05 AAT FNPF LRP Mock Exam Qs

Professional Examinations
AAT FNPF
Financial Performance
LECTURER RESOURCE PACK
MOCK EXAMINATION
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assessment materials. The solutions have been prepared by Kaplan Publishing.
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Unit 2 The Business Centre
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This exam paper is in TWO sections
You must show competence in BOTH sections. So try to complete EVERY task
in BOTH sections.
Section 1 contains 3 tasks and Section 2 contains 3 tasks.
You should spend about 75 minutes on each section.
You should include all your workings and essential calculations in your
answers.
Both sections 1 and 2 are based on the business described below.
SECTION 1
You should spend about 75 minutes on this section.
Data
You are a management accounting technician at Stewart Chemicals which produce a range of
products, one of which is ‘Stew 2’. This product is manufactured in a division which is devoted
solely to this production. It is packed in 10 litre drums.
One of your responsibilities is the preparation of a monthly performance report using standard
costing and variance analysis.
The following information relates to the financial performance for June 20X3.
Budget
5,000
Drums of ‘Stew 2’
Costs
Direct
material
Direct
labour
Fixed
overhead
Units of
input
Standard
cost per
unit of
input
Standard
cost per
unit
10 litres
£2
£20
1 hour
£8
1 hour
£15
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Actual
4,800
Standard
cost of
budgeted
production
Actual
cost per
unit of
input
Actual
cost
£100,000
£2.05
£105,000
£8
£40,000
£8.20
£41,820
£15
___
£75,000
________
£80,000
________
£43
___
£215,000
________
£226,820
________
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AAT FNPF : FINANCIAL PERFORMANCE
TASK 1.1
(a)
In preparation for the next management meeting to discuss the performance for June
20X3, calculate:
Actual usage of material in litres
Actual hours worked in the period
Standard usage of material for the actual level of production
achieved
Standard hours produced in the period
Standard hours in the budget
Fixed overhead recovered in the production achieved
(b)
Using your answers above and the information provided, calculate the following
variances:
£
F/A
Direct material price variance
Direct material usage variance
Direct labour rate variance
Direct labour efficiency variance
Fixed overhead expenditure variance
Fixed overhead volume variance
Fixed overhead capacity variance
Fixed overhead efficiency variance
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MOCK EXAMINATION : QUESTIONS
(c)
Prepare a statement reconciling the standard cost of actual production to the actual
cost of production for June 20X3.
Reconciliation of standard cost of actual production to actual cost of production
for June 20X3
£
F/A
£
Standard cost of actual
production
Direct labour rate
Direct labour efficiency
Direct material price
Direct material usage
Fixed
expenditure
overhead
Fixed overhead volume
Total variance
Actual cost
Data
On producing your monthly report, the Production Manager informs you that of the total hours
worked in the period, 200 hours was ‘down time’ as there had been a major breakdown of plant
and this had resulted in 2,000 litres of raw material being wasted.
TASK 1.2
Write a memo to the Accountant showing the effect of these factors on the variances for labour
efficiency and material usage.
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AAT FNPF : FINANCIAL PERFORMANCE
MEMO
To:
Accountant
From:
Accounting Technician
Date:
XX – XX – XX
Subject:
Variances arising in June 20X3
.
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MOCK EXAMINATION : QUESTIONS
Data
The materials that Stewart Chemicals uses have been priced as follows for the past four years:
£
20X0
1.57
20X1
1.73
20X2
1.84
20X3
2.05
Task 1.3
(a)
(b)
Convert the price of the materials for the four years to index numbers using 20X0 as
the base year.
Year
Price (£)
20X0
1.57
20X1
1.73
20X2
1.84
20X3
2.05
Index number
The total price increase over the four years expressed as a percentage is:
%
(c)
If the price increase for 2004 is 9% compared to 20X3,
(i)
The price in 20X4 is £
(ii)
The index number for the 20X4 price is
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AAT FNPF : FINANCIAL PERFORMANCE
SECTION 2
You should spend about 75 minutes on this section.
The company has two additional separate units producing chemicals; one on the NE Coast, the
other in the South.
Financial data for the two profit centres are shown below.
South Unit
Income statement for year ended 31 December 20X3
£000s
Turnover
960
___
Materials
Production labour
Other production expenses
Depreciation of buildings
Depreciation of machinery
Admin and other expenses
384
192
50
22
40
50
___
738
___
Operating profit
222
___
Extract from statement of financial position at 31 December 20X3
Cost
£000s
Depreciation
£000s
NBV
£000s
820
320
___
280
80
___
360
Non current assets
Buildings
Plant and machinery
1,100
400
_____
Net current assets
Stock
Debtors
Cash
Creditors
Net assets
6
50
35
4
(45)
___
44
___
404
___
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MOCK EXAMINATION : QUESTIONS
Other information
Number of employees
20
Units produced
10,000
Performance indicators for South Unit:
Asset turnover
2.4
Net profit margin
23.1%
Return on capital employed
55%
Wages per employee
£9,600
Production labour cost per unit of output
£19.20
Output per employee (in units)
500
Value added per employee
£23,800
Profit per employee
£11,100
NE Coast Unit
Income statement for year ended 31 December 20X3
£000s
Turnover
2,880
_____
Materials
Production labour
Other production expenses
Depreciation of buildings
Depreciation of plant
Admin and other expenses
1,152
296
720
32
100
115
_____
2,415
_____
Operating profit
465
_____
Number of employees
22
Units produced
30,000
Extract from statement of financial position at 31 December 20X3
Cost
£000s
Depreciation
£000s
NBV
£000s
Non current assets
Buildings
Plant and machinery
1,600
1,000
_____
128
200
___
1,472
800
_____
2,272
Net current assets
Stock
Debtors
Cash
Creditors
Net assets
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25
40
5
(60)
___
10
_____
2,282
_____
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AAT FNPF : FINANCIAL PERFORMANCE
The company is considering closing one of the plants in the next two years and you are to
attend a meeting shortly to assess the performance of both plants.
TASK 2.1
In preparation for the meeting, calculate the following performance indicators for the NE Coast
Unit:
Asset turnover
Net profit margin
Return on capital employed
Wages per employee
Production labour cost per unit
Output per employee
Value added per employee
Profit per employee
Data
Comments have been made by the management of both plants regarding their efficiency and
productivity.
TASK 2.2
You have been asked by the Accountant to prepare a series of notes for the forthcoming
meeting to:
1
2
3
4
Distinguish between the terms productivity and efficiency
Identify two performance indicators to measure efficiency for both plants
Identify two performance indicators to measure productivity for both plants
Comment as to why productivity and efficiency measures may give different rankings
You are required to prepare the notes that have been requested.
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MOCK EXAMINATION : QUESTIONS
NOTES
To:
From:
Date:
Subject:
KAPLAN PUBLISHING
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AAT FNPF : FINANCIAL PERFORMANCE
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MOCK EXAMINATION : QUESTIONS
Data
A new financial director has recently joined the company and in a meeting suggests that the
company should use the ‘balanced scorecard’ approach to performance management.
TASK 2.3
Your financial director asks you to write a memo to senior managers outlining the principle of
the balanced scorecard, explaining clearly the way in which performance is viewed from four
distinct perspectives.
You are required to draft this memorandum.
MEMO
To:
From:
Date:
Subject:
KAPLAN PUBLISHING
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AAT FNPF : FINANCIAL PERFORMANCE
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