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Question 1 of 60
1. Question
An organisation currently operates a Just-in-Time Production process and has two production departments: cutting and assembly. Each department currently has sufficient resources to ensure there is no bottleneck and the operation works as smoothly as possible.
The organisation currently produces 500 units per week, with staff working a 40 hour week.
The Manager of the cutting department has identified a new method of production reducing the labour time required from 2.5 to 1.25 hours per unit. The one requirement from senior management is that there is no build up of Work-in-Progress.
Should the organisation make the change in production to the cutting department?
CorrectIncorrect -
Question 2 of 60
2. Question
Calculate the IRR is the following project:
Project 1 Year 0 1 2 3 Investment -£100,000 Net Cash flows £40,000 £50,000 £60,000 CorrectIncorrect -
Question 3 of 60
3. Question
An organisation has the following investment opportunity at a cost of capital of 11%:
0 1 2 3 4 Investment (£1,500,000) Option 1 Cashflows £500,000 £600,000 £700,000 £500,000 The organisation has the option of investing a further £750,000 in year 4 and extending the project for two further years generating £350,000 in each year.
What is the correct decision?
CorrectIncorrect -
Question 4 of 60
4. Question
A parent company has three subsidiaries, Subsidiary A manufactures Component A, and sells only to Subsidiary B. Subsidiary B develops the component and sells Finished Good B to both external customers and must supply Subsidiary C.
Subsidiary A currently adopts a cost plus transfer price resulting in a 20% margin.
Subsidiary B buys Component A for £36/unit and sells Finished Good B for £45/unit to external customers and to Subsidiary B for £42/unit. Subsidiary B adopts a cost plus transfer price resulting in a 12.5% margin when sold externally.
The external customers have started negotiations with Subsidiary B and are demanding a price reduction of £6, or they will take their custom to a competitor.
Who will be the most frustrated with this proposal?
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Question 5 of 60
5. Question
Which of the following are core principles of TQM?
Select all that apply
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Question 6 of 60
6. Question
Calculate the EAA of the following, before deciding what project to invest in:
Project A will cost £10m and will generate £3.5m per annum for 5 years. Project B will cost £17m and will generate £5.5m for 7 years.
The rate of return is 10%Perform your workings to 3 decimal places.
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Question 7 of 60
7. Question
Which of the following would be completed for each responsibility centre under Responsibility Accounting?
Select all that apply
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Question 8 of 60
8. Question
Consider the following costs, and selling prices:
Current Proposed Dept. A Dept. B Dept. A Dept. B Transfer in price – £17 – £19 Own costs – variable £10 £5 £12 £5 Own costs – fixed £7 £3 £7 £3 Selling Price £17 £45 £19 £45 What will the impact on the organisation be under the Proposed if it produces 10,000 units?
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Question 9 of 60
9. Question
Under Process re-enginneering, which of the following should be reduced and eliminated?
Select all that apply
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Question 10 of 60
10. Question
Calculate the EAA of the following, before deciding what project to invest in:
Project A will cost £10m and will generate £3.5m per annum for 4 years. Project B will cost £17m and will generate £5m for 6 years.
The rate of return is 10%Perform your workings to 3 decimal places.
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Question 11 of 60
11. Question
A Manager of a Cost Centre has received his latest budget and is running at a loss of £100,000, which of the following can the manager do to improve the performance of the department?
Select all that apply.
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Question 12 of 60
12. Question
An Organisation has analysed its Footfall to Sales, and has identified the following:
Footfall Sales Contribution 250 50 £17,500 275 55 £19,250 300 60 £21,000 325 65 £22,750 350 70 £24,500 375 75 £26,250 400 80 £28,000 The organisation has Fixed costs of £15,000 and is currently benefiting from footfall of 300 people.
The road to the front of the shop is going to be dug up by the water company, which will reduce the footfall – by what percentage must the footfall decrease for the organisation to be loss making?
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Question 13 of 60
13. Question
Which of the following could not be used to close a cost gap?
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Question 14 of 60
14. Question
What is being described below:
ending a price with a nine makes it appear disproportionately cheaper
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Question 15 of 60
15. Question
Which of the following KPIs would be appropriate for a Manager of a Profit Centre?
