Beruflich Dokumente
Kultur Dokumente
ACCA
Paper F5
Performance Management
Revision Mock Examination
March 2016
Question Paper
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Section A ALL FIVE questions are compulsory and MUST be
attempted.
1. Sierra Limited has recorded the following data in the two most recent periods.
What is the best estimate of the companys fixed costs per period?
A. $135,000
B. $132,000
C. $51,000
D. $48,000
A. Direct materials
B. Direct labour
C. Fixed costs
D. Variable and fixed costs
3. Newells current level to breakeven is 6,000 units per annum. The selling price is $90
per unit and the variable cost is $40 per unit.
A. $120
B. $240,000
C. $300,000
D. $540,000
4. An office manager of Harris Plc wishes to minimise the cost of telephone calls made.
40% of calls in peak hours cost $1 each and the remainder of such calls cost $1.50
each. 30% of calls at other times cost $0.80 each, 50% of them cost $0.90 each, and
20% of them cost $1 each. This proportion cannot be varied, though the total number
of calls made in peak hours and of calls made at other times can be.
If X = the numbers of calls made each day in peak hours, and Y = the number
of calls made each day at other times, the official managers objective is to:
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5. Usman Co is considering its option with regard to a machine which cost $120,000 four
years ago.
The machine can generate scrap proceeds of $150,000 if the firm wants to sell. This
machine would generate net income of $180,000 if used on a project.
A. $120,000
B. $150,000
C. $180,000
D. $210,000
6. Bruno purchased some equipment several years ago for $50,000. Its net book value
is now $10,000. The equipment is no longer in normal use and it could be sold now for
$8,000.
Bruno has been offered a one-off contract which would make use of this piece of
equipment for six months. After this time the equipment would be sold for $5,000.
A. $8,000
B. $3,000
C. $5,000
D. $10,000
A. 14,000 units
B. 11,667 units
C. 28 units
D. 23 units
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9. Jack Lee is considering a project and has asked you for help. This project requires 400
kg of raw materials X. The Company has 150 kg of X in stock that were purchased six
months ago for $55 per kg. The company no longer has any use for X. The inventory
of X could be sold for $40 per kg. The current purchase price for X is $53 per kg.
What is the total relevant cost of raw material X for the project?
A. $17,950
B. $19,250
C. $21,200
D. $21,500
10.The Sales Director has prepared a manpower plan to ensure that sales quotas
for the forthcoming year are achieved. This is an example of:
A. Strategic planning
B. Tactical planning
C. Operational planning
D. Corporate planning
A company produces a product that requires two materials, Material A and Material B.
Details of the material quantities and costs for August are given in the table below.
Material A Material B
Budget Actual Budget Actual
Quantity (kg) 24,000 23,000 36,000 38,000
Cost per kg ($) 2.40 2.30 1.30 1.38
Budgeted and actual output of the product for August was 12,000 units.
A. $1,540 Favourable
B. $1,540 Adverse
C. $1,288 Favourable
D. $1,288 Adverse
A. $200 Adverse
B. $1,740 Adverse
C. $200 Favourable
D. $1,740 Favourable
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13.Details of two products are as follows:
A B
Selling price per unit ($) 180 150
Direct material cost per unit ($) 120 100
Output per hour (units) 80 90
Factory costs are $46,000 per day. There are 10 hours available on the bottleneck
machine every day.
A. 1.04
B. 2.04
C. 3.04
D. 4.04
15.ABC Plc uses an activity based costing system. Three products are manufactured,
details of which are as follows:
What is the machine set-up cost per unit of product Z (to the nearest cent) if
the annual machine set-up costs are $250,000?
A. $1.20
B. $1.02
C. $66.22
D. $2.00
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16.Designs plc has just developed a new product, XL. It took 36 minutes to produce the
first batch of five XLs. Designs estimates that it can enjoy an 85% learning effect on
production of the product. In order to set a price for the product, a standard cost card
is being formulated.
How much time per unit should be included for the production of the 201st to
250th items?
A. 7.20 minutes
B. 2.88 minutes
C. 3.10 minutes
D. 2.26 minutes
Jones Ltd operates a standard absorption costing system. The following information has
been extracted from the standard cost card for one of its products:
Budgeted production 1,500 units
It has subsequently been noted that due to a change in economic conditions the best price
that the material could have been purchased for was $4.50 per kg during the period.
