CIMA Management Accounting 3

Question 1

Which budgeting approach starts from a zero base each period and requires all expenditures to be justified?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting (ZBB) requires managers to justify every expense from scratch each period rather than adjusting prior-year figures.

Question 2

A flexible budget is most useful for:

Accepted Answer

Comparing actual costs to expected costs at actual activity level

Answer

A flexible budget adjusts budgeted costs to the actual level of activity achieved, providing a like-for-like comparison with actual results.

Question 3

In a job costing system, overhead is typically applied using:

Accepted Answer

A predetermined overhead absorption rate

Answer

A predetermined overhead absorption rate (OAR) is calculated before the period begins and applied to jobs based on a chosen activity base.

Question 4

When a machine hour rate is used to absorb production overhead, the rate is calculated as:

Accepted Answer

Budgeted overhead ÷ Budgeted machine hours

Answer

The predetermined overhead absorption rate = Budgeted overhead ÷ Budgeted machine hours, both established at the start of the period.

Question 5

Which variance measures the difference between the actual hours worked and the standard hours allowed for actual output, valued at the standard labor rate?

Accepted Answer

Labor efficiency variance

Answer

The labor efficiency variance = (Standard hours for actual output − Actual hours worked) × Standard rate.

CIMA - Chartered Institute of Management Accountants Aptitude Test Practice Test

CIMA - Chartered Institute of Management Accountants Aptitude Test Practice Test

CIMA Management Accounting 3