htt p:/ /f ree ac ca stu dy m ate r ial b log sp o t.c om / http://freeaccastudymaterial.blogspot.com/ http://freeaccastudymaterial.blogspot.com/ sp o t.c om / http://freeaccastudymaterial.blogspot.com/ ial b log FMA ate r PAPER F2 dy m MANAGEMENT ACCOUNTING BPP Learning Media is the sole ACCA Platinum Approved Learning Partner – content for the FIA suite of qualifications In this, the only FMA/F2 Practice and Revision Kit to be reviewed by the examiner: We include Do you know? Checklists to test your knowledge and understanding of topics  We provide you with two mock exams including the Pilot paper  We provide the ACCA examiner’s answers as well as our own to the Pilot paper as an additional revision aid as tu  ree ac c BPP's i-Pass product also supports this paper and is a vital tool if you are taking the computer based exam Note FIA FMA and ACCA Paper F2 are examined under the same syllabus and study guide htt p:/ /f FOR EXAMS FROM FEBRUARY 2013 TO JANUARY 2014 http://freeaccastudymaterial.blogspot.com/ P R A C T I C E & R E V I S I O N K I T / http://freeaccastudymaterial.blogspot.com/ First edition May 2011 Second edition November 2012 sp o t.c om FMA/F2 MANAGEMENT ACCOUNTING A note about copyright Dear Customer ISBN 9781 4453 9978 (Previous ISBN 9781 4453 7313 3) e-ISBN 9781 4453 9254 What does the little © mean and why does it matter? Your market-leading BPP books, course materials and e-learning materials not write and update themselves People write them: on their own behalf or as employees of an organisation that invests in this activity Copyright law protects their livelihoods It does so by creating rights over the use of the content log British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library ial b Published by BPP Learning Media Ltd BPP House, Aldine Place London W12 8AA Breach of copyright is a form of theft – as well being a criminal offence in some jurisdictions, it is potentially a serious breach of professional ethics www.bpp.com/learningmedia With current technology, things might seem a bit hazy but, basically, without the express permission of BPP Learning Media: ate r Printed in the United Kingdom by Ricoh Ricoh House Ullswater Crescent Coulsdon CR5 2HR dy m Your learning materials, published by BPP Learning Media Ltd, are printed on paper obtained from traceable sustainable sources as tu All our rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of BPP Learning Media ac c We are grateful to the Association of Chartered Certified Accountants for permission to reproduce past examination questions The suggested solutions in the exam answer bank have been prepared by BPP Learning Media Ltd, except where otherwise stated Photocopying our materials is a breach of copyright  Scanning, ripcasting or conversion of our digital materials into different file formats, uploading them to facebook or emailing them to your friends is a breach of copyright You can, of course, sell your books, in the form in which you have bought them – once you have finished with them (Is this fair to your fellow students? We update for a reason.) Please note the e-products are sold on a single user licence basis: we not supply ‘unlock’ codes to people who have bought them second hand And what about outside the UK? BPP Learning Media strives to make our materials available at prices students can afford by local printing arrangements, pricing policies and partnerships which are clearly listed on our website A tiny minority ignore this and indulge in criminal activity by illegally photocopying our material or supporting organisations that If they act illegally and unethically in one area, can you really trust them? htt p:/ /f ree © BPP Learning Media Ltd 2012  ii http://freeaccastudymaterial.blogspot.com/ / http://freeaccastudymaterial.blogspot.com/ t.c om CONTENTS Contents sp o Page Finding questions Question index v Helping you with your revision – the ONLY FMA/F2 Practice and Revision Kit to be reviewed by the examiner vii ial b log Using your BPP Practice and Revision Kit viii Passing the FMA/F2 exam ix Approach to examining the syllabus ix The Computer Based Examination x Tackling Multiple Choice Questions xi Using your BPP products xii Questions and answers Questions Answers 121 Formula sheet and tables 179 ate r Exam practice Mock exam (Pilot Paper)  Questions 185  Answers 201  ACCA examiner’s answers 207 dy m Mock exam  Questions 213  Answers 229 htt p:/ /f ree ac c as tu Review form iii http://freeaccastudymaterial.blogspot.com/ / http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om FMA/F2 MANAGEMENT ACCOUNTING iv http://freeaccastudymaterial.blogspot.com/ / http://freeaccastudymaterial.blogspot.com/ Question index Time allocation Marks Page Questions Answer 121 121 26 13 122 43 14 123 10 19 125 38 46 23 125 24 29 27 128 46 55 33 130 34 41 39 134 30 36 45 137 30 36 48 139 14 17 51 141 12 14 53 143 62 74 57 143 20 24 62 147 48 58 64 149 12 14 69 152 18 Capital expenditure budgeting 10 73 153 19 Methods of project appraisal 44 53 73 153 Part A: The nature, source and purpose of management information 20 24 Sources of data 12 14 Cost classification 22 Cost behaviour 36 Part B: Cost accounting methods and systems Accounting for materials Accounting for labour Absorption and marginal costing 10 Job, batch and service costing 11 Process costing ate r Accounting