2412

Managerial Accounting
Semester 1
2015/16
Exam
December 18, 2015
Lenght: 1h30 + 30 minutes (extra-time)
NAME: _____________________________________________________________________
NUMBER:________________________ CLASS: ____________________________________

The questions must be answered in the following stapled sheets, which must
not be separated

You can use the back of each sheet for rough draft

Part I (5 marks)
Multiple Choice: Identify the letter of the choice that best completes the statement or
answers the question. For each wrong answer, 0,25 marks will be deducted with a minimum
of zero for the overall mark of part I.

1. Management accounting and financial accounting differ in that management accounting
information is prepared
a. following prescribed rules
b. using whatever methods the company finds beneficial

c. for shareholders

d. to summarize the whole company with little detail

2. Which of the following costs incurred by a chair manufacturer would be traced to the
product cost through direct tracing?
a. the depreciation on factory equipment

b. the supervisor's wage

c. the insurance on the factory building
d. the woodmaker's salary

3. Sunk costs are
a. future costs that have no benefit.

b. relevant costs that have only short-run benefits.

c. avoidable costs.

d. irrelevant costs.

4. Which of the following is an example of a fixed cost?
a. power cost in the machining department

b. wood in the manufacture of furniture
c. labour cost paid on a piece basis

d. lease payments on machinery

5. Which of the following costs is NOT recorded in the company's accounting system?
a. sunk cost

b. opportunity cost

c. direct cost
d. indirect cost

6. Basing overhead allocation solely on volume
a. will undercost high-volume products and overcost low-volume products.

b. will overcost high-volume products and undercost low-volume products.

c. is the sole basis of the activity-based costing model.
d. All of the above are correct.

7. Refer to the figure presented below and to the Cost-Volume-Profit analysis. The
difference between line AB and line AC (area BAC) is the:
a. contribution ratio.
b. total variable cost.
c. contribution margin per unit.
d. total fixed cost.

8. Which of the following statements is true when making a decision between two
alternatives?
a. Variable costs may not be relevant when the decision alternatives have the same activity
levels.
b. Variable costs are not relevant when the decision alternatives have different activity
levels.
c. Sunk costs are always relevant.

d. Fixed costs are never relevant.

9. The contribution margin at the break-even point
a. equals total fixed costs.

b. is zero.

c. plus total fixed costs equals total revenues.
d. is greater than variable costs.

10. Which of the following is usually prepared before the production budget?
a. direct materials purchases budget
b. direct labour budget
c. sales budget
d. cash budget

Part II (5 marks)
GLOBAL Airlines operates 35 scheduled round-trips flights each week between Rome and
Paris. It charges a fixed one-way fare of 200 per passenger. GLOBAL Airlines can carry 150
passengers per one-way flight. Fuel and other flight-related costs are 5,000 per one-way
flight. On-flight meal and refreshment costs average 5 per passenger. Flight crew, ground
crew, advertising, and other administrative expenditures for the Rome-to-Paris route
amount to 400,000 each week.
Required:
1) If the load factor is 100% on all 70-one way flights (that is, the flights are 100% full) what
is the operating profit per week for Global Airlines (answer the question preparing a profit &
loss account employing a contribution margin format) (2.5 marks)

2) How many passengers must each of the 70 one-way flights have on average to break even
each week? (2.5 marks)

Part III (5 marks)

HighTech Company manufactures two models of compact disc players: a deluxe model and
a regular model. The company has manufactured the regular model for years; the deluxe
model was introduced recently to tap a new segment of the market.
The current cost accounting system allocates manufacturing support costs to the two
products on the basis of direct labour hours. The company has estimated that this year it will
incur 1,200,000 in manufacturing support costs and will produce 5,000 units of the deluxe
model and 50,000 units of the regular model. The deluxe model requires four hours of direct

labour, and the regular model requires two hours. Material and labour costs per unit and
selling price per unit are as follows:

Item
Direct materials cost
Direct labour cost
Selling price

Deluxe
50
60
200

Regular
40
30
100

Required:
1) Determine the cost to manufacture one unit of each model [2.25 marks];

2) The company has decided to trace manufacturing support costs to four activities as it
follows:

Activity
Cost Driver
Cost
Cost Driver Units
Demanded
Deluxe
Regular
Purchase orders
Number of orders
200,000
200
600
Quality control
Number of inspections
250,000
650
600
Product setups
Number of setups
400,000
100
100
Machine maintenance
Machine hours
350,000
20,000
15,000


Based on ABC, compute the total cost to manufacture one unit of each model [2.75 marks].

Part IV (5 marks)

Company XYZ, Ltd., a merchandising firm that sells one product, estimates it will sell 12,000
units of its product at 60 per unit in December. In November, the company prepared other
information to prepare a budget for December, as shown below:

Merchandise inventory, December 1
2,000 units
Desired merchandise inventory for December 31
3,000 units
Cost per unit of merchandise purchases
40
Selling and administrative expenses
200,000
November sales
60,000 units

The company estimates that 60% of each months sales are collected in the month
of sale and that the remaining 40% is collected in the month after sale.
The 200,000 of selling and administrative expenses includes 40,000 of
depreciation.
The company pays for half of merchandise purchases during the month of purchase
and pays the remainder during the month following purchase. Estimated
merchandise purchases for November are 340,000 .
All other out-of-pocket expenses are paid for in cash.

1) How many units of merchandise will Company XYZ budget to purchase in December?
What is the euro amount of budgeted merchandise purchases for December? (1.75
marks)





































2) Prepare the cash budget for December (2,5 marks);

3) What will be the value of Clients (Debtors) and Suppliers (Creditors) in the Balance Sheet
at the end of December? (0.75 marks)


















Good Luck!

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