessimistic divided by 3
Optimistic + 4 times Most Likely + Pessimistic divided by 6
23. Consider a project that consists of nine activities (A to I). The precedence relationships and
activity durations are shown here:
Activity Precedence Duration (days)
A – 16
B – 40
C – 22
D A 15
E C 15
F C 10
G E 2
H E 16
I D, F, G 10
What is the critical path for the completion of the project?

B
A → D→ I
C→ E→ H
C→E→G→I
24. When we calculate Earned Value do we use the actual cost or budget cost?
Actual cost Budget cost
B is correct because we use budget cost to calculate Earned Value based on actual estimated
completion.
25. What does Earned Value represent?

The actual spend based on actual work completed
The expected spend based on actual work completed
The expected spend based on budgeted work to this point in time
B is correct because Earned Value represents the amount that is expected to have been spent based on
the actual work completed.
26. Which variance do we use to consider whether our project is over or under budget?
Schedule variance Spending variance
B is correct because we use spending variance to determine whether the project is over or under budget
based on actual work completed. Schedule variance is used to determine whether we are ahead of or behind
schedule.
27. What does a negative schedule variance represent?

Project is over budget
Project is under budget
Project is behind schedule
Project is ahead of schedule
C is correct because a negative schedule variance indicates that our project is behind schedule. This is
because the Earned Value is less than the amount that was budgeted to have been spent for the actual work
completed.
28. Assume you are the management accountant supporting a project team. You have been asked to
develop a PERT diagram for the project. Which one of the following describes the project stage where this
action occurs?
Review Planning Selection Implementation

B is correct because PERT diagrams are used in project scheduling which is part of the project planning
stage.
29. Consider the following project information:
Activit Precedenc Duratio

y e n
A 10
B Activity A 6
C Activity A 18
D Activity B 15
E Activity C 8
What is the critical path for completion of the project?

A-B-D
A-C-E
A-B-C-E
B-C-D-E
B is correct because the duration of the path A-C-E is 36 and is the longest path and is therefore the
critical path.
30. Which of the following best describes the Earliest Occurrence Time (EOT)?
The total duration of activities on the critical path.

The shortest length of time you can complete a project in.
The number of days that it takes to complete a project activity.
The total duration of the longest path to a specific event node.
D is correct because this best describes the concept of EOT, which is the longest activity path to a
specific event node. This is a broader and more holistic response because it captures the EOT at any point
in the project (not just the total duration of the critical path) and is therefore considered the ‘best’
description.
31. A government contracted a construction company to build a large scenic viewing Ferris wheel
(observation wheel). Six months after being opened to the public, metal rods in the structure bent and
caused the entire wheel to become unstable. This resulted in the wheel being closed down and re-worked at
significant cost. What type of quality cost is this an example of?
Appraisal costs
Prevention costs
Internal failure costs
External failure costs
D is correct because in this example the wheel was used by customers before the faults where found
resulting in re-work costs and also reputational damage.
32. Which of the following activities would not be undertaken in the strategic fit assessment for a project?
Analysing project costs and variances to budget.

Analysing the reasons for performance variations.
Determining the final project costs and variances to budget.
Determining if the project delivered against it performance targets.
 C is correct because closing project costs and reporting variances is an activity undertaken as part of
financial closure and would therefore not be undertaken during strategic fit assessment.
33. Question 6
Which of the following is the correct analysis of the project based on this earned value (EV) chart?
Late and over budget
Late and under budget
Ahead of schedule and over budget
Ahead of schedule and under budget

D is correct. As actual costs (AC) are below EV, the project is running under budget. The EV line is
based on work actually completed in a given time. EV above budget means that more work has been
accomplished than was budgeted for, so the project is ahead of schedule. The planned value (PV) line is
based on estimated time (i.e. the X-axis) and is prepared before the project starts.
34. Which of the following is not a fundamental principle of probity as outlined by the Independent
Commission Against Corruption (ICAC)?
It is important that resources are used effectively and responsibility is taken for performance.
The purchase of inputs needs to be done in an open and competitive environment where price is
balanced against the other characteristics such as quality and risk.
Personal and business relationships may remain confidential, providing that suppliers are dealt with
impartially in negotiations.
Individuals and organisations should expect impartial treatment in their involvement with a project (e.g.
when an organisation submits a tender for a contract).
C is correct. If a family member supplies inputs to a project, this constitutes a conflict of interest that
needs to be disclosed and managed. While intellectual property may need to be kept confidential, the
supplier of it cannot expect the same level of confidentiality, especially where there is a conflict of interest
issue. All individuals involved in projects should be treated impartially.
35. Which of the following is the main reason for closing the cost records at the end of a project?
It allows for more effective resource dispersion.