for overheads Part C: Budgeting 14 Forecasting 15 Budgeting as tu 16 The budgetary process dy m 12 Process costing, joint products and by-products 13 Alternative costing principles htt p:/ /f ree ac c 17 Making budgets work ial b Presenting information log Accounting for management sp o Mins t.c om QUESTION INDEX v http://freeaccastudymaterial.blogspot.com/ FMA/F2 MANAGEMENT ACCOUNTING Time allocation Marks Mins Page Questions 14 17 21 Basic variance analysis 36 43 22 Further variance analysis 42 50 23 Performance measurement 26 24 Applications of performance measurement 26 25 Cost management 157 82 157 86 160 31 93 163 31 95 164 98 165 ial b Mixed banks 26 Mixed bank 27 Mixed bank 29 Mixed bank 30 Mixed bank Mock exams Mock exam (Pilot paper) 48 99 165 40 48 104 169 40 48 108 171 30 36 113 174 20 24 116 177 100 120 185 201 100 120 213 229 htt p:/ /f ree ac c as tu dy m Mock exam 40 ate r 28 Mixed bank Answer 81 log Part E: Performance measurement sp o Part D: Standard costing 20 Standard costing t.c om / http://freeaccastudymaterial.blogspot.com/ vi http://freeaccastudymaterial.blogspot.com/ / http://freeaccastudymaterial.blogspot.com/ t.c om USING YOUR PRACTICE AND REVISION KIT Helping you with your revision – the ONLY FMA/F2 Practice and Revision Kit to be reviewed by the examiner! sp o BPP Learning Media – the sole Platinum Approved Learning Partner - content log As ACCA’s sole Platinum Approved Learning Partner – content, BPP Learning Media gives you the unique opportunity to use examiner-reviewed revision materials for exams from February 2013 to January 2014 By incorporating the examiner’s comments and suggestions regarding syllabus coverage, the BPP Learning Media Practice and Revision Kit provides excellent, ACCA-approved support for your revision We provide signposts to help you plan your revision  ial b Selecting questions A full question index listing questions that cover each part of the syllabus, so that you can locate the questions that provide practice on key topics, and see the different ways in which they might be tested ate r Attempting mock exams htt p:/ /f ree ac c as tu dy m There are two mock exams that provide practice at coping with the pressures of the exam day We strongly recommend that you attempt them under exam conditions Mock exam is the Pilot Paper Mock exam reflects the question styles and syllabus coverage of the exam vii http://freeaccastudymaterial.blogspot.com/ / http://freeaccastudymaterial.blogspot.com/ t.c om FMA/F2 MANAGEMENT ACCOUNTING Using your BPP Practice and Revision Kit Aim of this Practice and Revision Kit sp o To provide the practice to help you succeed in both the paper based and computer based examinations for Paper FMA/F2 Management Accounting To pass the examination you need a thorough understanding in all areas covered by the syllabus and teaching guide log Recommended approach Make sure you are able to answer questions on everything specified by the syllabus and teaching guide You cannot make any assumptions about what questions may come up on your paper The examiners aim to discourage 'question spotting'  Learning is an active process Use the DO YOU KNOW? Checklists to test your knowledge and understanding of the topics covered in FMA/F2 Management Accounting by filling in the blank spaces Then check your answers against the DID YOU KNOW? Checklists Do not attempt any questions if you are unable to fill in any of the blanks - go back to your BPP Interactive Text and revise first  When you are revising a topic, think about the mistakes that you know that you should avoid by writing down POSSIBLE PITFALLS at the end of each DO YOU KNOW? Checklist  Once you have completed the checklists successfully, you should attempt the questions on that topic Each question is worth marks and carries with it a time allocation of 2.4 minutes  Once you have completed all of the questions in the body of this Practice & Revision Kit, you should attempt the MOCK EXAMS under examination conditions Check your answers against our answers to find out how well you did htt p:/ /f ree ac c as tu dy m ate r ial b  viii http://freeaccastudymaterial.blogspot.com/ / http://freeaccastudymaterial.blogspot.com/ t.c om PASSING THE FMA/F2 EXAM Passing the FMA/F2 exam To access FIA and ACCA syllabuses, visit the ACCA website sp o http://www.accaglobal.com The exam log You can take this exam as a paper-based exam or by a computer-based exam (CBE) All questions in the exam are compulsory This means you cannot avoid any topic, but also means that you not need to waste time in the exam deciding which questions to attempt There are fifty MCQs in the paper based exam and a mixture of MCQs and other types of objective test question (OTQ) (for example, number entry, multiple response and multiple response matching) in the CBE This means that the examiner is able to test most of the syllabus at each sitting, and that is what they will aim to So you need to have revised right across the syllabus for this exam ial b Revision ate r This kit has been reviewed by the FMA/F2 examiner and contains the Pilot paper, so if you just worked through it to the end you would be very well prepared for the exam It is important to tackle questions under exam conditions Allow yourself just the number of minutes shown next to the questions in the index and don’t look at the