CIMA Fundamentals of Management Accounting (BA2) Practice Exam

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• Which of the 3 E's is about purchasing inputs of quality at minimum cost?
• Which term is the value in today's prices, of a future cash flow?
• Which statement is not a characteristic of marginal costing?
• What is the primary purpose of service cost centres?
• Historic cost is defined as the amount paid for an asset.
• Capital employed is defined as:
• Which two considerations are highlighted when deciding on a selling price?
• Which statement correctly contrasts activity-based costing (ABC) with marginal costing?
• Which term describes a situation where one system handles financial accounting and a separate system handles cost/management accounting?
• Which variance specifically measures the difference between actual material usage and the standard quantity allowed for actual output, valued at the standard price?
• Sales volume variance is defined as the difference between which two quantities, valued at what rate?
• Which term represents the present value of future inflows minus the initial outlay?
• Material variance is based on actual production. Which statement describes it?
• Which variance is described as the difference between actual input price and the standard price per unit, when usage is ignored?
• What is a flexible budget?
• Which variance is particularly meaningful for cost control?
• Fixed costs £60,000; C/S ratio 0.25. Breakeven revenue equals?
• What is Management information?
• Which statement describes mutually exclusive outcomes?
• In batch costing, a cost unit is defined as which of the following?
• Which term best describes a cost that can be influenced by management decisions and actions?
• What is a standard cost (or expected)?
• Which statement about standard cost is true?
• In reapportionment, where are service cost centre overheads transferred?
• Which term describes a system of accounting that segregates revenue and costs into areas of personal responsibility in order to monitor and assess the performance of each part of the organization?
• Which statement best describes the wages control account?
• Which budget type is designed to adjust for changes in activity levels?
• What describes over-absorption of overheads?
• Marginal costing is best described as:
• Gross profit margin is defined as which of the following?
• What does the Contribution to Sales (C/S) ratio represent?
• Which budget is a comprehensive plan that ties together the operating budgets with the projected financial statements?
• Which term serves as the central repository for wage payments and deductions?
• In the high-low method, the change in cost between the highest and lowest activity levels is used to estimate the variable cost per unit.
• Operational Decisions are concerned with:
• Batch costing is best described as:
• For ungrouped data, the mean is calculated as which formula?
• If contribution is £40,000 and sales are £200,000, what is the P/V ratio?
• Total Costs are equal to Production costs plus Non-production costs.
• Batch costing is most similar to job costing in that:
• Cost per unit equals:
• What is the definition of margin (return on sales)?
• Which term describes a situation where financial accounting and cost/management accounting use separate systems?
• Predetermined OAR is defined as which of the following?
• What are budget variances?
• NPV is defined as what difference?
• What does linear regression analysis estimate in cost behavior?
• If fixed costs are £50,000; selling price £60; variable cost £30, how many units are required to breakeven?
• Which statement correctly defines the contribution concept used in short-term decision making?
• How is overhead absorbed calculated?
• What is a fixed budget?
• Which perspective focuses on internal processes and decision making within the organization?
• Which of the 3 E's deals with using inputs to achieve the organisation's goals?
• Which term describes a constant sum of money paid or received each period for a given number of periods?
• Which statement best describes the Global Management Accounting Principles?
• Which term is defined as the difference between the highest and lowest possible values?
• Batch costing is best described as:
• Which statement best defines a budget?
• Which statement describes the median?
• Which of the following is not a standard variance category described in the material?
• Which set correctly lists the three types of probability described?
• Which description captures uncertainty?
• Job cost card: A record of the actual costs incurred on a job. Which option describes it faithfully?
• What is the Budget Committee?
• What does the high-low method involve?
• Which statement best describes breakeven analysis?
• What is the primary purpose of a budget?
• Which statement is a standard assumption of CVP analysis within the relevant range?
• Which term describes a finite series of equal payments made at regular intervals?
• Cost unit is defined as:
• Residual income is best described as:
• What is an expenditure variance?
• Which budgeting approach starts from a zero base for each decision package?
• A standard cost card is usually prepared for each product manufactured. Which statement best describes its content?
• Which term is the return required by the company's investors?
• Which concept is the rate that makes net present value zero?
• Production cost centres are those which are:
• What is the value in today's prices, of a future cash flow?
• Economic value is what it is worth.
• Internal job costing is best described as:
• What is a functional budget?
• Capital employed is defined as:
• Which statement about the master budget is not typically included?
• Which statement best describes complementary probabilities?
• Which term refers to costs incurred to assess whether a firm's activities comply with environmental laws and standards?
• Costs incurred after waste has been produced but not discharged into the environment are called which type of cost?
• Incremental budgeting is defined as
• Indirect costs are costs incurred in the course of making a product or service, but which cannot be identified with a particular cost object; also known as an overhead.
• Which term describes separate systems used for different accounting functions, requiring data transfer between them?