It is required for specification satisfaction consensus.
Project workers may continue to bill hours to the project.
The end of financial period accounts need to be finalised.
C is correct. The main issue is that if the cost records are not closed, expenditure can continue to be
billed against the project. This will result in cost overruns or provide an opportunity for fraud.
36. A project has an initial cost of $25,000 and ongoing costs of $5,000 per annum. It is expected to
generate revenues of $16,000 per annum for three years.
What is the project’s net present value (NPV) if the cost of capital for the project is 20 per cent per annum?
($1,829) $8,000 $23,171 $48,171
37. A government construction authority is planning the construction of a new airport at a tourist
destination. Estimates of durations and costs for completing this project are as shown in the table.
Activity Description Duration Cost ($)

(weeks)
A Preparation of engineering plans 16 $200,000
B Tender documents 8 $30,000
C Construction of new access road 14 $150,000
D Construction of perimeter fence 4 $50,000
E Site preparation 12 $90,000
F Preparation of runway base 8 $100,000
G Pouring of concrete on runways 8 $200,000
H Construction of control tower 10 $300,000
I Painting runway markings 1 $6,000
J Installation of electronic systems 6 $20,000
K Testing electronic systems 1 $5,000
88 $1,151,000
Activity A must be completed before any other activity can begin. Activities C, D and E can start as soon
as B is completed. Activity E must be completed before F, which must be completed before G can be
started. Activity I can only begin when G is complete. H can begin when E is complete, and must be
completed before J can start. K can only start when J is complete.
How many weeks long will it take to complete the airport?
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MODULE 1

A. Big data, Innovation, Resources and Sustainability.

A. Increased competition and lower transport costs.

3. Why have organisational hierarchies generally become flatter?

A. To improve operational efficiency.

 A is correct because flatter hierarchies improve operational efficiency by decreasing the

A. Balancing stakeholder needs and supporting strategy.

5. Who is an organisation creating value for?

6. What does sustainable value creation refer to?

10. What makes up an organisation value chain?

13. Which of the following is a support activity in the value chain?

External user groups Decisions supported by accounting information

30. Which of the following statements best describes customer value?

31. Has the role of management accountants changed?

32. What is the primary objective of strategic management accounting?

36. How can industry value chain integration benefit a business?

47. Which of the following is true about supplier power?

49. Which of the following is not true about buyer power?

7. Which of the following is a key challenge of big data?

8. Which of the following is a ‘feedback’ function of an information system?

10. Which of the following best describes triangulation?

11. Which of the following is a major limitation of external information?

12. How is a data warehouse different from a traditional database?

Using Mendelow’s Stakeholder Grid, how would you classify Willam?

20. Adriana Silva is the management accountant at MakeGoodsCo, a manufacturing organisation

 A is correct because it fulfils Brian's needs of:

• comparability—last period compared with prior period

• verifiability—checking from cost of goods sold and sales accounts

• timeliness—in three days

• understandability—use of percentages that are understandable.

24. Which of the following defines a data custodian?

How would you classify the requested information?

26. What is the performance management approach in relation to strategy implementation?

What type of information is this classified as?

3. What type of responsibility centre would a HR director be in charge of?

What is ACC’s revenue budget for the next month?

D is correct because the revenue budget for next month is $252,000.

April May June

19,100 19,600 20,400 20,900

The budgeted cost to manufacture each unit is $80.

Forecast sales price: $100 is the most reliable forecast price.

9. Which of the following is correct regarding planning?

 B is correct based on the following calculations:

Actual output of 1,000 tubs requires a budgeted quantity of 6,000 cartons.

6,000 cartons / 1,000 tubs = 6 cartons per tub.

What is the direct material efficiency variance for Food Ltd?

100 cartons x $12 budgeted price = $1,200 Favourable.

What is the direct material price variance for Food Ltd?

The formula is (AQ x AP) - (AQ x BP)

(5,900 x $11) - (5,900 x $12)

14. Which of the following will measure a price variance?

15. Which of the following will measure an efficiency variance?

D is correct based on the following calculations.

The actual hours worked x budgeted cost is 20,000 x $5 = $100,000.

Calculation: $100,000 + $4,000 = $104,000.

Actual cost of $104,000 / 20,000 hours of work = $5.20 per hour.

C is correct based on the following calculations.

80,000 units produced x 2 kilograms per unit is 160,000 kilograms.

$760,000 / $5 = 152,000 kilograms were purchased.

Which one of the following describes a Flexible Budget?

(Actual selling price - budgeted selling price) x actual units sold

($25,000 - $28,000) x 350 = $-1,050,000