Managerial Accounting and Finance - Desklib

MANAGERIAL
ACCOUNTING AND
FINANCE

Contents
SECTION A.........................................................................................................................................4
Question A1 (2 marks)..........................................................................................................................4
Question A2 (2 marks)..........................................................................................................................4
Question A3 (2 marks)..........................................................................................................................4
Question A4 (2 marks)..........................................................................................................................4
Question A5 (2 marks)..........................................................................................................................5
Question A6 (2 marks)..........................................................................................................................5
Question A7 (2 marks)..........................................................................................................................5
Question A8 (2 marks)..........................................................................................................................5
Question A9 (2 marks)..........................................................................................................................6
Question A10 (2 marks)........................................................................................................................7
Question A11 (2 marks)........................................................................................................................7
Question A12 (3 marks)........................................................................................................................8
Question A13........................................................................................................................................8
Explain, with examples, the following terms:..................................................................................8
QUESTION B1.....................................................................................................................................9
A) Operating profit ..........................................................................................................................9
B) ABC Costing:..............................................................................................................................9
C) Calculation of Cost of each statement: -......................................................................................9
D) Distinction between the profit obtained....................................................................................10
QUESTION B2...................................................................................................................................10
Define and distinguish the terms ‘fixed costs’ and ‘variable costs’ and explain the importance
(relevance) of the distinction for short – term cost planning purposes...........................................10
b) Compute the following:..............................................................................................................11
QUESTION B3...................................................................................................................................11
a) Calculate the payback period for each of the projects. Based upon the payback criterion which
project should be chosen?...............................................................................................................11

(b) Calculate the net present value (NPV) of each project. Based upon the NPV criterion which
project should be chosen?...............................................................................................................12
(c) Based on your calculations in (a) and (b) above, what is the final decision concerning which
project should be chosen?...............................................................................................................12
(d) Discuss the advantages and disadvantages of the NPV and IRR methods of investment
appraisal..........................................................................................................................................12
REFERENCES...................................................................................................................................15

SECTION A
Question A1 (2 marks)
Financial accounting:
a. is required by regulatory bodies such as the SEC.
b. has its primary emphasis on the future.
c. provides data primarily for internal use by managers.
d. is concerned primarily with the performance of segments rather than with the
performance of the entire organization.
Question A2 (2 marks)
All of the following statements regarding budgeting is true except
a. Budgeting helps managers determine the resources needed to meet their goals and
objectives.
b. Budgeting is a key ingredient in good decision-making.
c. Budgeting is a bookkeeping task
d. The focus of budgeting is planning.
Question A3 (2 marks)
The main difference (or differences) between how traditional costing and activity-based
costing treat indirect manufacturing costs is (are) that:
a. traditional costing uses only production volume-based drivers while activity-
based costing uses only non-production volume based drivers.
b. traditional costing treats only unit level costs as variable, while ABC systems
treat unit level, batch level and product level costs as variable.
c. traditional cost allocations are usually based on a plant wide overhead rate,
while ABC systems use departmental overhead rates.
d. ‘a’ and ‘b’.
Question A4 (2 marks)
Select the response that represents the correct flow of costs in a job order costing
system
a. Raw materials, work in process, cost of goods sold, finished goods
b. Raw materials, work in process, finished goods, cost of goods sold
c. Raw materials, overhead, work in process
d. Direct material, finished goods, work in process