ACCA

MANAGEMENT ACCOUNTING F2/FMA

STUDY SYSTEM
For Examinations to August 2015

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 Paper
F2/FMA
Contents

Page

introduction ...............................................................................................v

About this Study System ............................................................................v

Syllabus.....................................................................................................vi

ACCA Study Guide ......................................................................................ix

Formulae and tables ................................................................................ xv

examination technique ..........................................................................xviii

Sessions

1 Accounting for Management ................................................. 1-1

2 Sources of data .................................................................... 2-1

3 Cost Classification ................................................................ 3-1

4 Presenting information ........................................................ 4-1

5 Accounting for Materials ....................................................... 5-1

6 Accounting for labour .......................................................... 6-1

7 Accounting for overheads..................................................... 7-1

8 Absorption and Marginal Costing .......................................... 8-1

9 Job, Batch and Service Costing ............................................. 9-1

10 Process Costing ...................................................................10-1

11 Alternative Costing Principles ..............................................11-1

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 Contents

Sessions Page

12 Budgeting—Nature, Purpose and Behavioural Aspects .........12-1

13 Statistical techniques ..........................................................13-1

14 Budget Preparation .............................................................14-1

15 Flexible Budgets, Budgetary Control and Reporting .............15-1

16 Standard Costing and Variance Analysis ..............................16-1

17 Capital Budgeting and discounted Cash Flows .....................17-1

18 Performance Measurement ................................................. 18-1

19 Further Aspects of Performance Measurement ....................19-1

20 Glossary ..............................................................................20-1

21 index ..................................................................................21-1

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 Introduction

ABout tHiS Study SySteM

This Study System has been specifically written for the Association of Chartered Certified
Accountant's Papers F2 Management Accounting in the ACCA Qualification and FMA
Foundations of Management Accounting of Foundations in Accounting.
It provides comprehensive coverage of the core syllabus areas and is designed to be used
both as a reference text and interactively with the ATC Learning System to provide you with
the knowledge, skill and confidence to succeed in your ACCA studies.
About the author: Nick Ryan is ATC International's lead tutor in performance management
and has more than 10 years' experience in delivering ACCA exam-based training.

How to Use This Study System

You should start by reading through the syllabus, study guide and approach to examining the
syllabus provided in this introduction to familiarise yourself with the content of this paper.
The sessions which follow include the following features:

These are the learning outcomes relevant to the session, as published in

Focus
the ACCA Study Guide.

Session Guidance Tutor advice and strategies for approaching each session.

Visual overview A diagram of the concepts and the relationships addressed in each session.

Terms are defi ned as they are introduced and larger groupings of terms will
definitions
be set forth in a Terminology section.

These are to be read as part of the text. Any solutions to numerical

illustrations
Illustrations are provided.

These extracts of external content are presented to reinforce concepts and

exhibits
should be read as part of the text.

These should be attempted using the pro forma solution provided

examples
(where applicable).

Key Points Attention is drawn to fundamental rules, underlying concepts and principles.

exam Advice These tutor comments relate the content to relevance in the examination.

Commentaries These provide additional information to reinforce content.

Session Summary A summary of the main points of each session.

These quick questions are designed to test your knowledge of the technical
Session Quiz
content. A reference to the answer is provided.

A link to recommended practice questions contained in the Study Question

Study Question Bank. At a minimum, you should work through the priority questions
Bank after studying each session. For additional practice, you can attempt the
remaining questions (where provided).

example Solutions Answers to the Examples are presented at the end of each session.

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Syllabus F2 Management Accounting

SyllABuS

Aim
To develop knowledge and understanding of providing basic management information in an
organisation to support management in planning and decision-making.

Main Capabilities
On successful completion of this paper, candidates should be able to:
A. Explain the nature, source and purpose of management information.
B. Explain and apply cost accounting techniques.
C. Prepare budgets for planning and control.
d. Compare actual costs with standard costs and analyse any variances.
e. Explain and apply performance measures to monitor business performance.

