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Exam Paper for Managerial Accounting in BBA (With
Answers)
PAPER # 1
**Managerial Accounting Exam Paper**
**Duration: 2 hours**
**Instructions:**
1
...

2
...

3
...
Provide complete and concise answers
...
Show all calculations and workings where applicable
...
Write your answers in the provided space
...

6
...

**Section A: Multiple Choice Questions (MCQs) (40 marks)**
Circle the letter corresponding to the correct answer
...
Which of the following statements is true regarding managerial
accounting?
a
...


2

b
...

c
...

d
...

**Answer: b**
2
...
To minimize costs
...
To allocate costs to products or services
...
To determine the selling price of a product
...
To prepare financial statements
...
Contribution margin is calculated as:
a
...

b
...

c
...

d
...

**Answer: c**
4
...
Rent for the production facility
...
Direct labor
...
Property taxes
...
Depreciation expense
...
The break-even point is the level of sales at which:
a
...

b
...

c
...

d
...

**Answer: b**
**Section B: Short Answer Questions (SAQs) (60 marks)**
6
...
Provide an
example
...
These costs are futureoriented and can influence the decision-making process
...
If

4

accepting the special order increases material costs, these increased
material costs are relevant to the decision of whether to accept the order or
not
...
Explain the concept of "activity-based costing" (ABC) and its advantages
over traditional costing methods
...
It
involves identifying and assigning costs to specific activities or cost drivers,
and then allocating those costs to products or services based on their
consumption of these activities
...
Advantages of ABC
include better cost accuracy, improved decision-making, and a clearer
understanding of the cost structure of products or services
...
What is a budget, and why is it important in managerial accounting?
**Answer:**
A budget is a financial plan that outlines an organization's expected
revenues, expenses, and financial goals for a specific period, typically a fiscal
year
...

Budgets are crucial in managerial accounting because they enable
organizations to plan for the future, allocate resources efficiently, and
measure actual performance against planned performance
...


5

9
...

**Answer:**
A master budget is a comprehensive financial plan that combines various
individual budgets into one integrated document
...
**Sales Budget:** Estimates the expected sales revenue for a specific
period
...
**Production Budget:** Plans the production levels needed to meet
sales targets
...
**Direct Materials Budget:** Projects the quantity and cost of materials
required for production
...
**Direct Labor Budget:** Estimates labor costs associated with
production
...
**Operating Expense Budget:** Forecasts various operating expenses
like rent, utilities, and marketing costs
...
**Cash Budget:** Predicts the organization's cash inflows and outflows
to ensure sufficient liquidity
...
**Budgeted Income Statement:** Presents the expected financial
performance, including revenues and expenses
...
**Budgeted Balance Sheet:** Provides a snapshot of the financial
position at the end of the budget period
...
Explain the concept of "cost-volume-profit (CVP) analysis" and how it can
assist in decision-making
...
It helps organizations make informed decisions by
providing insights into the effects of changes in volume, selling price,
variable costs, and fixed costs on profit
...
It assists in decision-making by
identifying the level of activity required to achieve specific financial goals
and evaluating the potential risks and rewards associated with various
options
...

Multiple Choice Questions (10 points each)
1
...
Which of the following is a variable cost?
o

(a) Rent

o

(b) Depreciation

o

(c) Direct labor

o

(d) All of the above

3
...


o

(b) A committed cost is a cost that is incurred on a regular basis, while a
sunk cost is a cost that is incurred only once
...


o

(d) None of the above
...
What is the purpose of a budget?
o

(a) To provide a plan for future operations

o

(b) To control costs and improve efficiency

o

(c) To evaluate the performance of managers

o

(d) All of the above

5
...


o

(b) A standard cost is a cost that is incurred on a regular basis, while a
variance is a cost that is incurred only once
...


o

(d) None of the above
...
Explain the difference between financial accounting and managerial accounting
...
Identify and describe the different types of costs that can be classified as either
variable or fixed
...
Explain the concept of marginal costing and discuss its advantages and
disadvantages
...
Describe the different types of budgets that can be used by businesses
...
Explain the purpose of variance analysis and discuss how it can be used to
improve managerial decision-making
...
The company has estimated
the following costs associated with the new product line:


Direct materials: $5 per unit



Direct labor: $3 per unit



Variable overhead: $2 per unit



Fixed overhead: $100,000 per year

The company expects to sell 10,000 units of the new product line in the first year
...
Calculate the unit cost of the new product line using both absorption costing and
variable costing
...
Explain the difference between absorption costing and variable costing, and
discuss the advantages and disadvantages of each method
...
Which costing method would you recommend to the company for making the
decision of whether or not to launch the new product line? Explain your answer
...
(c)
2
...
(a)
4
...
(a)
Short Answer Questions
1
...
Managerial accounting is

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concerned with the provision of information for planning and decision-making by
internal users, such as managers
...
Variable costs change with the level of activity, while fixed costs do not change
with the level of activity
...
Examples of fixed costs include rent,
depreciation, and insurance
...
Marginal costing is a costing method that considers only variable costs when
making decisions
...
Marginal costing has the advantage of
being more relevant to decision-making than absorption costing, but it has the
disadvantage of being more difficult to implement
...
There are many different types of budgets that can be used by businesses, but
some of the most common include:
o

Operating budgets: These budgets forecast revenue

PAPER # 3
Question 1: What is the break-even point in units and sales dollars for a company that
sells a product for $50 per unit, has variable costs of $30 per unit, and fixed costs of
$100,000?

