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

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#### See also ACCA F2 flashcards: Set 2 | Set 3 | Set 4

### 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.

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