Rationale
The syllabus for Paper FMA/F2 Management Accounting introduces candidates to elements
of management accounting which are used to make and support decisions.
The syllabus starts by introducing the nature, the source and purpose of cost accounting, and
the costing techniques used in business which are essential for any management accountant.
The syllabus then looks at the preparation and use of budgeting and standard costing
and variance analysis as essential tools for planning and controlling business costs. The
syllabus concludes with an introduction to measuring and monitoring the performance of
an organisation.

Relational Diagram of Main Capabilities

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F2 Management Accounting Syllabus

Syllabus Structure

P3 P5

F5 ACCA

FMA F2

FIA MA2

MA1

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Syllabus F2 Management Accounting

Detailed Syllabus
A. The Nature, Source and Purpose of D. Standard Costing
Management Information
1. Standard costing system
1. Accounting for management 2. Variance calculations and analysis
2. Sources of data 3. Reconciliation of budgeted and actual
3. Cost classification profit
4. Presenting information E. Performance Measurement

B. Cost Accounting Techniques 1. Performance measurement—overview

2. Performance measurement—application
1. Accounting for material, labour and
overheads 3. Cost reductions and value enhancement
2. Absorption and marginal costing 4. Monitoring performance and reporting
3. Cost accounting methods
4. Alternative cost accounting principles
C. Budgeting
1. Nature and purpose of budgeting
2. Statistical techniques
3. Budget preparation
4. Flexible budgets
5. Capital budgeting and discounted
cash flow
6. Budgetary control and reporting
7. Behavioural aspects of budgeting 

Approach to Examining the Syllabus

The syllabus is assessed by a two hour paper-based or computer-based examination.
The examination will consist of two sections.
Section A will consist of 35 two mark objective questions.
Section B will contain 3 ten mark multi-task questions each of which will examine
Budgeting, Standard costing and Performance measurement sections of the syllabus.

ACCA Support
For examiner's reports, guidance and technical articles relevant to this paper see http://
www.accaglobal.com/en/student/acca-qual-student-journey/qual-resource/acca-qualification/
f2.html (also www.accaglobal.com/en/student/foundation-lvl-qual-student-journey/
qualification-resources/foundation-lvl-qual/dip-accounting-business/fma.html for FMA).

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F2 Management Accounting ACCA Study Guide

ACCA Study Guide

A. The Nature, Source and Purpose of Management Information Ref.

1. Accounting for management

a) Describe the purpose and role of cost and management accounting within an
1
organisation.
b) Compare and contrast financial accounting with cost and management accounting. 1
c) Outline the managerial processes of planning, decision-making and control. 1
d) Explain the difference between strategic, tactical and operational planning. 1
e) Distinguish between data and information. 1
f) Identify and explain the attributes of good information. 1
g) Explain the limitations of management information in providing guidance for
1
managerial decision-making.
2. Sources of data
a) Describe sources of information from within and outside the organisation including
government statistics, financial press, professional or trade associations, quotations 2
and price list).
b) Explain the uses and limitations of published information/data including information
2
from the internet).
c) Describe the impact of general economic environment on costs/revenue. 2
d) Explain sampling techniques (random, systematic, stratified, multistage, cluster
2
and quota).
e) Choose an appropriate sampling method in a specific situation. 2
3. Cost classification
a) Explain and illustrate production and non-production costs. 3
b) Describe the different elements of non-production costs: administrative, selling,
3
distribution and finance.
c) Describe the different elements of production cost: materials, labour and overheads.
d) Explain the importance of the distinction between production and non-production
3
costs when valuing output and inventories.
e) Explain and illustrate with examples classifications used in the analysis of the
product/service costs including by function, direct and indirect, fixed and variable, 3
stepped-fixed and semi-variable costs.
f) Explain and illustrate the use of codes in categorising transaction. 3
g) Describe and illustrate, graphically, different types of cost behaviour. 3
h) Use high/low analysis to separate the fixed and variable elements of total costs
including situations involving semi-variable and stepped-fixed costs and changes in 3
the variable cost per unit.
i) Explain the structure of linear functions and equations. 3
j) Explain and illustrate the concept of cost objects, cost units and cost centres. 3
k) Distinguish between cost, profit, investment and revenue centres. 3
l) Describe the differing needs for information of cost, profit, investment and revenue
3
centre managers.
4. Presenting information
a) Prepare written reports representing management information in suitable formats
4
according to purpose.
b) Present information using tables, charts and graphs (bar charts, line graphs, pie
4, 13
charts and scatter graphs).
c) Interpret information including the above tables, charts and graphs) presented in
4
management reports.