• Zero-based budgeting starts from what premise?
• Which term is defined as standard class width divided by current class width?
• A cost centre is best described as:
• Which statement defines an adverse variance?
• Which term describes the use of separate systems for financial accounting and costing, requiring data reconciliation between systems?
• A cost which cannot be affected by management within a given time span is called which?
• Which concept describes interest calculated and paid on capital plus any interest earned up to that point?
• What does linear regression analysis provide in cost modeling?
• A cost which can be influenced by management decisions and actions is called which?
• Management information is used for what purposes?
• What is a standard hour?
• Which measure shows how many years it takes for the cash flows to repay the original investment?
• Which term describes the cost that represents the additional costs and revenues resulting from a decision?
• Which statement describes risk?
• The term for a system of accounting that segregates revenue and costs into areas of personal responsibility in order to monitor and assess the performance of each part of the organization is known as?
• Non-financial performance indicators are measures based on non-financial information; examples include:
• In performance measurement, which perspective focuses on whether the business has delivered value for shareholders?
• Absorption costing is defined as:
• Total Production Cost equals Prime cost plus Production overheads (total direct costs + indirect production overheads)
• If actual activity is 8,000 units and the predetermined OAR is 6 per unit, what is overhead absorbed?
• Which statement best defines sales price variance?
• Under-absorption is the situation where which of the following occurs?
• Which of the following is NOT a characteristic of services?
• Under the linear assumption, which statement is true?
• Direct costs are costs that are traced in full to the product and show exactly how much cost we will incur to produce a specific item.
• Which statement best defines reapportionment in cost accounting?
• Which inputs are used to calculate a standard cost?
• Cost behavior is defined as:
• Which term is the process of entering transactions in the books of the business, ensuring equal debit and credit entries?
• Which expression correctly represents P[x], the probability of outcome x?
• If budgeted sales volume is 12,000 units and breakeven sales volume is 8,000 units, what is the margin of safety percentage?
• Which statement is true about marginal costing for decision making?
• Which set lists the three types of probability described?
• Which of the 3 E's focuses on using inputs to maximise output?
• What is the Margin of Safety?
• Performance measures that matter to customers are described by which perspective?
• Which statement describes the wages data in a wages control account?
• What is Management Accounting?
• Which expression gives the quantity of units required to reach a specific profit?
• A cost centre is defined as:
• Which technique calculates the annual percentage return given by a project?
• Which of the following describes imposed budgeting?
• Which statement best defines the expected value (EV) in decision analysis?
• In the regression equation y = a + b x, what does 'a' represent?
• What is budget cost allowance?
• Grouped data is characterized by which feature?
• The main purpose of using a standard cost is to provide an estimated unit cost for planning and control.
• Net profit margin is calculated as which of the following?
• Which metric ignores the time value of money by measuring how long it takes to recover the initial outlay?
• What is a decision variable?
• Historic cost
• Which option correctly describes the purpose of a decision tree?
• Which items are components of budgeting?
• Asset turnover measures how efficiently assets are being used to generate income. Which formula expresses asset turnover?
• Which term measures the spread of data around the mean?
• Which statement describes a disadvantage of marginal costing?
• What is the formula for gross profit margin?
• Which statement about periodic budgets is least accurate?
• Which description best matches the concept of repeated distribution in overhead allocation?
• Direct costs are costs traced in full to the product.
• Perishability, in the context of services, means:
• Which concept evaluates an equivalent value of money at an earlier point in time?
• Production cost centres are defined as:
• Which description best defines a decision tree?
• What is the principle budget factor?
• Which statement describes simultaneity in services?
• Discounting is the process of evaluating an equivalent value of money at an earlier point in time.
• A composite cost unit is used when:
• Environmental appraisal costs are costs incurred to assess whether a firm's activities comply with environmental laws and standards.
• If actual overhead is greater than overhead absorbed, what is this called?
• The standard hour is used to measure output when manufacturing how many products?
• How do independent events differ from dependent events?
• Which of the following is the correct formula for contribution per unit?
• What does ABC cost tracing involve?
• Total Production Cost is equal to which of the following?
• Which statement describes the arithmetic mean?
• Which term describes a unified accounting environment where all transactions are recorded in a single system for both financial and costing information?
• What is the definition of mark-up (return on costs)?
• Which statement correctly identifies Internal Rate of Return?
• On a breakeven chart, which axis represents sales volume and which represents money?
• What does the linear assumption state?
• In variance analysis, what do 'Should' and 'Did' represent in the context of sales price variance?
• Which statement best describes variable cost behavior?
• Which term is the difference between the upper and lower quartiles?
• What is an optimal production plan?
• What is the term for recording business transactions with equal debits and credits in the ledger?
• A future cash flow that will be incurred anyway, regardless of the decision taken, agreed in the past contractually is called which cost?
• Job: A cost unit which consists of a single order or contract. Which choice best defines it?