Question 2: A company has the following budgeted sales for the next six months:

Month | Sales
Jan | $200,000
Feb | $180,000
Mar | $220,000
Apr | $240,000
May | $260,000
Jun | $280,000

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The company collects 60% of its sales in the month of sale, 30% in the following month,
and 10% in the second following month
...
What are the
expected cash collections for April?

Question 3: A company produces two products, A and B, using the same raw material
...
Product A
requires 2 kg of raw material per unit and sells for $40 per unit
...
The variable costs per unit are $15 for
product A and $10 for product B
...
What is the
optimal product mix that maximizes the company's profit?

Question 4: A company has the following standard costs and actual costs for the month
of June:

Standard Costs | Actual Costs
Direct materials (10 kg @ $5) | Direct materials (12 kg @ $6)
Direct labor (5 hours @ $20) | Direct labor (6 hours @ $18)
Variable overhead (5 hours @ $10) | Variable overhead (6 hours @ $12)
Fixed overhead ($50,000) | Fixed overhead ($48,000)

The company produced and sold 1,000 units in June
...
Calculate the following variances:

a) Direct materials price variance
b) Direct materials efficiency variance
c) Direct labor rate variance
d) Direct labor efficiency variance
e) Variable overhead spending variance

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f) Variable overhead efficiency variance
g) Fixed overhead budget variance
h) Fixed overhead volume variance

Question 5: A company is considering whether to make or buy a component that it
currently makes in-house
...
The
cost to make the component is as follows:

Direct materials | $80,000
Direct labor

| $120,000

Variable overhead| $60,000
Fixed overhead | $100,000

The fixed overhead consists of $40,000 of avoidable costs and $60,000 of unavoidable
costs
...

What is the relevant cost to make the component? What is the relevant cost to buy the
component? What should the company do?

Question 6: A company has two divisions, X and Y
...
Division X has a capacity of 10,000 units and a variable cost of $10 per unit
...
Division Y can
buy the component from an external supplier for $20 per unit
...
Each unit of
product P requires 2 hours of labor, each unit of product Q requires 3 hours of labor,
and each unit of product R requires 4 hours of labor
...
What is the optimal production plan that maximizes the company's profit?

Question 8: A company uses activity-based costing to allocate its overhead costs to its
products
...
The activity cost drivers and rates are as follows:

Activity | Cost Driver | Rate
Machining | Machine hours | $50 per hour
Assembly | Direct labor hours | $20 per hour
Testing | Number of tests | $100 per test
Packaging | Number of packages | $5 per package

The company produces two products, A and B, with the following data:

Product | Direct Materials | Direct Labor | Machine Hours | Number of Tests | Number of
Packages
A

| $40

| $30

|2

|1

|1

B

| $60

| $40

|3

|2

|2

The company produces and sells 10,000 units of each product
...

The company's cost of capital is 10%
...

If the company drops segment B, it will save 80% of the traceable fixed expenses of
segment B, but it will lose 10% of the sales of segment A due to reduced customer
traffic
...
Break-even point in sales dollars = Break-even
point in units * Selling price per unit = 5,000 * $50 = $250,000
...
6 * $240,000) + (0
...
1 *
$180,000) = $214,000
...
The objective function is to maximize profit = 40x + 20y - 15x - 10y - 50,000 =
25x + 10y - 50,000
...

The optimal product mix is to produce and sell 4,000 units of product A and 2,000 units
of product B
...


Question 4:

a) Direct materials price variance = Actual quantity purchased * (Actual price - Standard
price) = (12 * 1,000) * ($6 - $5) = -$12,000 (Unfavorable)

b) Direct materials efficiency variance = Standard price * (Actual quantity used Standard quantity allowed) = ($5) * ((12 * 1,000) - (10 * 1,000)) = -$10,000
(Unfavorable)

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c) Direct labor rate variance = Actual hours worked * (Actual rate - Standard rate) = (6 *
1,000) * ($18 - $20) = $12,000 (Favorable)

d) Direct labor efficiency variance = Standard rate * (Actual hours worked - Standard
hours allowed) = ($20) * ((6 * 1,000) - (5 * 1,000)) = -$20,000 (Unfavorable)

e) Variable overhead spending variance = Actual hours worked * (Actual rate - Standard
rate) = (6 * 1,000) * ($12 - $10) = -$12,000

PAPER # 4
Section A: Multiple Choice Questions (20 marks)
1
...
Planning

o

B
...
Decision-making

o

D
...
Which of the following is an example of a fixed cost?
o

A
...
Direct labor

o

C
...
Sales commissions

3
...
Packaging materials

o

B
...
Insurance premiums

o

D
...
Which of the following is a key difference between managerial accounting and
financial accounting?
o

A
...


o

B
...


o

C
...


o

D
...