(continued on next page)

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ACCA Study Guide F2 Management Accounting

Ref.

B. Cost Accounting Techniques Ref.

1. Accounting for material, labour and overheads

a) Accounting for materials 5
i) Describe the different procedures and documents necessary for the ordering,
5
receiving and issuing of materials from inventory.
ii) Describe the control procedures used to monitor physical and 'book' inventory
5
and to minimise discrepancies and losses.
iii) Interpret the entries and balances in the material inventory account. 5
iv) Identify, explain and calculate the costs of ordering and holding inventory
5
including buffer inventory).
v) Calculate and interpret optimal reorder quantities. 5
vi) Calculate and interpret optimal reorder quantities when discounts apply. 5
vii) Produce calculations to minimise inventory costs when inventory is gradually
5
replenished.
viii) Describe and apply appropriate methods for establishing reorder levels where
5
demand in the lead time is constant.
ix) Calculate the value of closing inventory and material issues using LIFO, FIFO
5
and average methods.
b) Accounting for labour
i) Calculate direct and indirect costs of labour. 6
ii) Explain the methods used to relate input labour costs to work done. 6
iii) Prepare the journal and ledger entries to record labour cost inputs and outputs. 6
iv) Describe different remuneration methods: time-based systems, piecework
6
systems and individual and group incentive schemes.
v) Calculate the level, and analyse the costs and causes of labour turnover. 6
vi) Explain and calculate labour efficiency, capacity and production volume ratios. 6
vii) Interpret the entries in the labour account. 6
c) Accounting for overheads
i) Explain the different treatment of direct and indirect expenses. 7
ii) Describe the procedures involved in determining production overhead
7
absorption rates.
iii) Allocate and apportion production overheads to cost centres using an
7
appropriate basis.
iv) Reapportion service cost centre costs to production cost centres including
7
using the reciprocal method where service cost centres work for each other).
v) Select, apply and discuss appropriate bases for absorption rates. 7
vi) Prepare journal and ledger entries for manufacturing overheads incurred
7
and absorbed.
vii) Calculate and explain the under and over absorption of overheads. 7
2. Absorption and marginal costing
a) Explain the importance of, and apply, the concept of contribution. 8
b) Demonstrate and discuss the effect of absorption and marginal costing on inventory
8
valuation and profit determination.
c) Calculate profit or loss under absorption and marginal costing. 8
d) Reconcile the profits or losses calculated under absorption and marginal costing. 8
e) Describe the advantages and disadvantages of absorption and marginal costing. 8
(continued on next page)

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F2 Management Accounting ACCA Study Guide