Select all that apply
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Question 16 of 60
16. Question
An organisation has calculated the mean price of a component at £42/unit and a standard deviation of £2.61.
What percentage of prices can we expect to be within one standard deviation?
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Question 17 of 60
17. Question
If an organisation adopted a Differentiator Competitive Advantage and were to conduct a Value Chain Analysis, which of the following would aid the organisation in increasing profits?
Select all that apply?
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Question 18 of 60
18. Question
A duopoly exists in in this market, both companies are gearing up for the release of the next generation of this product. Company A knows that company B are behind on their development and are likely to be six months behind releasing their product.
Which pricing strategy is the most suitable?
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Question 19 of 60
19. Question
Which of the following variances should a Cost Centre Manager be concerned with?
Variance Revenue -3% Materials 4 Labour 1 Advertising -3% Office Supplies -4% Corprorate Overhead -1% Non-current Assets 10% Select all that apply.
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Question 20 of 60
20. Question
An organisation has went out to tender for a key components, three suppliers have responded:
Price/kg PredictedFaulty Units Supplier 1 £8.00 5% Supplier 2 £7.25 15% Supplier 3 £6.00 25% Which Supplier should the organisation select if they need to produce 1,000 units which require 1 kg/unit?
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Question 21 of 60
21. Question
When a product is at the maturity stage of its life cycle, which of the following would be appropriate?
Select all that apply.
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Question 22 of 60
22. Question
When should the ‘Money Method’ be used when completing a NPV with inflation?
Select all that apply
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Question 23 of 60
23. Question
The finance department are drafting a report on the performance of a subsidiary, the subsidiary is considered a Profit Centre by the parent. Which of the following ratios will be of value to the subsidiary manager?
Select all that apply
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Question 24 of 60
24. Question
Consider the decision tree below:
If a department manager had a new machine they wished to purchase, costing £275,000, an IRR of 31% and had the option of being delayed 12 months, what would the outcome be?
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Question 25 of 60
25. Question
A product is entering the decline stage of its lifecycle, which one of the following costing models would be most appropriate?
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Question 26 of 60
26. Question
An organisation is considering a new investment which would last four years, it has already invested £20,000 into a feasibility study and has the following information:
Asset would cost £160,000
Annual sales in Years 1 and 2: 40,000 units before reducing by 10,000 units per year in both Years 3 and 4. Selling price in the first year to be £12.50 and will increase at 2% per annum. Variable costs in Year 1 are £4.50 per unit and expected to increase at 2% per annum. Fixed costs are currently £240,000 and are expected to increase to £300,000 if this project is selected, growing by 5% per annum.
The asset is expected to have a residual value of £80,000 in money terms.
The working capital will need to increase by 15% of the expected sales revenue. The additional working capital is required from the outset.
Corporation tax is 20% per annum and is paid one year in arrears. 20% reducing balance writing-down allowances are available on the asset cost.
The necessary return on investment is 15%
Calculate the total of the Variable Costs over the four years.
Input your answer in the format “£X,XXX”, to the nearest pound.
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Question 27 of 60
27. Question
A Manager of Cost Centre Manager has incurred expenses of £1.5m in materials and £0.9m in direct labour producing 800,000 units. They have been set a target of reducing the cost per unit from its current cost by 2% next financial year on a production volume of 850,000 units. Assuming that direct labour will increase by 1%, what will the cost of materials per unit need to be to deliver the 2% reduction?
Calculate your workings and answer to two decimal places and provide your answer in the format “£X.XX”.
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Question 28 of 60
28. Question
Which one of the following will not aid decision making in time of uncertainty?
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Question 29 of 60
29. Question
Calculate the NPV on this investment opportunity:
Initial investment: £200,000
Net Cashflow Yr 1: £60,000
Net Cashflow Yr 2: 110,000
Net Cashflow Yr 3: £70,000
Net Cashflow Yr 4: £30,000Scrap value of investment in Yr 4: £15,000
The required rate of return is 15%
Perform your calculations to three decimal places and complete the field below in the format “£X,XXX” to the nearest whole pound.
