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CIMA BA2 Exam
Fundamentals of Management Accounting (Page 21 )

Updated On: 15-Feb-2026
Page 16 of 80
PDF with 392 Questions

Within the relevant range, a variable cost is a cost which:

  1. cannot be forecast with any degree of accuracy because of its variability.
  2. varies in total in proportion to the level of activity.
  3. varies per unit in proportion to the level of activity.
  4. varies in total in proportion to the level of inflation.

Answer(s): B



CORRECT TEXT

Refer to the exhibit.



Patchit Limited operates a job costing system. They have been asked to quote for a rush job that will require to be done in overtime hours. It is estimated that the job will incur the following costs:

Production overheads are absorbed on a direct labour hour basis. Budgeted direct labour hours for the year were 50,000 and budgeted direct labour cost was $300,000.

If production overheads had been based on a percentage of direct labour cost, the revised production costs for the job would be:

  1. $8

Answer(s): A



In order to provide information that is suitable for control purposes, the budget must be:

  1. Computer generated
  2. Fixed
  3. Flexed
  4. Ideal

Answer(s): C



CORRECT TEXT
C Ltd produces a chemical in a single process. Information for this process last month is as follows:

(a) Opening work in progress - 10000 kg valued at £10000 for direct material and £7500 for conversion costs.

(b) Materials input - 25000 kg at £1.10 per kg.

(c) Conversion costs - £17000

(d) Output during the month - 23000 kg.

(e) There were 7500 units of closing work in progress which was complete as to materials and 30% complete as to conversion.

(f) Normal loss for the month was 10% of input and all losses have a scrap value of 80p per kg.

What was the value of normal loss during the month?

  1. £1999

Answer(s): A



Which of the following best describes a step cost?

  1. A cost which remains constant until activity reaches a critical level; thereafter the cost increases to a higher level and the unit cost remains constant until the next critical activity level is reached.
  2. A cost which increases steadily until activity reaches a critical level; thereafter the cost increases to a higher level and the total cost remains constant until the next critical activity level is reached.
  3. A cost which remains constant until activity reaches a critical level; thereafter the cost increases to a higher level and the total cost remains constant until the next critical activity level is reached.
  4. A cost which increases per unit until activity reaches a critical level; thereafter the cost increases to a higher level and the unit cost remains constant until the next critical activity level is reached.

Answer(s): C






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