Ref.
3. Cost accounting methods 9
a) Job and batch costing:
i) Describe the characteristics of job and batch costing. 9
ii) Describe the situations where the use of job or batch costing would be
9
appropriate.
iii) Prepare cost records and accounts in job and batch costing situations. 9
iv) Establish job and batch costs from given information. 9
b) Process costing
i) Describe the characteristics of process costing. 10
ii) Describe the situations where the use of process costing would be appropriate. 10
iii) Explain the concepts of normal and abnormal losses and abnormal gains. 10
iv) Calculate the cost per unit of process outputs. 10
v) Prepare process accounts involving normal and abnormal losses and abnormal
10
gains.
vi) Calculate and explain the concept of equivalent units. 10
vii) Apportion process costs between work remaining in process and transfers out
10
of a process using the weighted average and FIFO methods.
viii) Prepare process accounts in situations where work remains incomplete. 10
ix) Prepare process accounts where losses and gains are identified at different
10
stages of the process.
(x) Distinguish between by-products and joint products. 10
(xi) Value by-products and joint products at the point of separation. 10
(xii) Prepare process accounts in situations where by-products and/or joint
10
products occur.
(Situations involving work-in-process and losses in the same process are excluded).
c) Service/operation costing
i) Identify situations where the use of service/operation costing is appropriate. 9
ii) Illustrate suitable unit cost measures that may be used in different service/
9
operation situations.
iii) Carry out service cost analysis in simple service industry situations. 9
4. Alternative cost accounting
a) Explain activity based costing (ABC), target costing, life cycle costing and total
11
quality management (TQM) as alternative cost management techniques.
b) Differentiate ABC, Target costing and life cycle costing from the traditional costing
11
techniques (note: calculations are not required).

C. Budgeting Ref.

1. Nature and purpose of budgeting 12

a) Explain why organisations use budgeting. 12
b) Describe the planning and control cycle in an organisation. 12
c) Explain the administrative procedures used in the budgeting process. 12
d) Describe the stages in the budgeting process ( including sources of relevant data,
planning and agreeing draft budgets and purpose of forecasts and how they link 12
to budgeting).
2. Statistical techniques
a) Explain the advantages and disadvantages of using high low method to estimate
3
the fixed and variable element of costing.
b) Construct scatter diagrams and lines of best fit.
(continued on next page)

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ACCA Study Guide F2 Management Accounting

Ref.
c) Analysis of cost data.
i) Explain the concept of correlation coefficient and coefficient of determination.
ii) Calculate and interpret correlation coefficient and coefficient of determination. 13
iii) Establish a linear function using regression analysis and interpret the results. 13
d) Use linear regression coefficients to make forecasts of costs and revenues. 13
e) Adjust historical and forecast data for price movements. 13
f) Explain the advantages and disadvantages of linear regression analysis. 13
g) Describe the product life cycle and explain its importance in forecasting. 11
h) Explain the principles of time series analysis (cyclical, trend, seasonal variation and
13
random elements).
i) Calculate moving averages. 13
j) Calculation of trend, including the use of regression coefficients. 13
k) Use trend and seasonal variation (additive and multiplicative) to make budget
13
forecasts.
l) Explain the advantages and disadvantages of time series analysis. 13
m) Explain the purpose of index numbers. 13
n) Calculate simple index numbers for one or more variables. 13
o) Explain the role and features of a computer spreadsheet system. 13
p) Identify applications for computer spreadsheets and their use in cost and
13
management accounting.
3. Budget preparation
a) Explain the importance of principal budget factor in constructing the budget. 14
b) Prepare sales budgets. 14
c) Prepare functional budgets (production, raw materials usage and purchases, labour,
14
variable and fixed overheads).
d) Prepare cash budgets. 14
e) Prepare master budgets income statement and statement of financial position). 14
f) Explain and illustrate 'what if' analysis and scenario planning. 14
4. Flexible budgets
a) Explain the importance of flexible budgets in control. 15
b) Explain the disadvantages of fixed budgets in control. 15
c) Identify situations where fixed or flexible budgetary control would be appropriate. 15
d) Flex a budget to a given level of volume. 15
5. Capital budgeting and discounted cash flows
a) Discuss the importance of capital investment planning and control. 17
b) Define and distinguish between capital and revenue expenditure. 17
c) Outline the issues to consider and the steps involved in the preparation of a capital
17
expenditure budget.
d) Explain and illustrate the difference between simple and compound interest, and
17
between nominal and effective interest rates.
e) Explain and illustrate compounding and discounting. 17
f) Explain the distinction between cash flow and profit and the relevance of cash flow
17
to capital investment appraisal.
g) Identify and evaluate relevant cash flows for individual investment decisions. 17
h) Explain and illustrate the net present value (NPV) and internal rate of return iRR)
17
methods of discounted cash flow.
i) Calculate present value using annuity and perpetuity formulae. 17
j) Calculate NPV, IRR and payback (discounted and non-discounted). 17
k) Interpret the results of NPV, IRR and payback calculations of investment viability. 17
(continued on next page)

