ACCA Paper F2 Management Accounting June 2011 Final Assessment Answers To gain maximum benefit, do not refer to these

e answers until you have completed the final assessment questions and submitted them for marking. ACCA F2 MANAGEMENT ACCOUNTING 2 KAPLAN PUBLISHING Kaplan Financial Limited, 2010 The text in this material and any others made available by any Kaplan Group comp any does not amount to advice on a particular matter and should not be taken as such. No reliance should be placed on the content as the basis for any investment or other decisio n or in connection with any advice given to third parties. Please consult your appropria te professional adviser as necessary. Kaplan Publishing Limited and all other Kapla n group companies expressly disclaim all liability to any person in respect of any losse s or other claims, whether direct, indirect, incidental, consequential or otherwise arising in relation to the use of such materials. All rights reserved. No part of this examination may be reproduced or transmitte d in any form or by any means, electronic or mechanical, including photocopying, recordin g, or by any information storage and retrieval system, without prior permission from Kapl an Publishing. FINAL ASSESSMENT ANSWERS KAPLAN PUBLISHING 3 ANSWER 1 Contribution per unit = $9 $6 = $3 Breakeven point = $54,000/$3 = 18,000 units Margin of safety = ($180,000/$9) 18,000 = 2,000 units ANSWER 2 D $ Overhead incurred 146,200 Overhead absorbed = $17.50 7,928 hours 1_3_8_,7_4__0 Under absorbed 7,460 ANSWER 3 A Variable cost per unit = 5,269 4,821 $36,614 $33,926 = $6 Fixed costs = $36,614 (5,269 $6) = $5,000 Total cost = $5,000 + ($6 2,560) ANSWER 4 C EOQ = Ch 2CoD = 60 2 320 10,000 = 326.6

To nearest whole unit = 327 ANSWER 5 Process account Units $ Units $ Materials 2,000 8,000 Normal loss 200 350 Conversion 4,500 Output 1,700 11,475 _____ ______ Abnormal loss __1_0_0_ ___6_7_5_ _2_,0_0__0 _1_2_,5_0__0 _2_,0_0__0 _1_2_,5_0__0 Average cost = ($12,500 $350)/(2,000 200) = $6.75 ACCA F2 MANAGEMENT ACCOUNTING 4 KAPLAN PUBLISHING ANSWER 6 Abnormal loss account Units $ Units $ Abnormal loss 100 675 Scrap 100 175 _____ ______ P&L _____ ___5_0_0_ __1_0_0_ ___6_7_5_ __1_0_0_ ___6_7_5_ ANSWER 7 D ANSWER 8 B Variable cost per unit = ($30,000 $28,800)/(3,000 2,700) = $4 Fixed costs = $30,000 ($4 3,000) = $18,000 Total costs = $18,000 + ($4 3,250) = $31,000 ANSWER 9 D Process account Units Units Materials 10,000 CWIP 1,000 Normal loss 200 Output 8,000 ______ Abnormal loss ___8_0_0_ _1_0_,0_0__0 _1_0_,0_0__0 Number of equivalent units Materials Units % EU CWIP 1,000 100 1,000 Output 8,000 100 8,000 Abnormal loss 800 100 __8_0_0_ _9_,8_0__0 500 FINAL ASSESSMENT ANSWERS KAPLAN PUBLISHING 5 ANSWER 10 B The material is not a constraint. There is plenty available. Chairs Tables Cupboards Contribution per unit $14 $26 $50 Labour hrs per unit 2 hrs 4 hrs 8 hrs Contribution per hr $7 $6.5 $6.25 Ranking 1st 2nd 3rd Production plan 1,000 1,000 0 Hrs used 2,000 hrs 4,000 hrs 0 ANSWER 11 B $ Amount absorbed = $4.25 17,500 = 74,375 Actual overhead _(_7_2_,0_0_0_ ) Under absorbed ___2_,3_7__5 Budgeted hours = $68,000/$4.25 = 16,000 hours

ANSWER 12 r = ((11 17,986) (440) ((11 10,366) (330) ) (11 13,467) (440 330) 2 2 = 4,246 5,126 148,137 145,200 = 4,665.297 148,137 145,200 = 0.629 = 0.63 ACCA F2 MANAGEMENT ACCOUNTING 6 KAPLAN PUBLISHING ANSWER 13 A $ AQ AP = 16,000 $1.9 = 30,400 Price variance 1,600 F AQ SP = 16,000 $2 = 32,000 Usage variance 2,000 A SQ SP = 3 5,000 $2 = 30,000 ANSWER 14 B ANSWER 15 B 75 hrs $25 1.25 per hour = $2,343.75 ANSWER 16 A ANSWER 17 C ANSWER 18 Variable cost = ((151,500 4,000) (94,500 2,000))/(25,000 15,000) = $5.50 per uni t Fixed cost at 15,000 units = 94,500 5.50 15,000 = $12,000 Fixed cost at 10,000 units = $10,000. ANSWER 19 B 40% of $74,425 = $29,770 ANSWER 20 B FINAL ASSESSMENT ANSWERS KAPLAN PUBLISHING 7 ANSWER 21 B Contribution earned by other product per unit = 100 12 2.5 20 15 = $23 Contribution earned per hour of skilled labour = $23/2.5 = $9.20 Add back labour cost per hour which is not saved = $20 Cash lost per labour hour as a result of the labour transfer = $29.20 Contract should be charged with $150 29.20 = $4,380 ANSWER 22 B ANSWER 23 C Actual sales 2,000 units Budgeted output and sales for the year

