BIP

Question 1

scope of management accounting

Answer 1

flexible, includes historical, current and future information which can focus on segments of the business

Question 2

cost object

Answer 2

anything for which costs are determined

Question 3

cost centre

Answer 3

a department, process or function where costs can be accumulated

Question 4

cost unit

Answer 4

a product or service for which costs are determined

Question 5

composite cost unit

Answer 5

cost unit made up of two parts i.e tonnes per mile

Question 6

overhead absorption

Answer 6

budgeted measure of activity

Question 7

job costing

Answer 7

for specific one off jobs

Question 8

contract costing

Answer 8

specific big jobs

Question 9

batch costing

Answer 9

identical items

Question 10

process costing

Answer 10

a continuous production process

Question 11

contribution per unit

Answer 11

sales price per unit - variable cost per unit

Question 12

total profit

Answer 12

total contribution - fixed costs

Question 13

determinants of demand

Answer 13

• price of the good
• price of other goods
• substitutes
• complements
• national income
• fashion
• income distribution

Question 14

determinants of supply

Answer 14

• price of the good
• price of other goods
• price of joint products
• costs
• changes in technology
• weather
• harvests

Question 15

price elasticity of demand

Answer 15

% change in price

Question 16

income elasticity of demand

Answer 16

% change of household income

Question 17

cross elasticity of demand

Answer 17

% change in price of product B

Question 18

price elasticity of supply

Answer 18

% change in price

Question 19

methods to determine a transfer price

Answer 19

• market price
• cost-plus price
• dual pricing

Question 20

principal budget factor

Answer 20

limit to the activity of an organisation in a given period

Question 21

imposed budgets

Answer 21

set by top management with little or no input from operating personnel

Question 22

participative budget

Answer 22

developed by lower-level managers who submit these to their superiors

Question 23

incremental budget

Answer 23

start with the previous period’s budget and add increments of costs and revenues occurring in the coming year

Question 24

zero based budget

Answer 24

start from zero each year

Question 25

rolling budget

Answer 25

prepared a year ahead then regularly updated by adding a further accounting period when the first period has expired

Question 26

beyond budgeting

Answer 26

companies need to move beyond budgeting because of flaws in budgeting

Question 27

inventory period in days

Answer 27

inventory ------------------ x 365 cost of sales

Question 28

rate of inventory turnover

Answer 28

cost of sales ----------------- avg inventory

Question 29

receivables collection period in days

Answer 29

avg receivables ---------------------- x 365 revenue

Question 30

payables payment period in days

Answer 30

avg payables ------------------- x 365 purchases

Question 31

cash operating cycle

Answer 31

raw materials holding period + avg production period + avg inventory holding period + avg receivables collections period - (avg payables payment period)

Question 32

flexible budget

Answer 32

prepared at the start of a period which recognises different cost behaviour patterns and is designed to change as the volume of activity changes

Question 33

flexed budget

Answer 33

prepared at the end of the budget period and is based on the actual level of activity by recognising cost behaviour

Question 34

budget variances

Answer 34

compares actual results to a flexed budget

Question 35

material total variance

Answer 35

standard material cost of the output produced and the actual material cost incurred

Question 36

material price variance

Answer 36

what the material did cost and what it should have cost

Question 37

material usage variance

Answer 37

how much material should have been used and how much material was used, valued at standard price

Question 38

labour total variance

Answer 38

standard labour cost of the output produced and the actual labour cost incurred

Question 39

labour rate variance

Answer 39

what the actual labour used did cost and what it should have cost

Question 40

labour efficiency variance

Answer 40

the hours that should have been worked for the number of units actually produced and the actual number of hours worked valued at the standard rate per hour

Question 41

variable production overhead total variance

Answer 41

variable production overhead that should be used for actual output and the variable production overhead actually used

Question 42

variable production overhead expenditure variance

Answer 42

the actual cost of any change from the standard variable overhead rate per hour

Question 43

variable production overhead efficiency variance

Answer 43

cost of any change from the standard level of efficiency

Question 44

fixed overhead expenditure variance

Answer 44

the budgeted and actual fixed overhead expenditure

Question 45

sales price variance

Answer 45

what the sales revenue should have been for the actual quantity sold and what it actually was

Question 46

sales volume variance

Answer 46

standard contribution as a result of the sales volume being higher or lower than budgeted