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F2 Management Accounting ACCA Study Guide

Ref.
6. Budgetary control and reporting
a) Calculate simple variances between flexed budget, fixed budget and actual sales,
15
costs and profits.
b) Discuss the relative significance of variances. 15
c) Explain potential action to eliminate variances. 15, 16
d) Define the concept of responsibility accounting and its significance in control. 15
e) Explain the concept of controllable and uncontrollable costs. 15
f) Prepare control reports suitable for presentation to management (to include
15, 16
recommendation of appropriate control action).
7. Behavioural aspects of budgeting
a) Explain the importance of motivation in performance management. 12
b) Identify factors in a budgetary planning and control system that influence motivation. 12
c) Explain the impact of targets upon motivation. 12
d) Discuss managerial incentive schemes.
e) Discuss the advantages and disadvantages of a participative approach to budgeting.
f) Explain top down, bottom up approaches to budgeting.

D. Standard Costing Ref.

1. Standard costing systems

a) Explain the purpose and principles of standard costing. 16
b) Explain and illustrate the difference between standard, marginal and
8, 16
absorption costing.
c) Establish the standard cost per unit under absorption and marginal costing. 8,16
2. Variance calculations and analysis 16
a) Calculate sales price and volume variance. 16
b) Calculate materials total, price and usage variance. 16
c) Calculate labour total, rate and efficiency variance. 16
d) Calculate variable overhead total, expenditure and efficiency variance 16
e) Calculate fixed overhead total, expenditure and, where appropriate, volume,
16
capacity and efficiency variance.
f) Interpret the variances. 16
g) Explain factors to consider before investigating variances, explain possible causes
16
of the variances and recommend control action.
h) Explain the interrelationships between the variances. 16
i) Calculate actual or standard figures where the variances are given.
3. Reconciliation of budgeted and actual profit
a) Reconcile budgeted profit with actual profit under standard absorption costing. 16
b) Reconcile budgeted profit or contribution with actual profit or contribution under
16
standard marginal costing.

E. Performance Measurement Ref.

1. Performance measurement overview 18

a) Discuss the purpose of mission statements and their role in performance
18
measurement.
b) Discuss the purpose of strategic and operational and tactical objectives and their
18
role in performance measurement.
c) Discuss the impact of economic and market conditions on performance measurement. 18
d) Explain the impact of government regulation on performance measurement. 18
(continued on next page)

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ACCA Study Guide F2 Management Accounting

