Learn or revise key terms and concepts for your ACCA exams using OpenTuition interactive ACCA Flashcards

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### Define the labour idle time ratio

Idle time ratio = idle hours / total hours x 100%

### What is the definition of the Internal Rate of Return (IRR)?

The IRR is the rate of interest at which the Net Present Value of the project is zero.

### In process costing, how are abnormal losses or gains valued?

Abnormal gains and losses are valued at full cost per unit.

### How is the Residual Income (RI) calculated?

RI = profit less notional interest on the capital invested

### What does the sales volume variance measure?

The sales volume variance measures the effect on the budgeted profit of the difference between the actual sales volume and the budgeted sales volume.

### What is top-down budgeting?

Top-down budgeting is where the budgets are prepared by high-level management and then communicated to lower levels.

Lower level management do not participate in the budget process.

### A Paasche price index number uses base year or current year quantities. Which?

A Paasche index number uses current year quantities.

### In process costing, what is meant by an abnormal gain?

An abnormal gain is the amount by which the actual loss is less than the normal (or expected) loss.

### Define the labour production volume ratio (activity ratio)

The labour production volume ratio = expected hours to produce actual output / total hours available (budgeted) x 100%

### If the linear equation y = a + bx, were to be drawn on a graph, what would be the gradient of the line?

The gradient of the line would be ‘b’.

### In the linear equation y = a + bx, where y is the total cost and x is the total production, what is the variable cost per unit?

The variable cost per unit is ‘b’ in the equation

### In the linear equation y = a + bx, which is the dependent variable?

The dependent variable is y

### If we have an equation relating the total sales revenue to the total advertising spend, which would be the dependent variable?

The dependent variable would be the sales revenue (it depends on the amount of advertising expenditure.)

### When sampling, what is meant by a ‘sampling frame’?

A sampling frame is a numbered list of all items in a population

### What is a ‘semi-variable cost’?

A semi-variable cost is a combination of variable and fixed costs.

### Describe a ‘pie chart’?

A pie chart is a circle that is divided into segments representing each type of observation. The size of each segment is proportional to the proportion of the total that are within each type of observation.

### In the linear equation y = a + bx, where y is the total cost and x is the total production, what is the fixed cost?

The fixed cost is ‘a’ in the equation

### What is meant by ‘indirect costs (or overheads)’?

Indirect costs are those costs which cannot be specifically identified with a specific cost unit or cost centre.

### What is meant by a ‘line of best fit’?

The line that most nearly goes through all the points when the data is plotted on a graph.

### What is meant by ‘quota sampling’?

The population is stratified and a sample of each strata is restricted to a fixed number.

### What are the purposes of costing (i.e. calculating the cost of producing a product or service)?

To enable a selling price to be set

To calculate a profit per unit

To value inventory

### What is the purpose of management accounting?

To help management run the business in a way that achieves the objectives of the business.

tshegokau says

QuEstion 7 Chapter 4 An organisation operates a piecework system of remuneration, but also guarantees its employees 80% of a time-based rate of pay which is based on $20 per hour for an eight hour working day. Three minutes is the standard time allowed per unit of output. Piecework is paid at the rate of $18 per standard hour. If an employee produces 200 units in eight hours on a particular day, what is the employee’s gross pay for that day? A $128 eB $144 C $160 D $180

200×(3÷60)×18=180

Can someone please help me understand what method was used.?

John Moffat says

The standard time is 3 minutes per unit.

200 units were produced, so the standard time for those units is 200 x 3 = 600 minutes (or 10 hours).

They are paid $18 per standard hour, so a total of 10 a $18 = $180.

(The guaranteed minimum is 8hours x $20 = $160, but $180 is above the minimum)

In future, please ask questions like this in either the general F2 forum, or in the F2 Ask the Tutor Forum.

It has nothing to do with the Flashcards.

Saagiba says

sir, i was very fed up about my F2 exam.. i did the exam in November CBE.. i do not have any idea about the FMA and i’m planning to do resit on january.. please provide me a help to get through the exam or the syllabus.. nothing is there i have understood in the F2 syllabus..

opentuition_team says

Did you watch F2 lectures on this website??

Reena says

Hello,

all syllabus is found on OPentuition including examiners reports.Please check you will found it.

Reena says

Dear Sir,

Please confirm the anwser & explain below:

A Company uses standard marginal costing.Last month , when all sales were at the standard selling price, the standard contribution from actual sales was $50 000 and the following variances arose:

Total variable cost variances $ 3500 adverse

Total fixed costs variances $ 1000 favourable

Sales volume contribution variances $ 2000 favorable

What was the actual contribution for last month?

John Moffat says

The actual contribution is 50,000 – 3500 + 1000 = 47,500.

The sales volume variance is not relevant because 50,000 is the standard contribution from actual sales. (if you had been given the budgeted contribution, then the sales volume variance would be relevant).

(I don’t know why you have posted this question here – it is not one of the flashcard questions. Better is to ask questions on the Ask the ACCA Tutor Forums – we cannot read every comment, but we always read the Ask the Tutor questions very regularly)

Reena says

What is a master budget?When it is prepare before the operational budget or After.

What is dysfunctional manager is ?.

In a canned foods manufacturing what term will be used process, batch, job or joint to be used?

What is a service costing?

John Moffat says

The master budget usually comprises a budgeted income statement for the year, a budgeted balance sheet, a cash budget, and a capital expenditure budget. (I say usually, because it is up to the individual company to decide whether or not they find all of the above useful for them, and therefore whether or not they prepare them all).

The master budget is prepared after the operational (functional) budgets – they are the budgets for each individual area (e.g. materials usage budget, labour budget etc..)

‘dysfunctional manager’ manager is not a standard term. However a manager who makes dysfunctional decisions is one who makes decisions that are good for him, but not good for the company as a whole.

There is no rule for a canned food manufacturer (or for any business for that matter) as to what type of costing they use – it is whatever the company feels is more appropriate. However, depending on the exact circumstances, process costing is probably more appropriate.

Service costing is costing for a service business (for example, for a hotel, calculating the costs for one room/night in order to be able to decide on what price to charge per night).

Reena says

Thank you Sir,