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BA2 Exam Dumps : Fundamentals of management accounting

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Fundamentals of management accounting Questions and Answers

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Question 1

Which of the following is NOT a valid purpose of budgeting?

Options:

A.

To communicate targets to managers.

B.

To comply with financial reporting requirements.

C.

To coordinate the different activities of an organisation.

D.

To authorise managers to incur expenditure.

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Question 2

Which of the following statements regarding variances is valid?

Options:

A.

Using higher quality material than standard could explain an adverse labour efficiency variance.

B.

Improved maintenance of production machinery could explain an adverse material usage variance.

C.

An adverse labour rate variance could explain a favourable labour efficiency variance.

D.

Poor supervision could explain a favourable labour rate variance.

Question 3

A company makes and sells a range of products. The standard details per unit for one of these products, product X, are as follows.

To meet sales demand, the company must obtain 2,000 units of product X next month. There is sufficient labour capacity to produce 1,500 of these units in-house during normal time. However, any production above this level would require overtime working which would be paid at a premium of 50%.

The company can buy as many units of product X as it wishes next month from an external supplier at a price of $120 per unit.

What is the total financial benefit to the company of purchasing the appropriate number of units from the external supplier rather than producing them in-house?

Options:

A.

$20,000

B.

$30,000

C.

$27,500

D.

$5,000

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