Ref.
2. Performance measurement—application 18
a) Discuss and calculate measures of financial performance (profitability, liquidity,
19
activity and gearing) and non-financial measures.
b) Perspectives of the balanced scorecard
i) discuss the advantages and limitations of the balanced scorecard
ii) describe performance indicators for financial success, customer satisfaction,
process efficiency and growth
iii) discuss critical success factors and key performance indicators and their link to
objectives and mission statements
iv) establish critical success factors and key performance indicators in a
19
specific situation
c) Economy, efficiency and effectiveness 19
i) explain the concepts of economy, efficiency and effectiveness
ii) describe performance indicators for economy, efficiency and effectiveness
iii) establish performance indicators for economy, efficiency and effectiveness in a
specific situation
iv) discuss the meaning of each of the efficiency, capacity and activity ratios
v) calculate the efficiency, capacity and activity ratios in a specific situation
d) Unit costs 18
i)
describe performance measures which would be suitable in contract and
process costing environments
e) Resource utilisation 18
i) describe measures of performance utilisation in service and manufacturing
environments
ii) establish measures of resource utilisation in a specific situation
f) Profitability 18
i) calculate return on investment and residual income
ii)
explain the advantages and limitations of return on investment and residual
income
g) Quality of service 19
i) distinguish performance measurement issues in service and manufacturing
industries
ii) describe performance measures appropriate for service industries
3. Cost reductions and value enhancement
a) Compare cost control and cost reduction. 18
b) Describe and evaluate cost reduction methods. 18
c) Describe and evaluate value analysis. 18
4. Monitoring performance and reporting
a) Discuss the importance of non-financial performance measures. 19
b) Discuss the relationship between short-term and long-term performance. 19
c) Discuss the measurement of performance in service industry situations. 19
d) Discuss the measurement of performance in non-profit seeking and public sector
19
organisations.
e) Discuss measures that may be used to assess managerial performance and the
19
practical problems involved.
f) Discuss the role of benchmarking in performance measurement. 19
g) Produce reports highlighting key areas for management attention and
19
recommendations for improvement.

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F2 Management Accounting Formulae Sheet and Tables

Formulae AND TABLES

Formulae Sheet
Regression Analysis
y = a + bx

a=
∑ y − b∑ x
n n

n∑ xy − ∑ x ∑ y
b=
n∑ x 2 − (∑ x )2

n∑ xy − ∑ x ∑ y
r=
( n∑ x 2
− (∑ x )
2
) ( n∑ y 2 2
− (∑ y ) )
Economic Order Quantity

2CoD
=
Ch

Economic Batch Quantity

2CoD
=
D
Ch(1 − )
R

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Formulae Sheet and Tables F2 Management Accounting

Present Value Table

Present value of 1, i.e. (1 + r)−n
where r = discount rate
n = number of periods until payment

Discount rate (r)

Periods
(n) 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
1 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 1
2 0.980 0.961 0.943 0.925 0.907 0.890 0.873 0.857 0.842 0.826 2
3 0.971 0.942 0.915 0.889 0.864 0.840 0.816 0.794 0.772 0.751 3
4 0.961 0.924 0.888 0.855 0.823 0.792 0.763 0.735 0.708 0.683 4
5 0.951 0.906 0.863 0.822 0.784 0.747 0.713 0.681 0.650 0.621 5
6 0.942 0.888 0.837 0.790 0.746 0.705 0.666 0.630 0.596 0.564 6
7 0.933 0.871 0.813 0.760 0.711 0.665 0.623 0.583 0.547 0.513 7
8 0.923 0.853 0.789 0.731 0.677 0.627 0.582 0.540 0.502 0.467 8
9 0.914 0.837 0.766 0.703 0.645 0.592 0.544 0.500 0.460 0.424 9
10 0.905 0.820 0.744 0.676 0.614 0.558 0.508 0.463 0.422 0.386 10
11 0.896 0.804 0.722 0.650 0.585 0.527 0.475 0.429 0.388 0.350 11
12 0.887 0.788 0.701 0.625 0.557 0.497 0.444 0.397 0.356 0.319 12
13 0.879 0.773 0.681 0.601 0.530 0.469 0.415 0.368 0.326 0.290 13
14 0.870 0.758 0.661 0.577 0.505 0.442 0.388 0.340 0.299 0.263 14
15 0.861 0.743 0.642 0.555 0.481 0.417 0.362 0.315 0.275 0.239 15