A. $4,200 Adverse
B. $4,800 Adverse
C. $4,480 Adverse
D. $4,520
A. $3,600 Adverse
B. $3,280 Adverse
C. $4,200 Adverse
D. $3,820 Adverse
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19.Most companies have a Management Information System (MIS) set up to monitor
actual monthly spending against budgeted monthly spending.
A. Control
B. Planning
C. Decision-making
D. All the above
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Section B ALL FIVE questions are compulsory and MUST be
attempted.
1. Uni-craft is a toy manufacturer producing more than 30 product lines for disabled
children. The products are specialised and in high demand all over Europe. Recently
they are facing stronger competition due to increased flux of products from the Chinese
market. Uni-craft is considering introducing an ABC system in an effort to build a fair
cost structure and a more competitive price for its products. Details of its three
products from the latest budget working papers are set out below:
Three cost pools have been identified. Their costs for the year are as follows:
$
Machine running costs: 1,400,000
Set up costs: 1,500,000
Purchase order costs: 600,000
Currently, Uni-craft operates an absorption costing system where all overheads are
absorbed based on machine hours.
Required:
Calculate the total cost per unit for each product using:
(15 marks)
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2. Veronica runs a small business performing beauty services at customer homes in a
small spa town in central England. At present she offers make-up services to ladies
getting ready for a special day, such as weddings or parties, and historically she has
always been very busy her work diary has been consistently full of bookings.
Lately, however, competition in the town's beautician market has become more intense
since a large hairdressing salon in the town centre has started offering make-up
services. In response to this, Veronica has decided to diversify into offering manicure
services as well as make-up services. She has asked for your help in deciding how to
price her manicure services.
Together you and Veronica have performed some market research into home manicure
services in the town. This research suggests that the estimated demand for manicure
services per quarter at two different price points are as follows:
Required:
Calculate the expected profit for the manicure services at a price point of:
Explain briefly maximax, maximin and expected value decision rules, with
reference to risk attitudes. (4 marks)
(10 marks)
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3. Southbury Estate is a housing department within a large social services organisation
run by the government from taxpayers money. For many years the budgets have been
set by adjusting for any known changes in activity levels (mostly population
statistics) and adding an inflation adjustment to the previous years expenditure. Up
until now, only senior management have been involved in the budgeting process.
Required:
(15 marks)
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4. Manhattan Engineering (ME) is engaged in manufacturing metal parts for industrial
use. It operates a standard marginal costing system for management accounts. The
newly appointed managing director of ME having very little financial background has
received a variance report for the quarter 3, extracts of which are shown below:
The above figures do not include the effect of a shortage of required skilled workers in
the industry and general average labour rate has gone up to $6 per hour.
In the quarter just ended the company produced and sold 900 units. The direct
materials used were 3,620 kg at total cost of $13,032. The actual direct labour cost
was $9,968.75 for 1,812.5 hours.
Required:
(a) Calculate for labour costs planning and operational variances in as much
detail as information allows. (6 marks)
(b) Explain how analysing variances into planning and operational elements
can help ME. (4 marks)
(10 marks)
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5. Umbrella Company (UC) manufactures two types of umbrellas in two different
factories, the South and the North. After assembly the finished umbrellas are
transferred to the sales division at their cost plus 10% profit mark-up. UCs prices are
set on the basis of the external market in consideration, and current prices for South
umbrellas are $3.00 and of North Umbrellas $2.50. UC sets a target return of 20% on
investment in each division per annum. The heads of all divisions get paid a bonus of
$500 for every 1% return achieved in excess of target return; so if achieved return is
20% no bonus is paid, and for 21%, $500 is paid and so on.
The following are the financial details of the divisions gathered by the company
accountants.
South North
Direct material cost per umbrella ($) 1.20 0.80
Direct labour ($) 1.00 1.00
Overheads ($) 0.50 0.40
Annual capacity (units) 1,500,000 1,250,000
Current capacity utilisation (units) 1,400,000 1,100,000
Investment ($) 1,500,000 1,000,000
Sales division is part of the head office of UC which is responsible for all sales. It mostly
shares the facilities of the head office; therefore the investment in sales division is only
minimal ($250,000). UC operates a just-in-time system.
Required:
(10 marks)
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Formulae Sheet
Learning curve
Y axb
Where:
Demand curve
P a bQ
changein price
b
changein quantity
a price when Q 0
MR = a 2bQ
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