answers until you have finished Then correct your answer and go back to the Interactive Text for any topic you are really having trouble with Try the same question again a week later – you will be surprised how much better you are getting Doing the questions like this will really show you what you know, and will make the exam experience less worrying Doing the exam dy m If you have honestly done your revision you can pass this exam There are certain points which you must bear in mind:  Read the question properly  Don’t spend more than the allotted time on each question If you are having trouble with a question leave it and carry on You can come back to it at the end as tu Approach to examining the syllabus FMA/F2 is a two-hour paper It can be taken as a paper based or a computer based examination The exam is structured as follows: 100 htt p:/ /f ree ac c 50 compulsory multiple choice questions of marks each No of marks ix http://freeaccastudymaterial.blogspot.com/ / http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om FMA/F2 MANAGEMENT ACCOUNTING http://freeaccastudymaterial.blogspot.com/ / http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om NOTES http://freeaccastudymaterial.blogspot.com/ / http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om FMA/F2 MANAGEMENT ACCOUNTING http://freeaccastudymaterial.blogspot.com/ / http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om NOTES http://freeaccastudymaterial.blogspot.com/ / http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om FMA/F2 MANAGEMENT ACCOUNTING http://freeaccastudymaterial.blogspot.com/ / http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om NOTES http://freeaccastudymaterial.blogspot.com/ / http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om FMA/F2 MANAGEMENT ACCOUNTING http://freeaccastudymaterial.blogspot.com/ / http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om NOTES http://freeaccastudymaterial.blogspot.com/ / http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om FMA/F2 MANAGEMENT ACCOUNTING http://freeaccastudymaterial.blogspot.com/ / http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om NOTES http://freeaccastudymaterial.blogspot.com/ / http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om FMA/F2 MANAGEMENT ACCOUNTING http://freeaccastudymaterial.blogspot.com/ / http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om NOTES http://freeaccastudymaterial.blogspot.com/ / http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om FMA/F2 MANAGEMENT ACCOUNTING http://freeaccastudymaterial.blogspot.com/ t.c om FMA/F2 MANAGEMENT ACCOUNTING (11/12) REVIEW FORM Name: Address: Date: sp o Our advertisement in ACCA Student Accountant How have you used this Practice & Revision Kit? (Tick one box only) Our advertisement in Teach Accounting Distance learning (book only) Other advertisement On a course: college Our brochure with a letter through the post As a tutor BPP email Other log ACCA E-Gain email With 'correspondence' package Our website www.bpp.com Have used complementary Interactive Text Which (if any) aspects of our advertising you find useful? (Tick as many boxes as are relevant) ial b Why did you decide to purchase this Practice & Revision Kit? (Tick one box only) Have used BPP Texts in the past Prices and publication dates of new editions Recommendation by friend/colleague Information on Practice & Revision Kit content Saw advertising Facility to order books off-the-page ate r Recommendation by a lecturer at college None of the above Other dy m During the past six months you recall seeing/receiving any of the following? (Tick as many boxes as are relevant) Have you used the companion Interactive Text for this subject? Yes No Your ratings, comments and suggestions would be appreciated on the following areas Very useful Useful Not useful Good Adequate Poor 'Did You Know' checklists Questions Answers Mock exams ac c Possible pitfalls as tu Introductory section (How to use this Practice & Revision Kit) 'Do You Know' checklists ree Structure & presentation Icons Excellent p:/ /f Overall opinion of this Kit Do you intend to continue using BPP Interactive Texts/Kits? Yes Please note any further comments and suggestions/errors on the reverse of this page Please return to: Ian Blackmore, BPP Learning Media Ltd, FREEPOST, London, W12 8BR htt / http://freeaccastudymaterial.blogspot.com/ http://freeaccastudymaterial.blogspot.com/ No / http://freeaccastudymaterial.blogspot.com/ t.c om FMA/F2 MANAGEMENT ACCOUNTING (11/12) REVIEW FORM (continued) htt p:/ /f ree ac c as tu dy m ate r ial b log sp o Please note any further comments and suggestions/errors below http://freeaccastudymaterial.blogspot.com/ ... http://freeaccastudymaterial.blogspot.com/ / http://freeaccastudymaterial.blogspot.com/ t.c om FMA /F2 MANAGEMENT ACCOUNTING Using your BPP Practice and Revision Kit Aim of this Practice and Revision Kit. .. your revision – the ONLY FMA /F2 Practice and Revision Kit to be reviewed by the examiner vii ial b log Using your BPP Practice and Revision Kit viii Passing the FMA /F2 exam... http://www.accaglobal.com/content/dam /acca/ global/PDF-students/2012s/sa_jan12_mcq.pdf xi http://freeaccastudymaterial.blogspot.com/ FMA /F2 MANAGEMENT ACCOUNTING Using your BPP products t.c om / http://freeaccastudymaterial.blogspot.com/ This Kit gives you the question