5
...
It can help managers to determine how many units of a product or
service they need to sell to break even
...
It can help managers to determine how changes in price, volume, or
costs will affect profits
...
It can help managers to make better decisions about product mix,
pricing, and marketing strategies
...
It can help managers to identify and reduce costs
...
Explain the different types of costs that managers need to be aware of
...
Describe the three main types of budgets
...
Explain how standard costing can be used to improve performance
...
Discuss the different types of variance analysis
...
Explain how marginal costing can be used to make better decision-making
...
The company's current sales volume
is 100,000 units per year
...
The company's current selling price is $15 per unit
...
Increase the sales volume to 110,000 units per year
...

2
...
This would not require any change in
fixed costs
...
Calculate the company's current profit
...
Calculate the company's profit if it increases the sales volume to 110,000 units
per year
...
Calculate the company's profit if it reduces the selling price to $14 per unit
...
Recommend which option the company should choose and explain your reasons
...
D
2
...
B
4
...
D
Section B: Short Answer Questions
1
...

Indirect costs: Costs that cannot be directly traced to a specific product or
service
...

Variable costs: Costs that change with the level of activity
...
The three main types of budgets are:
o

o

Operating budgets: Budgets that show how a company plans to generate
revenue and incur costs during a specific period of time
...

o Financial budgets: Budgets that show how a company plans to finance its
operations and investments
...
Standard costing is a method of accounting that compares the actual costs of a
product or service to the standard costs that should have been incurred
...
Variance analysis can be
used to identify and investigate areas where costs are out of control
...
The different types of variance analysis include:
o

Material price variance: The difference between the actual price paid for

o

materials and the standard price
...
Which of the following is NOT a function of managerial accounting?
o

A
...
Controlling

o

C
...
Reporting to external stakeholders

2
...
Direct costs are incurred specifically for the production of a product or
service, while indirect costs are incurred for the benefit of the organization
as a whole
...
Direct costs are fixed, while indirect costs are variable
...
Direct costs are expensed in the period in which they are incurred,
while indirect costs are capitalized and amortized over time
...
None of the above
...
What is the purpose of a budget?
o

A
...


o

B
...


o

C
...


o

D
...


4
...
Direct material standard cost

o

B
...
Variable overhead standard cost

o

D
...
What is the purpose of variance analysis?
o

A
...


o

B
...


o

C
...


o

D
...


Section B: Short Answer Questions (30 marks)
1
...

2
...
Explain the different types of budgets that a business may create
...
What is the purpose of standard costing?

20

5
...

Section C: Case Study (50 marks)
Case Study:
The ABC Company manufactures and sells a variety of products
...
For the month of March, the company produced and
sold 10,000 units of its most popular product, Product X
...
00



Direct labor: $3
...
00



Fixed overhead: $1
...
Calculate the total standard cost of production for the month of March
...
Calculate the total actual cost of production for the month of March
...
Calculate the direct material variance, direct labor variance, variable overhead
variance, and fixed overhead variance for the month of March
...
Explain the possible causes of each variance and recommend corrective actions,
if necessary
...
D

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2
...
D
4
...
A
Section B: Short Answer Questions
1
...
Managerial accounting is the process of providing
financial information to internal stakeholders, such as managers and employees,
to help them make better decisions
...
The different types of costs that a business may incur include direct costs,
indirect costs, fixed costs, and variable costs
...
The different types of budgets that a business may create include operating
budgets, capital budgets, and cash flow budgets
...
The purpose of standard costing is to provide a benchmark for comparing actual
costs to expected costs
...

5
...

Section C: Case Study
1
...

2
...
Managerial Accounting
2
...
Managerial Accounting Exam
4
...
Accounting Exam
6
...
Accounting Test
8
...
Study Materials
10
...
BBA Managerial Accounting Questions
12
...
BBA Accounting Exam
14
...
Accounting Practice Test
16
...
BBA Accounting Course
18
...
Managerial Accounting Test
20
...
BBA Accounting Answers
22
...
Accounting Exam Practice
24
...
Managerial Accounting Quiz

23



managerial accounting



BBA



exam paper



answers



accounting

24



business



management



finance



economics



decision-making



performance evaluation



planning and budgeting



control systems



financial reporting



cost accounting



budgeting



forecasting



break-even analysis



cost allocation



job costing



process costing



standard costing



variance analysis



financial statement analysis



performance management



transfer pricing



capital budgeting



risk management



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