When a moving average is plotted onto a graph, where should the plotted points be located?

• A.At the end of the period to which they apply.
• B.At the beginning of the period to which they apply.
• C.Anywhere within the period to which they apply.
• D.At the mid-point of the period to which they apply.

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A manager in your organisation says, "I have spare capacity and I need a unit cost as a basis for pricing a special one-off contract. You have provided me with a relevant cost of $6.50 per unit and a full production cost of $8.00 per unit. Please explain which unit cost I should use." Which cost should be used in this decision and why?

• A.The relevant cost because it is the lower unit cost.
• B.The relevant cost because it represents the cash flows that will be affected if the contract is accepted.
• C.The full production cost because it will be used in the financial accounting reporting system.
• D.The full production cost because it is important to ensure that all costs are covered by the selling price.

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Which of the following would lead to a favourable variance?

• A.The standard material price was set too low.
• B.Labour hours worked were lower than standard.
• C.The standard material usage was set too low.
• D.Actual labour cost was higher than standard.

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Assume that you have made profit calculations based on standard profit calculation methods and activity based costing methods.
In which ways will this information be beneficial to the management team?
Select all the true statements.

• A.Under an activity based costing system the various support activities that are involved in the process of making products or providing services are identified.
• B.Operational analysis will provide information to management on how costs can be incurred and managed.
• C.The identification of cost drivers provides information to management to enable them to take actions to improve the overall profitability of the company.
• D.The cost drivers that cause a change to the cost of activities are also identified and used as the basis to attach activity costs to a particular product or service.
• E.Through the tracing of costs to product in this way ABC establishes less accurate costs for the product or service.

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Which of the following distinguishes risk from uncertainty?

• A.Risk is relevant to financial decisions whereas uncertainty is relevant to non-financial.
• B.Risk can be quantified whereas uncertainty cannot.
• C.Risk should be taken into account in decision making whereas uncertainty should not.
• D.Risk can have both upside and downside whereas uncertainty is always downside.

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