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Question 30 of 60
30. Question
An organisation is considering a project with the following information:
0 1 2 3 Investment (£400,000) Net Cashflows £25,000 £45,000 £40,000 The cost of capital is 10% and the growth is 4%.
The organisation is forecasting sales of £40,000 from year 3 onwards.
Complete the field below, in the format “£X,XXX” note that is to the nearest pound.
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Question 31 of 60
31. Question
A Manager of a subsidiary that is considered an Investment Centre, has been set the following KPIs:
- Increase residual income by 10%
- Increase profitability by 15%
- Increase liquidity by 5%
Which of the following would be an issue for the Manager to realise these targets?
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Question 32 of 60
32. Question
What is being described below:
Managing risk in this context means using management techniques to reduce the probability or impact of the negative event without undue cost
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Question 33 of 60
33. Question
An organisation has the following overhead and product information:
Activity Cost Number of Activities Purchasing materials £240,000 12,000 Setting up machines £45,000 900 Running machines £150,000 120 Assembling products £75,000 500 Inspecting finished goods £50,000 1,000 Product B Activities Purchasing materials 10 Setting up machines 1 Running machines 1 Assembling products 4 Inspecting finished goods 2 After a redesign of how materials are purchased, the number of activities will decrease to 9,600 and costs will reduce to £172,800, finally Product B will require only 9 purchasing materials activities.
What impact will this change have on the total overhead allocated to Product B?
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Question 34 of 60
34. Question
Which of the following would be categorised as non-financial factors?
Select all that apply
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Question 35 of 60
35. Question
A magazine publisher wants to charge 10% less for its advertising than similar publications, what type of benchmarking will assist in answering this query?
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Question 36 of 60
36. Question
An organisation has the opportunity to take out an insurance policy against a disaster – under the TARA framework this is an example of what?
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Question 37 of 60
37. Question
An organisation only produces two products, A and B, they also share a factory, some of the expense are shown below:
A B Running Machines £150,000 £300,000 Production Set up £25,000 £20,000 Machine Maintenance £60,000 £60,000 Management Salaries £100,000 £100,000 Running machines is the cost pool for the expense incurred in using the highly specialist equipment needed to make each of these products. Production set up is completed by a specialist team who spend their time equally between the two products. Machine Maintenance is the expense allocated in respect for maintaining the specialist machines and Management Salaries is a 50/50 split in costs between the two departments.
The Manager for Product B has called into question the appropriateness of one of the expenses. Based on the available information above, which level of the cost hierarchy is being questioned?
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Question 38 of 60
38. Question
Which of the following are factors of High Quality Data?
Select three
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Question 39 of 60
39. Question
Which of the following are non-financial performance indicators for a Human Resource department?
Select all that apply.
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Question 40 of 60
40. Question
An organisation has operated very successful in a field where new legislation has been introduced, with the potential impact of fines and significant costs to become compliant should the current machinery not be at the standard required by the new legislation. The organisation has therefore decided to withdraw from this sector. Under the TARA framework, this is an example of what?
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Question 41 of 60
41. Question
Which of the following are advantages of Just In Time Production?
Select all that apply
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Question 42 of 60
42. Question
A fast-growing organisation wants to develop a data driven marketing plan. The organisation has a functioning accounting department which has remained unchanged since the organisation was founded. The organisation wants to grow its market share but lacks the systems necessary to capture and analyse the data.
If the organisation was to introduce a Business Intelligence Systems, which of the following problems could be overcome?
Select all that apply
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Question 43 of 60
43. Question
Match the KPI to the correct perspective of the Balanced Scorecard.
Sort elements
- Increase company profitability
- Maintain high levels of customer satisfaction
- Increase call-handling expertise
- Build a culture that encourages innovation
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Financial
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Customer
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Internal
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Learning
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Question 44 of 60
44. Question
Which one of the following would be in the public interest?
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Question 45 of 60
45. Question
Rearrange the steps below of Calculating the full production cost of a unit using Activity Based Costing, starting with the earliest task at the top.
