UNIVERSITY OF THE WEST INDIES, MONA CAMPUS

Faculty of Social Sciences MONA SCHOOL OF BUSINESS

DIPLOMA IN BUSINESS ADMINISTRATION

SB515:
FOUNDATIONS OF FINANCIAL & MANAGERIAL ACCOUNTING

IN-COURSE TEST #2
Thursday, November 25th, 2010 Lecturers: Mr. Ryan Chung Mr. Marrio Blake

Student ID Number______________________________

Time: 6:00pm to 7:30pm 30MINS. DURATION: 1HR

INSTRUCTIONS:
1. Answer ALL Questions.

2. For Multiple Choice, circle your answer

3. For Short Answer questions show all workings.

UNIVERSITY OF THE WEST INDIES, MONA CAMPUS

Faculty of Social Sciences MONA SCHOOL OF BUSINESS

EXECUTIVE AMSTERS IN EDUCATIONAL MANAGEMENT

SBCO6110:
FINANCIAL & MANAGERIAL ACCOUNTING

IN-COURSE TEST#2
Thursday, October 13th, 2010 Lecturers: Mr. Ryan Chung Mr. Marrio Blake

Student ID Number______________________________

Time: 6:00pm to 7:30pm 30MINS. DURATION: 1HR

INSTRUCTIONS:
4. Answer ALL Questions.

5. For Multiple Choice, circle your answer For Short Answer questions show all workings.
1. Which of the following is a characteristic of management accounting: a) Can focus on specific areas of a business activities b) No legal requirement to prepare c) Assist in decision making of managers d) All of the above 2. Which of these are perspectives of the balance score card: I. Financial II. Customer III. Learning and Growth IV. Internal Business a) I and III b) I, II and IV c) I, II, III and IV d) II, III and IV 3. Which of the following is not a method of separating mixed cost: a) Dissecting b) Statistical c) Engineering d) High and Low method Activity Based Costing (ABC) can be used for all of the following except: a) Pricing b) Product Mix c) Cost Cutting d) Valuation

4.

5. Which of the following methods of investment appraisal factors in the time value of money: a) Accounting rate of return b) Payback period c) Net Present Value d) All of the above 6. Economic Order Quantity (EOQ) is defined as:

a) Level at which replenishment order should be made b) Warning sign to mgmt that stocks are reaching a wasteful level c) The quantity of an item that, when ordered regularly, results in minimum ordering and storage costs d) used to minimize risk of stock-outs 7. Under the behavioural cost classification which of the following cost remains constant irrespective of the level of activity? a) Fixed cost b) Product cost c) Period cost d) Variable cost 8. If inventory levels are too low, then: I. There is a risk of interruption to production due to shortage II. Frequent ordering, with associated costs, will be necessary III.Economies of scale of bulk buying are lost IV. Costs of storage will have to be met a) b) c) d) 9. I and III I, II, III II, III, IV II and IV

I am a manager who receives information printouts through the use of terminals that relay information on each item that is purchased, used or sold at regular intervals for review and action, which also relays information directly to my suppliers. Which inventory control mechanisms is used: a) Point of Sale b) Visual c) Just in time system d) Off-line point of sale

10. Net Present Value is the most important method of investment appraisal a) True b) False 11. Which of the following investment appraisal method does not use the cash flow based approach: a) Payback Period

b) Net present value c) Accounting rate of return d) All of the above 12. The following standard cost information is presented for Champions Company, which produces clocks: $ Direct material: 3.00 Direct labor: 1.50 Variable manufacturing overhead: .50 Standard variable costs per ring 5.00 Fixed Cost - $10,000 Selling Price - $7 per unit Calculate the Contribution Margin per unit: a) $4.00 b) $2.00 c) $6.50 d) $2.50 13. From question 12 above, calculate the profit of Champions Company if the are to sell 20000 units: a) $10,000 b) $30,000 c) $15,000 d) $55,000 14. Marginal costing has which of the following features: a) Marginal costing provides the best information for decision making b) Under and over absorption of overheads is a factor c) It includes fixed production cost in the cost of production d) Inventories are valued at their full production cost including absorbed fixed production costs. 15. If fixed costs decrease, the break-even point in units will a) increase b) decrease c) remain the same d) remain the same, however contribution margin per unit will decrease

16. Which of the following falls under finance budgets: a) Sales budget b) Cash budget c) Selling and Admin expenses budget d) Production budget 17. A budget that shows revenues and expenses for a variety of volumes or activity levels is known as: a) Flexible budget b) Cash budget c) Production budget d) Static budget 18. The specific number of units that must be sold for a Company to make a particular profit would be called: a) Breakeven point b) Targeted Sales c) Profit d) Margin of safety 19. If project A has a payback period of 2 years, an ARR of 50% and an NPV of $2,400 compared to project B, with a payback of 4 years, an ARR 35% and an NPV of $3,600. Which project would you choose: a) Project A b) Project B c) Both d) None 20. Which of the following is not a tool that is used by managers for continuous improvements within an organization: a) Activity based management b) Total quality management c) Just in time management d) Value chain analysis

SECTION B ANSWER ALL QUESTIONS 21. The following information is available for Product RC. Total budgeted sales Sales price per unit Total fixed cost Variable cost per unit 4000 units $5 $5,000 $3

a. Calculate the number of units of RC that must be sold to breakeven? b. In order to make a profit of $2,000, how many units of RC must be sold? c. If variable cost was decreased to $2, what would be the new breakeven point? 22. Two projects A and B have an initial outlay of $150,000 and each has the following cash flows: A B 80,000 30,000 70,000 50,000 60,000 70,000 a) What is the ARR for each project b) If the company has a required rate of return of 40%, which project would you choose and why?

FORMULAS

COST-VOLUME-PROFIT ANALYSIS 1. Break Even (Units) = 2. Targeted Sales Units = Fixed Cost + Profit Contribution Margin per unit Fixed Cost + Profit Contribution Margin per unit

INVESTMENT APPRAISAL 1. Accounting Rate of Return = Average Annual Profit Initial Investment