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CIMA BA2 Practice Test Chapter 13 - Short-term decision making
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CIMA BA2 Practice Test Chapter 13 - Short-term decision making
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BA 2 - Fundamentals of Management AccountingPractice questions
Short-term decision making
Chapter thirteen
, 1
01. EFG is currently considering a job that requires 1,000 kg of raw material. There are two
possible situations.
(a) The material is used regularly within the company. The present inventory is 10,000 kg
which was purchased at $1.80 per kg. The current purchase price is $2.00 per kg.
What is the relevant cost per kg?
(b) EFG has 2,000 kg in inventory, bought 2 years ago for $1.50 per kg, but no longer used
for any of its products. The current market price for the material is $2.00, but it could be
sold for $0.80 per kg.
What is the relevant cost for material?
02. A new contract requires the use of 50 kg of metal ZX. There are 25 kg of ZX in inventory at
the moment, which were bought for $200 per kg. The company no longer has any use for metal
ZX. The current purchase price is $210 per kg, and the metal could be disposed of for net scrap
proceeds of $150 per kg.
What cost should be charged to the new contract for metal ZX?
03. XYZ is pricing a job that involves the use of 20 hours of skilled labour and 50 hours of
semi-skilled labour.
The four existing skilled workers are paid $15 per hour with a minimum weekly wage of $450.
They are currently working 24 hours a week.
The semi-skilled workforce is currently fully utilised. They are each paid $10 per hour, with
overtime payable at time and a half. Additional workers may be hired for $12 per hour.
Calculate the relevant labour cost for XYZ's job.
04. A mining operation uses skilled labour costing $14 per hour, which generates a contribution
(after deducting the labour costs) of $3 per hour.
A new project is now being considered which requires 5,000 hours of skilled labour. There is a
shortage of the required labour and no additional labour can be hired.
What is the relevant cost of using the skilled labour on the project?
BA 2 - Short-term decision making. Quantia Learning
, 2
05. Equipment owned by a company has a net book value of $1,800 and has been idle for some
months. It could now be used on a six month contract that is being considered. If not used on
this contract, the equipment would be sold now for a net amount of $2,000. After use on the
contract, the equipment would have no resale value and would be dismantled.
What is the total relevant cost of the equipment to the contract?
06. ABC manufactures a single product. The unit costs of the product are as follows:
$
Direct materials 36
Direct labour 12
Direct expenses 9
Variable overheads 13
The product sells for $95. The fixed costs for the period were $55,000.
Required:
The breakeven number of units is _________.
07. LMN plans to produce and sell 4,000 units of product C each month, at a selling price of $18
per unit. The unit cost of product C is as follows:
$ per unit
Variable cost 8
Fixed cost 4
12
Required:
To the nearest whole number, the margin of safety, as a percentage of planned sales is
__________ %.
BA 2 - Short-term decision making. Quantia Learning
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