1,750 units Extra units sold 250 units Budgeted contribution per unit $175 Sales volume variance 250 175 = 43,750 (F) ANSWER 24 B Design of logo $50 Setting up of embroidery machine $50 Shirts $520 Thread and consumables $40 Embroiderers wages 10 hours @ $11 per hour = $110 Marginal cost of sales = $(50 + 50 + 520 + 40 + 110) = $770. ANSWER 25 B ACCA F2 MANAGEMENT ACCOUNTING 8 KAPLAN PUBLISHING ANSWER 26 Expected output = 95% 350 litres = 332.50 litres Cost per unit = (4250 + 2495)/332.50 = $20.29 ANSWER 27 C ANSWER 28 D ANSWER 29 D Sales budget = 450 1.20 + 375 0.95 + 550 1.35 = $1,638.75 ANSWER 30 A ANSWER 31 C Process account kg $ kg $ Materials 500 3,750.00 Normal loss 10% 50 Labour 3,000.00 Output 425 7,437.50 Overheads ___ __ 1_,_1_2_5_._0_0 Abnormal loss ___2_5_ ___4_3_7_._5_0 _5__0_0_ 7_,_8_7_5_._0_0 __5_0_0_ _7_,_8_7_5_._0_0 Average cost of a unit = $7,875/(500 kg 50 kg) = $17.50 per kg FINAL ASSESSMENT ANSWERS KAPLAN PUBLISHING 9 ANSWER 32 D The fixed overhead capacity variance measures whether the work force worked more or fewer hours than budgeted for the period. Budgeted hours = 4 550 = 2200 hours Fixed overhead absorption rate = 15,950/2,200 = $7.25 per hour Fixed overhead capacity variance = 435 (F) thus worked more than budgeted. Actual hours FOAR = 15,950 + 435 = 16,385 Actual hours = 2,260 ANSWER 33 B Daily sales Number of days Probability (x) (p) px 200 3 3/20 = 0.15 30 250 6 6/20 = 0.3 75 300 8 8/20 = 0.4 120 35 0 _ 3_ 3 /20 = 0.15 _5_2_.5_ 20 px 277.5 ____ ANSWER 34

A ANSWER 35 B Budget for 1,150 units Actual costs Expenditure variance Direct materials 5.30 1,150 = 6,095 6,250 155 (A) Direct labour 5.20 1,150 = 5,980 5,870 110 (F) Variable overhead 3.80 1,150 = 4,370 5,230 860 (A) Fixed overhead 2.90 1,150 = 3,335 3,230 105 (F) ANSWER 36 A True ACCA F2 MANAGEMENT ACCOUNTING 10 KAPLAN PUBLISHING ANSWER 37 C y = a + bx 491 = 234 + 20b 20b = 257 b = 257/20 = 12.85 ANSWER 38 Grass Usage for bull (kg) 15,000 Usage for cow (kg) _2_7_,0_0__0 Materials usage budget (kg) 42,000 Closing inventory (kg) 1,250 Opening inventory (kg) _(_2_,5_0_0_) Material purchases budget (kg) _4_0_,7_5_0_ Material purchases budget ($) 61,125 ANSWER 39 A ANSWER 40 B ANSWER 41 A ANSWER 42 C Relevant price for material for this job is the replenishment price. Total cost is $500 3.50 = $1,750 FINAL ASSESSMENT ANSWERS KAPLAN PUBLISHING 11 ANSWER 43 B Assembly Finishing Budgeted overheads 250,000 175,000 Budgeted labour hours 5 3,000 + 7 5,000 = 50,000 2 3,000 + 3 5,000 =21,000 OAR $5 per hour $8.33 per hour ANSWER 44 D Number of equivalent units Conversion Units % EU CWIP 19,000 100 19,000 Output 4,000 70 __2_,8_0__0 _2_1_,8_0__0 Cost per EU = $118,810/21,800 = $5.45 ANSWER 45 A

The department 2 labour hours available are not a constraint, 200 hrs are suffic ient. Only department 1 is constrained by the labour hours available. A B Contribution per department 1 labour hour $25 $60 Ranking 2 1 Production plan 75 100 Hours used in department 1 150 hours + 50 hours = 200 hours ANSWER 46 B ACCA F2 MANAGEMENT ACCOUNTING 12 KAPLAN PUBLISHING ANSWER 47 C Labour required for Theta (hours) 4,500 Labour required for Omega (hours) __9_,0_0__0 Total labour required (hours) 13,500 Value @ $8.50 per hour 114,750 ANSWER 48 D AH AR = 21,750 hrs $3 = $65,250 $6,750 F SH SR = 15 hrs 1600 units $3 = $72,000 ANSWER 49 B The graph shows a variable cost which starts to be incurred only beyond a certai n volume of output. Only B fits this description of cost behaviour. ANSWER 50 D $ Direct materials: $10,000 + $6,000 = 16,000 Direct labour: (800 $4) + (400 $5) = 5,200 Production overhead: (800 $4) + (400 $4) = __4_,8_0__0 Total production cost 26,000 Total cost (+ 20% for admin) 31,200