Question 1

Which TWO of the following statements are true for obtaining a reliable forecast from a time series?

Options :

A : There must be an increasing trend.

B : The past trend must continue in the future.

C : The past pattern of seasonal variations must continue in the future.

D : Extrapolation of the trend must be avoided.

E : There must be a decreasing trend.

Answer: B,C

Question 2

Some of the movements in a time series follow a pattern over time.
Which type of movement does NOT follow a pattern over time?

Options :

A : Trend

B : Cyclical variation

C : Random variation

D : Seasonal variation

Answer: C

Question 3

A company is preparing its annual budget and is estimating the number of units of Product A that it will sell in each quarter of year 2. Past experience has shown that the trend for sales of the product is represented by the following relationship:

y = a + bx where

y = number of sales units in the quarter a = 10,000 units b = 3,000 units x = the quarter number where 1 = quarter 1 of year 1

Actual sales of Product A in Year 1 were affected by seasonal variations and were as follows:

Quarter 1:14,000 units Quarter2: 18,000 units Quarter 3: 18,000 units Quarter 4: 20,000 units

Calculate the expected sales of Product A (in units) for each quarter of year 2, after adjusting for seasonal variations using the additive model.

Options :

A : The expected sales for year 2 Quarter 4 was 32700 units

B : The expected sales for year 2 Quarter 4 was 32000 units

C : The expected sales for year 2 Quarter 4 was 33000 units

D : The expected sales for year 2 Quarter 4 was 40000 units

Answer: B

Question 4

Which THREE of the following statements about different costing systems are correct?

Options :

A : Contribution per unit is the selling price per unit minus the variable costs per unit.

B : In a period during which finished goods inventory levels fall, profit using marginal costing will be higher than if absorption costing is used.

C : When valuing inventory using throughput costing, the direct labour cost is excluded.

D : Over-absorption of fixed production overhead is caused by actual sales exceeding budgeted sales.

E : Finished goods inventory will be assigned a higher value using throughput costing than absorption costing.

Answer: A,B,C

Question 5

A company's budget for the next period shows that it would breakeven at sales revenue of $800,000 and fixed costs of $320,000.

The sales revenue needed to achieve a profit of $200,000 in the next period would be:

Options :

A : $1,950,000

B : $1,780,000

C : $1,400,000

D : $1,300,000

E : $1,390,000

Answer: D

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