Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › KIT QUESTION

- This topic has 1 reply, 2 voices, and was last updated 1 year ago by LMR1006.

- AuthorPosts
- April 24, 2023 at 11:45 am #683448
Q-1 CORFE CO(2016)

WHICH OF THE FOLLOWING STATEMENTS RELATING TO THE PREPARATION OF A FLEXIBLE BUDGET FOR THE NEW BATTERY ARE TRUE?——-DOUBT—-WHY? THE FLEXIBLE BUDGET WILL GIVE MANAGERS MORE OPPORTUNITY TO INCLUDE BUDGETARY SLACK THAN A FIXED BUDGET. IS FALSE?

WHAT IF THEY CHOOSE THAT ACTIVITY LEVEL WHICH IS IN THEIR COMFORTZONE?Q-2 BELLAMY CO

WHICH TWO OF THE FOLLOWING ARE UNDERLYING ASSUMPTIONS OF FORECASTS MADE USING REGRESSION ANALYSIS?

——

1- A CURVILINEAR RELATIONSHIP EXISTS BETWEEN THE TWO VARIABLES

2- THE VALUE OF VARIABLE CAN BE PREDICTED OR ESTIMATED FROM THE VALUE OF ONE OTHER VARIABLE

3- A PERFECT LINEAR RELATIONSHIP BETWEEN THE TWO VARIABLES

4- WHAT HAS HAPPEND IN THE PAST WILL PROVIDE A RELIABLE GUIDE TO THE FUTURE.——DOUBT—- WHY 3RD IS WRONG AND 2ND IS TRUE? PLEASE EXPLAIN WITH SOME CASE SCENARIO IF POSSIBLE.

Q-3 WHICH OF THE FOLLOWING WOULD AFFECT THE RELIABILITY OF A FORECAST USING LINEAR REGRESSION?

—–DOUBT—-HOW COEFFICIENT OF CORRELATION WILL AFFECT THE RELIABILITY OF FORECAST?

Q-4 S CO IS A MANUFACTURER OF MULTIPLE PRODUCTS AND USES TARGET COSTING.IT HAS BEEN NOTED THAT PRODUCT P CURRENTLY HAS S TARGET COST GAP AND THE COMPANY WISHES TO CLOSE THIS GAP.

—-> WHICH OF THE FOLLOWING MAY BE USED TO CLOSE THE TARGET COST GAP FOR PRODUCT P.?

– USE OVERTIME TO COMPLETE WORK AHEAD OF SCHEDULE

– SUBSTITUTE CURRENT RAW MATERIAL WITH CHEAPER VERSIONS

– RAISE THE SELLING PRICE OF P

– NEGOTIATE CHEAPER RENT FOR S COMPANY’S PREMISES

—–DOUBT—-WHY THE 3RD OPTION IS CORRECT? ACC TO CONCEPT INCREASING THE SELLING PRICE IS NOT A VIABLE OPTION.April 24, 2023 at 2:03 pm #683464Q1

The fixed budget may not hold much relevance in the real world. This is because businesses witness a significant variation in activities than what they initially estimate. So, they build in slack to these estimates easily. Much more likely than with a flexible budget.

It states the flexible budget will give managers more opportunity to include slack than a fixed budget.

This is not correct a fixed budget does!Q2

(1) Not correct as curvilinear means not linear (in the sense of being curved, not ‘linear in parameters’)

In reality there exists a linear relationship between the independent variable, x, and the dependent variable, y.(2) Correct as

Linear regression analysis is used to predict the value of a variable based on the value of another variable.(3) This statement is incorrect

Regression analysis is not correlation analysis and vice versa.

Correlation can determine if two numeric variables are significantly linearly related. A correlation analysis provides information on the strength and direction of the linear relationship between two variables, whilst simple linear regression analysis estimates parameters in a linear equation that can be used to predict values of one variable based on the other. So a perfect linear relationship (r=-1 or r=1) means that one of the variables can be perfectly explained by a linear function of the other.(4) Correct

Regression analysis a method that is utilised to assess the strength of the relationship between dependent and independent variables and for modelling the future relationship between them. By doing regression analysis, over a period it allows companies to determine valuable and actionable business insights (for example, what will be sales numbers in the next 12 months).Q3

Yes, the coefficient of correlation can affect the reliability of a forecast. The correlation coefficient measures how close the points of a scatter plot are to a straight line and it’s sensitivity.

It does not take forecast bias into account, so it’s possible for a forecast with large errors to still have a good correlation coefficient with the observations.Q4

How can you close the gap?

The gap is the difference between selling price take off margin to get target cost. The gap is the difference between actual cost and the target cost.So if SP is $40 Margin $8 (25%) Target Cost $32 if Actual Cost is $36 you have a cost gap of $4.

If you increase SP to $45 Margin is $9 (25%) Target cost is $36……. Actual cost is still $36 so you closed your gap. - AuthorPosts

- You must be logged in to reply to this topic.