11% 12% 13% 14% 15% 16% 17% 18% 19% 20%
1 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 1
2 0.812 0.797 0.783 0.769 0.756 0.743 0.731 0.718 0.706 0.694 2
3 0.731 0.712 0.693 0.675 0.658 0.641 0.624 0.609 0.593 0.579 3
4 0.659 0.636 0.613 0.592 0.572 0.552 0.534 0.516 0.499 0.482 4
5 0.593 0.567 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0.402 5
6 0.535 0.507 0.480 0.456 0.432 0.410 0.390 0.370 0.352 0.335 6
7 0.482 0.452 0.425 0.400 0.376 0.354 0.333 0.314 0.296 0.279 7
8 0.434 0.404 0.376 0.351 0.327 0.305 0.285 0.266 0.249 0.233 8
9 0.391 0.361 0.333 0.308 0.284 0.263 0.243 0.225 0.209 0.194 9
10 0.352 0.322 0.295 0.270 0.247 0.227 0.208 0.191 0.176 0.162 10
11 0.317 0.287 0.261 0.237 0.215 0.195 0.178 0.162 0.148 0.135 11
12 0.286 0.257 0.231 0.208 0.187 0.168 0.152 0.137 0.124 0.112 12
13 0.258 0.229 0.204 0.182 0.163 0.145 0.130 0.116 0.104 0.093 13
14 0.232 0.205 0.181 0.160 0.141 0.125 0.111 0.099 0.088 0.078 14
15 0.209 0.183 0.160 0.140 0.123 0.108 0.095 0.084 0.074 0.065 15

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F2 Management Accounting Formulae Sheet and Tables

Annuity Table
1 − (1 + r)−n
Present value of an annuity of 1, i.e.
r

where r = interest rate

n = number of periods

Discount rate (r)

Periods
(n) 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
1 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 1
2 1.970 1.942 1.913 1.886 1.859 1.833 1.808 1.783 1.759 1.736 2
3 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 3
4 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 4
5 4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 5
6 5.795 5.601 5.417 5.242 5.076 4.917 4.767 4.623 4.486 4.355 6
7 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 7
8 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 8
9 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.995 5.759 9
10 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 10
11 10.370 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 11
12 11.260 10.580 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 12
13 12.130 11.350 10.630 9.986 9.394 8.853 8.358 7.904 7.487 7.103 13
14 13.000 12.110 11.300 10.560 9.899 9.295 8.745 8.244 7.786 7.367 14
15 13.870 12.850 11.940 11.120 10.380 9.712 9.108 8.559 8.061 7.606 15

11% 12% 13% 14% 15% 16% 17% 18% 19% 20%
1 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 1
2 1.713 1.690 1.668 1.647 1.626 1.605 1.585 1.566 1.547 1.528 2
3 2.444 2.402 2.361 2.322 2.283 2.246 2.210 2.174 2.140 2.106 3
4 3.102 3.037 2.974 2.914 2.855 2.798 2.743 2.690 2.639 2.589 4
5 3.696 3.605 3.517 3.433 3.352 3.274 3.199 3.127 3.058 2.991 5
6 4.231 4.111 3.998 3.889 3.784 3.685 3.589 3.498 3.410 3.326 6
7 4.712 4.564 4.423 4.288 4.160 4.039 3.922 3.812 3.706 3.605 7
8 5.146 4.968 4.799 4.639 4.487 4.344 4.207 4.078 3.954 3.837 8
9 5.537 5.328 5.132 4.946 4.772 4.607 4.451 4.303 4.163 4.031 9
10 5.889 5.650 5.426 5.216 5.019 4.833 4.659 4.494 4.339 4.192 10
11 6.207 5.938 5.687 5.453 5.234 5.029 4.836 4.656 4.586 4.327 11
12 6.492 6.194 5.918 5.660 5.421 5.197 4.988 4.793 4.611 4.439 12
13 6.750 6.424 6.122 5.842 5.583 5.342 5.118 4.910 4.715 4.533 13
14 6.982 6.628 6.302 6.002 5.724 5.468 5.229 5.008 4.802 4.611 14
15 7.191 6.811 6.462 6.142 5.847 5.575 5.324 5.092 4.876 4.675 15

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examination technique F2 Management Accounting

eXAMiNAtioN teCHNiQue
General
 Divide your time in proportion to the marks on offer:
 On average, a 2-mark question should take you just a little under 2½ minutes.
 Allocate 12 minutes to each 10-mark question.
 Keep to this time allocation.
 Answer all questions.

