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NEW QUESTION 12
Which of the following are not advantages of Absorption costing? (Select ALL that apply.)
- A. The key benefit of absorption is that it helps management in making short term decisions.
- B. The key benefit of absorption costing is that it cannot be manipulated by production changes.
- C. The key benefit of absorption costing is that it recognises both fixed and variable overheads are necessary for production to occur.
Answer: A,B
NEW QUESTION 13
A company is appraising two projects. Both projects are for five years. Details of the two projects are as follows.
Based on the above information, which of the following statements is correct?
- A. The annuity factor for project A would be lower than the annuity factor for the project B.
- B. An annuity could be used to calculate the net present value of the projects.
- C. A perpetuity could be used to calculate the net present value of the projects.
- D. The annuity factor for project A would double the annuity factor for project B.
Answer: B
NEW QUESTION 14
Refer to the exhibit.
The following data refers to a manufacturing process for the month of July:
The work in progress is completed as follows:
(a) 100% for material
(b) 80% for labour
(c) 60% for overhead
What is the value of the finished goods?
Answer:
Explanation:
£13198
NEW QUESTION 15
A service company provides accountancy training courses. Which THREE of the following would be classified as variable costs of the company?
- A. Advertising (The company runs specific adverts for each course)
- B. Depreciation of office machinery
- C. Lecturers' fees (Lecturers are paid a flat rate per day)
- D. Course manager's salary
- E. Office rental
- F. Hire of conference rooms
Answer: A,C,F
NEW QUESTION 16
When sales and output have passed the break-even point, the contribution per unit, for each unit then sold, becomes:
- A. The profit per unit
- B. The margin of safety
- C. Bigger
- D. Smaller
Answer: A
NEW QUESTION 17
Refer to the exhibit.
The following data relates to two activity levels of a department. Overhead absorption is on the basis of machine hours.
The variable overhead rate per hour is £4.50. The amount of fixed overhead, to the nearest £000, is:
Answer:
Explanation:
£871
NEW QUESTION 18
A standard hour is:
- A. A measure of time
- B. The standard time taken to produce one unit
- C. A measure of output
- D. The actual time taken to produce one unit
Answer: C
NEW QUESTION 19
Refer to the exhibit.
A company has the following budgeted sales for the next 6 month period:
Cash sales are 20% of the total and receive a cash discount of 5%. The remaining 80% of sales are on credit.
60% of credit customers pay within one month, the remaining 40% pay within two months.
The cash receipts for the month of July will be:
- A. $110,000
- B. $109,200
- C. $91,200
- D. $90,400
Answer: D
NEW QUESTION 20
Which of the following best describes a step cost?
- A. A cost which remains constant until activity reaches a critical level; thereafter the cost increases to a higher level and the unit cost remains constant until the next critical activity level is reached.
- B. A cost which increases per unit until activity reaches a critical level; thereafter the cost increases to a higher level and the unit cost remains constant until the next critical activity level is reached.
- C. A cost which remains constant until activity reaches a critical level; thereafter the cost increases to a higher level and the total cost remains constant until the next critical activity level is reached.
- D. A cost which increases steadily until activity reaches a critical level; thereafter the cost increases to a higher level and the total cost remains constant until the next critical activity level is reached.
Answer: C
NEW QUESTION 21
Refer to the Exhibit.
The following budgetary information is available for a department in a manufacturing company:
The production overhead absorption rate percentage, when the percentage on prime cost is used, is:
Answer:
Explanation:
200%
NEW QUESTION 22
Refer to the exhibit.
The budgetary control report for the latest period shows the following. Variances in brackets are adverse.
The sales volume contribution variance for the period was
- A. $500 favorable
- B. $4,500 favorable
- C. $26,700 adverse
- D. $27,200 adverse
Answer: D
NEW QUESTION 23
A company uses an integrated accounting system.
The accounting entries for an issue of indirect materials to production would be:
- A. Debit: Finished goods control account Credit: Raw material control account
- B. Debit: Raw material control account Credit: Work in progress control account
- C. Debit: Work in progress control account Credit: Raw material control account
- D. Debit: Production overhead control accountCredit: Raw material control account
Answer: D
NEW QUESTION 24
Refer to the exhibit
Zeff Ltd has forecast that the relationship between total overheads and machine hours will be as follows:
If the budget is to be based on 4,000 machine hours, the fixed overhead absorption rate will be:
Give your answer to 2 decimal places.
Answer:
Explanation:
£7.09
NEW QUESTION 25
Refer to the exhibit.
The following extracts are taken from a company's budgetary planning papers, showing the budgeted costs to be incurred at two activity levels:
Direct material is a wholly variable cost.
Direct labour is a semi-variable cost.
Production overhead is a step cost, with a single step at an output of 450 units.
The total budget cost allowance for an output of 480 units is:
Answer:
Explanation:
$13100 adverse
NEW QUESTION 26
Which of the following is NOT a valid purpose of budgeting?
- A. To authorise managers to incur expenditure.
- B. To communicate targets to managers.
- C. To comply with financial reporting requirements.
- D. To coordinate the different activities of an organisation.
Answer: A
Explanation:
Reference: https://www.acowtancy.com/textbook/acca-pm/budgetary-systems/budgetary-systems/notes
NEW QUESTION 27
Which of the following would NOT be an appropriate performance measure for a profit centre manager?
- A. Gross margin
- B. Sales price variance
- C. Return on capital employed
- D. Contribution per unit
Answer: D
NEW QUESTION 28
Which of the following statements about CIMA's role in relation to its students is correct?
i. CIMA's professional conduct staff process complaints made against CIMA students ii. Students are not governed by CIMA's code of ethics until they become registered CIMA members iii. Students may consult CIMA about situations in their work place that appear to conflict with CIMA's code of ethics iv. Once students have passed all of the CIMA exams they may use the designatory letters ACMA
- A. (i) and (iii)
- B. (iii) and (iv)
- C. (i), (iii) and (iv)
- D. (i), (ii) and (iv)
Answer: A
NEW QUESTION 29
A company uses an integrated accounting system and absorbs production overhead using a predetermined rate of $6 per machine hour.
Last period a total of 25,500 machine hours were worked and the actual production overhead incurred was
$158,000.
The accounting entries for the production overhead under- or over-absorbed for the period would be:
- A. Debit: work in progress control account $5,000
Credit: income statement $5,000 - B. Debit: work in progress control account $5,000
Credit: production overhead control account $5,000 - C. Debit: production overhead control account $5,000
Credit: income statement $5,000 - D. Debit: income statement $5,000
Credit: production overhead control account $5,000
Answer: D
NEW QUESTION 30
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