level 1

Question 1

What are the 4 perfomance measures for the balance scorecard? FICI

Accepted Answer

Financial Internal (business) Customer Innovation and learning

Question 2

How do you calculate return on capital employed (ROCE)

Accepted Answer

How well a company uses both its equity and debt to generate a return

Question 3

How do you calculate inventory days

Accepted Answer

Lower is better as inventory costs money

Question 4

How do you calculate receivable days

Accepted Answer

lower is better as you want to receive money as quickly as possible

Question 5

How do you calculate payable days

Accepted Answer

Higher is better (generally) so that you can keep your cash in the bank for further investment

Question 6

How do you calculate the efficiency ratio? (non financial)

Accepted Answer

times 100%

Question 7

How do you calculate the Activity ratio? (non financial)

Accepted Answer

times 100%

Question 8

How do you calculate the capacity ratio? (non financial)

Accepted Answer

times 100%

Question 9

How do you calculate machine hour utilisation?

Accepted Answer

times 100%

Question 10

How does CIMA define Management Accounting

Accepted Answer

The application of the principles of accounting and financial management to create, protect, preserve and increase value for the stakeholders of for-profit and not-for-profit enterprises in the public and private sectors

Question 11

How does CIMA define Cost Accounting

Accepted Answer

The gathering of cost information and it's attachment to cost objects, the establishment of budgets, standard costs and actual costs of operations, processes, activities or products; and the analysis of variances, profitability or the social use of funds

Question 12

When stock increases which will produce a larger profit

Accepted Answer

Marginal costing

Question 13

How do you reconcile the profit between marginal and absorption costing

Accepted Answer

multiply the change in inventory by the overhead absorption rate to give you the difference. If stocks have increases in the period absorption costing will be the higher profit

Question 14

What does the full product cost include (4)

Accepted Answer

Direct material Direct labour Direct expenses Production overheads

Question 15

What is a period cost?

Accepted Answer

Costs which are charged in full to the P&L in the period in which they occured. These include admin costs, selling and distribution costs and finance costs

Question 16

What would be included in the Prime Cost of a unit?

Accepted Answer

Direct Materials Direct Labour Direct Expense NO OVERHEADS

Question 17

What would not be included in the full production cost?

Accepted Answer

Non production overheads (also called period costs which are charged in full to the P&L

Question 18

What are the traditional costing methods (2)

Accepted Answer

Absorption costing Marginal costing

Question 19

What are the types of costs by function?

Accepted Answer

1) Production Costs 2) Non - Production Costs

Question 20

What is the difference between full production cost and total cost

Accepted Answer

Full production cost will include the OAR for production overheads but total cost also includes non production overheads

Question 21

in a formula what does this mean

Accepted Answer

average of X

Question 22

what are the purposes of a budget?

Accepted Answer

Coordination Responsibility Utilisation Motivation Planning Evaluation Telling

Question 23

what is the difference between marginal costing and absorption costing

Accepted Answer

marginal costing treats all fixed costs as period costs, absorption costs will absorb the fixed costs per unit.

Question 24

in a formula what does sigma mean

Accepted Answer

the sum of

Question 25

What is a cost pool

Accepted Answer

An activity that consumes resources and for which overhead costs are identified and allocated

Question 26

What is a cost driver

Accepted Answer

A unit of activity that consumes resources, a factor influencing the level of cost

Question 27

When is activity based costing relevant? (3)

Accepted Answer

Indirect costs are high relative to direct costs Products or services are complex, tailored to customer needs Some products sold in large numbers, but others are sold in small numbers

Question 28

In activity based costing what 2 things should a cost driver be?

Accepted Answer

Relevant Easy to measure

Question 29

What are the 5 steps to calculating the full cost per unit using ABC (activity based costing)

Accepted Answer

1) Group production overheads into activities, according to how they are driven 2) Identify cost drivers for each activity, i.e what causes these activity costs to be incurred. 3) Calculate a cost driver rate for each activity 4) Absorb the activity costs into the product 5) Calculate the full production cost and/or the profit or loss

Question 30

When allocating joint costs between joint products what 3 measurement bases can be used?

Accepted Answer

Physical measurement Market value measurement Net realisable value

Question 31

In throughput accounting what can be included in the cost of sales?

Accepted Answer

Materials cost ONLY! Labour and expenses are considered fixed costs (Still need too do opening Inv plus purchases less closing inventory for cost of sales)

Question 32

What is TPAR?

Accepted Answer

Throughput accounting ratio

Question 33

What are the different costing methods? (5)

Accepted Answer

Job Costing Batch Costing Service Costing Process Costing Costing in the public sector

Question 34

Define variance analysis

Accepted Answer

The evaluation of performance by means of variances, whose timely reporting should maximise the opprtunity for managerial action

Question 35

How does the valuation of raw materials effect the calculation of materials Price variances?

Accepted Answer

this is only on the price variance, usage variance will be on materials used

Question 36

What does this symbol mean?

Accepted Answer

Profit

Question 37

When does a unit of production have a standard profit

Accepted Answer

When using an absorption costing system

Question 38

When does a unit of production have a standard contribution

Accepted Answer

When using a marginal costing system

Question 39

What is the principal budget factor?

