Management Information Flashcards
6 cards from real ACA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Management Information flashcards as text
The main purpose of a cash budget is to:
Answer: Identify future cash surpluses and deficits so financing can be arranged
A cash budget forecasts cash receipts and payments over future periods, enabling management to anticipate shortfalls and arrange appropriate financing, or to plan investment of surpluses.
Fixed overhead volume variance measures:
Answer: The difference between absorbed and budgeted fixed overhead, due to activity levels
Fixed overhead volume variance = (Absorbed fixed overhead − Budgeted fixed overhead). It arises because actual production volume differed from budgeted volume, affecting overhead absorption.
Which of the following costs is relevant for a make-or-buy decision?
Answer: Avoidable fixed overheads that would be saved if bought in
Relevant costs for make-or-buy decisions include incremental variable costs, avoidable fixed costs, and opportunity costs. Depreciation of idle machinery and allocated overheads are irrelevant as they are not incremental.
The margin of safety measures:
Answer: The excess of budgeted or actual sales over the breakeven point
The margin of safety is the difference between actual or budgeted sales and the breakeven sales volume, expressed in units, revenue, or as a percentage of budgeted sales.
Benchmarking in management accounting involves:
Answer: Comparing performance against best practice or competitors
Benchmarking compares an entity's performance metrics, processes, and costs against best practice, industry averages, or leading competitors to identify improvement opportunities.
Which budget is prepared first in the budget hierarchy?
Answer: Sales budget
The sales budget is prepared first as it establishes expected revenue and volumes; all other budgets (production, labour, materials, cash) are derived from the sales plan.