2022 BA2 exam torrent BA2 Study Guide
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NEW QUESTION 124
A company's output level increases but remains within the relevant range. Which ONE of the following statements is incorrect?
- A. Total variable costs will increase
- B. Total fixed costs will remain the same
- C. Fixed costs per unit will decrease
- D. Variable costs per unit will decrease
Answer: D
NEW QUESTION 125
A company operates a flexible budget system. A budget for direct material cost is set at £12500 for 2500 kgs of material.
It is budgeted that all materials will be obtained at a 5% discount when total production is in excess of 2700 kgs.
What variance is reported if actual material usage is 3000 kgs and the actual cost is £13500?
- A. £1250 favourable
- B. £750 favourable
- C. £1500 favourable
- D. £1000 adverse
Answer: B
NEW QUESTION 126
Which of the following statements relating to risk and uncertainty is correct?
- A. Uncertainty exists when we know all of the possible outcomes and their probabilities.
- B. Risk exists when we do not know all of the possible outcomes.
- C. Risk exists when we know all of the possible outcomes but not their probabilities.
- D. Uncertainty exists when we know all of the possible outcomes but not their probabilities.
Answer: B
NEW QUESTION 127
A company uses an integrated accounting system.
The accounting entries for an issue of indirect materials to production would be:
- A. Debit: Work in progress control account Credit: Raw material control account
- B. Debit: Finished goods control account Credit: Raw material control account
- C. Debit: Raw material control account Credit: Work in progress control account
- D. Debit: Production overhead control accountCredit: Raw material control account
Answer: D
NEW QUESTION 128
Which of the following would NOT require taking into account the time value of money?
- A. Deciding to make a long-term investment in a project on the basis of its payback period.
- B. Selecting an investment project on the basis that it has a positive net present value (NPV).
- C. Calculating the present value of a five-year annuity.
- D. Taking a long-term investment decision on the basis of the project's internal rate of return (IRR).
Answer: C
Explanation:
Reference: https://www.acowtancy.com/textbook/acca-fm/d1-investment-appraisal-techniques/npv/notes
NEW QUESTION 129
A company operates an absorption costing system. Overheads are absorbed using a pre-determined absorption rate using labour hours. In the period actual labour hours were 10,600, 400 hours below budget. Actual overheads for the period were £234,680 and there was an under-absorption of overheads of £1,480.
What was the budgeted level of overheads?
- A. £242,000
- B. £233,200
- C. £245,072
- D. £224,720
Answer: A
NEW QUESTION 130
Refer to the exhibit.
Which type of cost do the following figures represent?
- A. Curvi-linear
- B. Semi-variable
- C. Fixed
- D. Variable
Answer: D
NEW QUESTION 131
The standard labour content of one unit of 'BFC' is $35 (7 hours paid at $5 per hour).
During period 2, 600 hours were worked at a cost of $3,300 to produce 90 units of 'BFC'.
What was the direct labour total variance for Period 2?
- A. $300 Favourable
- B. $150 Adverse
- C. $300 Adverse
- D. $150 Favourable
Answer: B
NEW QUESTION 132
CVP Limited manufactures a single product with a selling price of $25.60. Fixed costs are $122,880 per month and the product has a profit/volume ratio of 40%.
In a month when actual sales were $358,400, CVP's margin of safety in units was?
Answer:
Explanation:
1996
NEW QUESTION 133
Refer to the exhibit.
ZAP publishes a monthly magazine aimed at the teenage market. It has drawn up a budget for next year as follows:
What selling price would be required for ZAP to break even?
- A. $1.25
- B. $1.20
- C. $1.65
- D. $0.80
Answer: C
NEW QUESTION 134
In a manufacturing company which produces a range of products, the wages of a machine operator in the factory would be classified as a:
- A. Indirect expense
- B. Indirect labor cost
- C. Direct expense
- D. Direct labor cost
Answer: D
NEW QUESTION 135
Within a relevant range of output, the variable cost per unit of output will:
- A. Remain constant as output increases
- B. Be impossible to tell without further information
- C. Increase as output increases
- D. Reduce as output increases
Answer: A
NEW QUESTION 136
When compiling profit statement using a marginal costing system we must calculate the contribution. Once we have the contribution, we must deduct a specific amount to calculate the profit. Which of these values should we NOT deduct? (Select ALL that apply.)
- A. Fixed costs
- B. Selling price
- C. Cost of goods sold
Answer: B,C
NEW QUESTION 137
The standard variable cost of product A is $4 per unit and the standard selling price is $6.80 per unit.
During the latest period 1,200 units of product A were produced and sold, compared with a budget of 1,300 units.
The actual variable cost incurred was $4.90 per unit and the actual selling price was $6.50 per unit.
The sales volume contribution variance for the period was
- A. $160 adverse
- B. $680 adverse
- C. $390 adverse
- D. $280 adverse
Answer: D
NEW QUESTION 138
Which of the following is a relevant cost?
- A. A sunk cost
- B. An incremental cost
- C. An historical cost
- D. A committed cost
Answer: C
NEW QUESTION 139
Refer to the exhibit.
The budgetary control report for the latest period shows the following. Variances in brackets are adverse.
The sales volume contribution variance for the period was
- A. $26,700 adverse
- B. $4,500 favorable
- C. $500 favorable
- D. $27,200 adverse
Answer: D
NEW QUESTION 140
A feature of a normal curve is that it is asymptotic, meaning that _______.
- A. it extends into infinity.
- B. the area under the curve = 1.
- C. the mean divides the curve exactly in half.
Answer: A
NEW QUESTION 141
Fast Manufacturers PLC have reconsidered their new project and the initial investment required of £1,000,000 is now 25% less than the original conception. The project will remain will have a three year life span and have no scrap value.
However, this new conception has operating costs of £150,000 in year 1, and increasing by 5% due to inflation the following years. The gross revenue will also be higher across the board. The new project conception is forecasting a gross revenue of £525,000 in year 1 and again increasing with inflation 5% for years 2 and 3.
If the cost of capital has remained at 14%, should Fast Manufacturers PLC go ahead with the revised project?
- A. Go ahead with the project
- B. Cannot tell from the information given
- C. Do not go ahead with the project
Answer: A
NEW QUESTION 142
Overhead absorption is best described as:
- A. The process of sharing costs amongst two or more cost centres
- B. The identification of costs specifically attributable to a particular cost centre
- C. The charging of overheads to cost units produced
- D. The identification of overhead cost variances
Answer: C
NEW QUESTION 143
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