Accepted Answer

The budget that drives the others (usually sales budget) it will determine the production volumes etc.

Question 40

What are the 4 V's of big data?

Accepted Answer

Volume Variety Velocity Veracity (integrity/authenticity)

Question 41

What is the C/S ratio?

Accepted Answer

Contribution to sales ratio

Question 42

What is operational gearing?

Accepted Answer

The proportion of Fixed costs to total costs High operational gearing = high fixed costs, high breakeven point and high C/S ratio. High operational gearing means profits increase rapidly after breakeven point also means they would struggle in recession as Fixed costs hard to reduce

Question 43

What are the 6 steps to Linear programming?

Accepted Answer

DOFPIS

Question 44

In step 1 of linear programming how do you DEFINE THE VARIABLES

Accepted Answer

Simplify the equations by using abbreviations for the products or variables ie use X and Y instead of product alpha and product bravo

Question 45

In step 2 of linear programming how do you STATE THE OBJECTIVE FUNCTION

Accepted Answer

Unless told otherwise the objective is usually to maximise contribution, so, you need to express this is a formula. For example if you are using X and Y as your variables and the contribution for each is 4X and 8Y then your forlual would be contribution = 4X + 8Y

Question 46

In step 3 of linear programming how do you STATE THE CONSTRAINTS

Accepted Answer

Restate each of the contraints in a formula. For example Dept A: 8X + 10Y < 11,000 Dept B: 4X + 10Y <9,000 you also need a non negative contraint, for example X,Y > 0 which simply means X & Y cant be less than zero

Question 47

In step 4 of linear programming how do you IDENTIFY POINTS TO PLOT (or draw graph)

Accepted Answer

Draw the constraint lines. If a constraint is 4X + 8Y < 8000 then make the X zero so that 8Y = 8000, this becomes 8000/8 = 1000. You can mark 1000 on the Y axis ( on the Y line) then do the same the other way around, 4X +8Y < 8000 becomes 4X + 0Y = 8000, which becomes 8000/4 = 2000. you can mark 2000 on the X axis line. Then you join the 2 points together. Repeat for each constraint. The area between zero and the crossover points is the feasable area.

Question 48

For step 5 of linear programming How do you FIND THE OPTIMAL SOLUTION - ISO CONTRIBUTION LINE

Accepted Answer

There are 2 options. . using simultaneous equations . using an IS0- contribution line Simultaneous equation = Calculate the coordinates for X and Y at each vertex (further points) on the feasible region. Then calculate the contribution for each vertex by substituting the values for X and Y into the objective function. The one with the highest contribution is the solution. If you cannot determine the numbers at all of the points then use the simultaneous equations. for example:- if you have Dept A: 8x + 10y = 11,000 Dept B: 12x + 6y = 12000 multiply one of the sets of data to get one common denominator ie Dept A times 1.5 would mean that both x's are now 12, so this becomes Dept A: 12x + 15y = 16,500 Dept B: 12x + 6y = 12,000 Then duduct one set of data from the other to leave 0x + 9y = 4,500. you can then dicide 4,500 by 9 to get the value for Y as 500. You can then use that value to solve the rest nto get the value of x Iso contribution line = we need to maximise contribution so choose a value for you contributions ie if contribution is £4 for X and £8 for Y you could use 4X + 8Y = 4000. You can plot the this on the graph as y = 500 and x = 1000 for the 2 points (you changed one to zero and divided the 4000 by the remainder) then joint the 2 points to give your ISO line. Move this line outwards evenly and the last crossover point it touches in the feasible area is your optimal solution. Calculate the constribution for those levels of production

Question 49

What are slack and shadow pricing?

Accepted Answer

Shadow price is the amount ABOVE usual price

Question 50

How does CIMA define SHADOW PRICE?

Accepted Answer

the increase in value which would be created by having available one additional unit of a limiting resource at its original cost. This represents the opportunity cost of not having the use of the one extra unit. Only scarce resouces (binding constraints) will have a shadow price as they are fully utilised at the optimal solution

Question 51

How does CIMA define SLACK?

Accepted Answer

The amount of each resourse which will be unused if a specific linear programming solution is implemented

Question 52

How does CIMA define SURPLUS?

Accepted Answer

This is utilisation of a resource over and above minimum. Surpluses rend to arise in minimisation of cost problems where we have greater than or equal to constraint lines. eg. a constraint may state that it is necessary to produce a minimum of 400 units. If the optimum plan then recommends producing 450 units, the surplus in this case would be 50 units. If the constraint is binding then the surplus will be zero

Question 53

What type of risk profile is maximax?

Accepted Answer

Risk seeker

Question 54

What type of risk profile is a Maximin?

Accepted Answer

Risk Averse

Question 55

What type of risk profile is a MiniMax Regret?

Accepted Answer

Risk averse (sore loser)

Question 56

How do you calcualte the sensitivity of sales VOLUME?

Accepted Answer

You do profit / CONTRIBUTION X 100

Question 57

How do you calculate the Co-efficient of Variation (CoV)

Accepted Answer

times by 100 to show as %

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