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Calculate the full production cost per unit
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Calculate the Overhead Absorption Rate
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Establish Cost Pools
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Identify Cost Driver
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Absorb the activity costs into the product
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Question 46 of 60
46. Question
Which of the following would be included as part of the Technical feasibility section of a project proposal?
Select all that apply.
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Question 47 of 60
47. Question
A Manager of a subsidiary which is considered a Cost Centre in a declining market, has received the following targets for the financial year ahead:
- Increase revenue by 15%
- Increase output by 10%
- Maintain costs at current levels
- Increase Profit by 10%
Which of the following statements are true?
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Question 48 of 60
48. Question
One issue often faced by organisations new to analysing Big Data is defined below:
Much of the information gathered by companies’ conducting big data is sensitive or personal information, this means the firm need to ensure that they are meeting industry standards or legislation when storing the data.
What is being defined?
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Question 49 of 60
49. Question
Activity Based Costing depends on which one of the following to drive improvements in profitability?
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Question 50 of 60
50. Question
Several investors are considering the following investment, each has their own cost of capital:
Investor A: 10%
Investor B: 12%
Investor C: 15%
Investor D: 18%Investment (£125,000) Net Cash flow £60,000 £65,000 £45,000 Which investors would consider this investment?
Select all that apply
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Question 51 of 60
51. Question
Which method of transfer pricing is being described below?
In a perfectly competitive market place for a product, then the market price is the best transfer price
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Question 52 of 60
52. Question
Which of the following ignores the time value of money?
Select all that apply
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Question 53 of 60
53. Question
Calculate the EAA of the following, before deciding what project to invest in:
Project A @ 10% cost of capital
0 1 2 3 Investment (£200,000) Cash flows £100,000 £100,000 £100,000 Project B @ 18% cost of capital
0 1 2 3 Investment (£275,000) Cash flows £135,000 £145,000 £155,000 Perform your workings to 3 decimal places.
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Question 54 of 60
54. Question
With regards to transfer pricing, if no external market exists for a product, the producing department is most likely considered which of the following?
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Question 55 of 60
55. Question
Which of the following is not true regarding NPV?
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Question 56 of 60
56. Question
Calculate the EAA of the following, before deciding what project to invest in:
Project A @ 15% cost of capital
0 1 2 3 Investment (£150,000) Cash flows £100,000 £125,000 £150,000 Project B @ 18% cost of capital
0 1 2 3 4 Investment (£150,000) Cash flows £90,000 £115,000 £140,000 £140,000 Perform your workings to 3 decimal places.
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Question 57 of 60
57. Question
Two managers are negotiating a transfer price. The cost of the component is £12 and the company has a policy of adding 20% for costing jobs. The market price of this component is £16/unit.
If the managers agree on a cost plus approach what would the price be?
In put your answer in the format “£X.XX”.
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Question 58 of 60
58. Question
An organisation is considering two possible projects, it has a rate or return of 15% and a payback period of less than two years, which project should they select?
Project 1 Year 0 1 2 3 Investment -£65,000 Net Cash flows £30,000 £40,000 £50,000 Project 2 Year 0 1 2 3 Investment -£65,000 Net Cash flows £45,000 £40,000 £30,000 CorrectIncorrect -
Question 59 of 60
59. Question
An organisation has £5,500,000 to invest in projects, using Profitability Indexing and the projects NPV, which projects should be selected?
Project Amount Profitability Index NPV 1 £2,500,000 1.25 £1,600,000 2 £1,500,000 1.2 £1,100,000 3 £400,000 1.15 £350,000 4 £1,500,000 1.23 £900,000 5 £900,000 1.15 £700,000 Select all that apply
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Question 60 of 60
60. Question
A department manager had only one internal customer until recently, under the current transfer pricing arrangement the department sold the component at cost. However, the department manager has been approached by an external customer who is willing to pay £20/unit, which would result in a profit mark-up of 30%.
The department manager wants this profit to be reflected in internal sales, however the internal customer is refusing to move from the current arrangement. Senior Management have decided to adopt a dual pricing model based, allowing the department to sell at the market rate and the internal customer to record the purchase at cost.
What is the difference per unit?
Input your answer int he field below int he format “£X.XX”.
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