Question

Which one of the following is not generally regarded as part of the budgetary process?

Select one:

Preparation of master budget.

Communication of objectives.

Designing an absorption costing system.

On-going review of budgets.

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A company's budgeted variable overheads for a period amounted to £24,000. During this period, the company spent £23,760 on variable overheads.

The company’s level of production was expected to require 12,000 labour hours but the actual amount of labour hours used was only 10,800 hours.

What was the variable overhead expenditure variance for the period?

Calculate your answer to the nearest whole £ and enter it in the blank space provided.

Indicate an adverse variance (if appropriate) by placing a minus sign in front of the value (e.g., -500).

Answer the question by providing the appropriate number in the box below (e.g., 123456). Do not enter a dot, commas, spaces, letters, words or symbols (such as £). Failure to follow these instructions will result in the answer being marked as incorrect.

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A company uses a standard costing system and the standard materials cost per unit of their product is £20. The actual level of production of this product for a period was 3,200 units. The company recorded the following variances during the period:

Material price variance: £500 favourable

Material usage variance: £1,500 favourable

What was the actual cost of the materials for the period?

Calculate your answer to the nearest whole £ and enter it in the blank space provided.

Answer the question by providing the appropriate number in the box below (e.g., 123456). Do not enter a dot, commas, spaces, letters, words or symbols (such as £). Failure to follow these instructions will result in the answer being marked as incorrect.

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Which one of the following is not generally regarded as a functional budget?

Select one:

Cash budget

Selling and administration budget

Sales budget

Production budget

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The following extract has been provided from a company’s performance report:

	£
Sales volume variance	2,500 Adverse
Sales price variance	5,000 Favourable
Material usage variance	750 Favourable
Material price variance	1,000 Adverse

Which of the following statements could explain the performance? (Select one option only).

Select one:

More units have been sold than expected

The material wastage rate has been lower than expected

Material purchased is of poorer quality than expected.

Contribution per unit is lower than expected.

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What is the main difference between a fixed and flexible budget?

Select one:

A flexible budget considers only variable costs, but a fixed budget considers all costs.

A fixed budget is produced for an entire organisation, but a flexible budget is applicable only to a single department.

Flexible budgets can provide less realistic control information than fixed budgets.

A fixed budget is based on a specific level of production/sales and a flexible budget can be prepared for any production level.

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Which of the following statements is incorrect?

Select one:

A normal distribution curve is a frequency distribution that is symmetrical and bell shaped.

The following indicate how data is dispersed: standard deviation, mean, range, and variance.

A disadvantage of the arithmetic mean of a grouped frequency distribution is that its value may not correspond to any actual value in the frequency distribution.

A histogram is a pictorial representation of a grouped frequency distribution.

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Which of the following statements are incorrect? (Select one option only).

Select one:

The median is a useful measure of the centre of a distribution because it is not affected by unusually high or low values.

A scatter chart is useful to identify whether there is correlation between two sets of data.

A pie chart is a useful method of illustrating the trend of profit over time.

A distribution with values clustered around the mean will have a smaller standard deviation than a distribution with values which are evenly spread.

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Complete the following sentence using one of the four options below.

A scatter graph on which the points tend to  blank indicates positive correlation.

'Drag and drop' the correct option into the box

   

Match the statistical measure with its description by filling the blanks with the phrases below. You can do this by dragging and dropping, using your mouse.

The  blank measures the proportion of the total variation in the value of one variable that can be explained by the variations in the value of the other.
The  blank describes how two variables move together.
The  blank compares the dispersion of two distributions.
The  blank describes short-term fluctuations in recorded values.

1 seasonal variation, 2 co-effecient of determination 3 coorlation co-effecient 4 co-effecient of variation

Answer 1

1.

Designing an absorption costing system is not generally regarded as part of the budgetary process.

2.

Variable overhead standard rate = £24,000 / 12,000 = £2 per hour

Variable overhead expenditure variance = Actual labour hours*Standard rate - Actual variable overhead

Variable overhead expenditure variance = 10,800*£2 - £23,760

Variable overhead expenditure variance = £21,600 - £23,760 = -£2,160 Adverse

3.

Let actual cost of material be x

Material price variance = Actual quantity*Standard price - Actual quantiy*Actual price

£500 = 3,200*£20 - x

x = £64,000 - 500 = £63,500

Hence, actual cost of material is £63,500

4.

Cash budget is not generally regarded as a functional budget.