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14.31 Six years ago material M cost $10 per kg and the price index most appropriate to the cost of material Mwas 130. The same index now stands at 510.

What is the best estimate Of the current cost of material M per kg?

ABCD

$2.55$29.23$39.23$51.00 (2 marks)

(Total = 62 marks)

Em Budgeting '24 mins

15.1 Which of the following may be considered to be objectives of budgeting?

(i) Co-ordination(ii) Communication(iii) Expansion(iv) Resource allocation

A All of themB (i), (ii) and (iv)C (ii), (iii) and (iv)D (ii) and (iv) (2 marks)

15.2 What does the statement 'sales is the principal budget factor' mean?

A The level of sales will determine the level of cash at the end of the periodB· The level of sales will determine the level of profit at the end of the periodC The company's activities are limited by the Jevel of sales it can achieveD Sales is the largest item in the budget (2 marks)

15.3 Which of the following tasks would usually be carried out first in the budgetary planning process?

A Identity the principal budget factorB Establish the level of sales demandC Calculate the predetermined overhead absorption rateD Establish the organisation's long term objectives (2 marks)

15.4 QT Co manufactures a single product and an extract from their flexed budget for production costs is asfollows.

Activity level

Direct materialLabourProduction overhead

80%$

2,4002,1204,0608,580

90%$

2,7002,1604,0808,940

What would the total production cost allowance be in a budget flexed at the 83% level of activity? (tothe nearest $)

ABCo

$6,266$6,888$8,586$8,688 (2 marks)

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· 15.5 Which ofthese statements Is untrue?.' ....•.. ,'. >' . . ." .

.' A Spreadsheetsmake the ealculatlon and manipulation of data eas'-e~arid qulcker, '.' .B Spreadsheetsare very useful for word-processingC Budgeting can be done very easily using spreadsheetso Spreadsheetsare useful for plotting graphs (2 marks)

The following data applies to questions 15.6 to 15.7:A B C D F G

1 Jan Feb Mar Apr May2 b Sales 15,000 13,400 16,100 17,200 15,3003 Cost of sales 11,090 10,060 12,040 13,000 11,1004 Grossprofit 3,910 3,340 4,060 4,200 4,2005 Expenses 1,500 1,500 1,500 1,500 1,5006 Net profit 2,410 1,840 2,560 2,700 2,70078 Net profit %

15.6 The formula =C2-C3 will give the contents of which cell?A C6B C4C C5o C1 (2 marks)

15.7 What wouId be the formu la for March net profit?A =D2-03B =B6+C6C =04-05o =03*08 (2 marks)

15.8 What will be the formula to go in G8?A ==G6/G2*100B =G4/100*G6C =G2/G6*lOOo =G6/G4*100 (2marks)

15.9 A company manufactures a single product. In a computer spreadsheet the cells F1 to Fl2 contain thebudgeted monthly sales units for the twelve months of next year in sequence,with January sales in cellFl and finishing with. Decembersales in F12. The company policy is for the closing inventory offiriished goods each month to be 10% of the budgeted sales units for the following month.Which of the following formulae will generatethe budgeted production (in units) for March next year?A . =[F3 + (0.1 *F4))B =[F3-(0.1*F4)]C ='[(1.1*F3)-(0.1*F4)]D =[(0.9*F3) + (0.1 *F4)] (2 marks)

15.10 Which of the following are disadvantagesof flexil:)Jebudgets? .1 They are not very useful for decision-making2 They are more time consuming to preparethan fixed budgets3 They fail to provide an appropriate yardstick for cost control purposes4 They are based on a set of assurnptlons which may be over simplisticA 2 and 4 onlyB 2, 3 and 4 onlyC 1,2and30nly

_______ 0 1,_3_a_n_d_4_0_n_ly ~~ (2_m,__ r_~_) ~~

(Total = 20 marks)

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