• Which concept is the return required by investors and often used as a hurdle rate?
• Which term is defined as the return required by the company's investors?
• Which term aims to improve internal processes and decision making?
• The formula budgeted fixed costs plus (number of units times variable cost per unit) represents which concept?
• Which is an advantage of marginal costing?
• If actual overhead is less than overhead absorbed, which condition is this?
• What is a budget manual?
• What is a limited factor?
• Which measure indicates distances from the mean in the normal distribution in units of standard deviations?
• A joint probability table is used to represent which of the following?
• Which statement correctly describes a variable cost?
• Which statement best describes a flexed budget?
• Management accounting aims to create value for stakeholders in which organizations?
• Which term describes the setup where financial accounting and cost/management accounting use different systems?
• What does a joint probability table record?
• Which term describes an annuity that starts after a fixed time and continues forever?
• A composite cost unit is used when:
• Return on capital employed (ROCE) is calculated as:
• Semi-variable, mixed, or semi-fixed costs are:
• Value for money means:
• What best distinguishes risk from uncertainty?
• Which variance is based on actual units sold and standard price per unit?
• Which term is a collecting place for net wages paid and deductions made from gross pay?
• Which term describes measures to evaluate the business's capacity to maintain its competitive position through the acquisition of new skills and development of new products?
• Which is an assumption of breakeven analysis for short-term decisions?
• What are non-mutually exclusive outcomes?
• Which item is not typically included in a functional budget?
• What is a scarce resource?
• Which description defines net present value (NPV) as a comparison of the discounted value of the future cash flows with the cost of setting up a project today?
• Which of the following best describes participative budgeting?
• Which measure focuses on the middle 50% of data by excluding extreme values?
• What is a piecework system?
• Which statement about normal costing is true?
• Grouped data is characterized by what?
• Which term is defined as standard class width divided by current class width?
• Operational Decisions are best described as:
• Conditional probability describes the probability of an event occurring given what?
• Ungrouped data describe which type?
• The production plan maximizing contribution from the limited factor is called?
• Which expression correctly represents P[x], the probability of outcome x?
• Which term describes implementing the strategy set, efficiently and effectively?
• Which characteristic BEST describes services in terms of intangibility?
• Which term describes any distribution that is symmetrical around the mean?
• A future, incremental cash flow arising as a direct consequence of a decision is called which cost?
• ROCE is a measure of profitability relative to resources invested and is calculated as:
• A future cash flow that will be incurred anyway regardless of the decision?
• Which statement about zero-based budgeting is accurate?
• In repeated distribution, which service cost centre is processed first?
• What is a volume variance?
• What is the relevant range?
• Which term means dividing the distribution into quarters?
• What does the comparison between the fixed budget and the flexed budget illustrate?
• Price or rate variance can apply to which input categories?
• What describes ungrouped data?
• Breakeven revenue can be calculated as which of the following?
• Asset turnover measures how efficiently assets are used to generate income. Which formula represents asset turnover?
• Which statement defines a favourable variance?
• Which statement best describes a cost object?
• Costs incurred after waste has been produced and discharged into the environment are called which type of cost?
• Which equation best represents total cost in the standard model?
• Which statement best describes rolling budgets?
• Which term means one set of accounts in which all transactions are recorded and the same system provides financial accounting and costing information?
• Usage or efficiency variance measures the difference between which?
• A stepped cost is most accurately described as:
• Volume variance is the difference between which two quantities, valued at standard contribution per unit?
• Prime costs are
• Which option best describes the expected value in decision analysis?
• Which approach to probability uses historical observations to estimate likelihood?
• Environmental prevention costs are costs incurred to prevent the production of waste that could damage the environment.
• What is normal costing?
• Which measure is defined as the most frequently occurring item?
• Asset turnover measures how efficiently assets are used to generate income. Which formula expresses asset turnover?
• What does the master budget typically include?
• The benefit which could have been earned but was given up by choosing the other option is called which cost?
• Which statement about rolling budgets is true?
• Which statement best describes contribution?
• What is the correct definition of the overhead absorption rate (OAR)?
• Price or rate variance relates to which of the following?
• Which term describes a cost that cannot be affected by management within a given time span?
• Contribution is defined as:
• Breakeven level of activity in units is calculated as?
• Total Costs equal Production costs plus Non-production costs.
• A department or function whose performance is the direct responsibility of a manager is called which?
• Which term describes the distance from the mean in the normal distribution measured by the number of standard deviations they represent?
• What best describes a blanket absorption rate?
• Operating statements are used to show how variances reconcile budgeted contribution with actual contribution. Which option best reflects their purpose?
• The increase in costs and revenues that occur as a result of the decision is called which cost?
• Heterogeneity in services implies:
• Which statement best describes activity-based costing (ABC)?
• Which lines are plotted on a breakeven chart?
• A cost object is defined as:
• What is the breakeven point?