Objective Questions
 Section A will consist of 35 multiple choice questions (MCQs) of two marks each.
 MCQs generally consist of:
a "stem" (the question);
a "key" (the correct answer);
 "distracters" (plausible but incorrect answers).

The average time per item should not be applied exactly to each individual question, as
some will take longer than others. The following approach is recommended:
 Avoid getting bogged down by the difficult time-consuming questions which require a
lot of calculations. Even with good knowledge, it is easy to make an arithmetical slip, in
which case you will get the wrong answer. Leave these questions until the end—but do
not forget to come back to them.
 Guess the solution to any questions that you do not have time (or the knowledge) to
do. You may guess the correct answer, in which case you will get the marks for that
question. If you leave any blank, you will not get any marks!

 Cover up the answers, A, B, C and D, while doing your calculations.

 It is not unusual for one of the distracters to be a number which you will calculate before
reaching the final solution. Therefore, you may be distracted and think you have the correct
answer before you have completed working.
 When time is up, guess an answer. If one of the options stands out as being disproportionate
to the others, it is more likely to be a distracter than the key—so do not select it.

You may prefer to take the approach of quickly reviewing all questions and doing the
apparently easier and less time-consuming items first. However, as this means looking
through all the pages more than once it may not save you any time.

This approach is not recommended for computer-based examinations.

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F2 Management Accounting examination technique

illustration 1 Answering an MCQ

A management consultancy firm recovers overheads on chargeable consulting hours.

Budgeted overheads were $615,000 and actual consulting hours were 32,150.
Overheads were under-recovered by $35,000.
if actual overheads were $694,075 what was the budgeted overhead absorption
rate per hour?
A. $19.13
B. $20.50
C. $21.59
d. $22.68

Solution
 Step 1
Start by reading the last sentence of the stem (i.e. the line before A, B, C, D).
This tells you what you have to calculate:
 Budgeted overhead absorption rate (BOAR).

 Step 2
Write down anything that will help you.
The relevant formula(e):

Budgeted overheads $615,000

 =
Budgeted hours ??

"Proforma" calculation(s):
$
Actual overheads 694,075
Overheads absorbed
659,075 (β)
(32,150 × BOAR)
Under recovery 35,000

 Step 3
Solve:
$659,075
 = $20.50
32,150

 Step 4
Select the appropriate box on your answer sheet:
 B

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examination technique F2 Management Accounting

Multi-task Questions
Section B will contain three 10-mark multi-task questions. These will test:
 budgeting;
 standard costing; and
 performance measurement
The consolidation question could include a small amount of interpretation.
Parts of the multi-task questions may effectively be no different to MCQs. The following
guidance is particularly relevant to the paper-based examinations.
Numerical requirements
You should expect the first marks to be the easiest to gain, so do not be tempted to
overstep the time allocation on a question to tidy up or complete it—start the next
question (or part) instead.
Before starting a computation, picture your route. Do this by jotting down the steps you
are going to take and imagining the layout of your answer.
Set up a pro-forma structure to your answer before working the numbers—but do not
write out every possible caption. (A blank pro forma is likely to be worth no marks.)
Set out the narrative on the left and have a clean, straight column on the right for the
amount being presented. All workings must be shown:
 simple workings may be included on the face of your answer but keep them clear of
the final amounts you are presenting;
 other workings must be clearly set out and cross-referenced to the face of your answer.

A clear approach and referenced workings will help earn marks even if you make an arithmetic mistake.

If you do spot a mistake in your answer, it is generally not worthwhile spending time
amending the consequent effects of it. It is better to leave and be awarded credit for
what you have done.
NEVER cross out an answer or workings unless you have redone them.
NEVER "finish" or "tidy up" a financial statement at the expense of getting on with the
next question.
Do not ignore marks for any requirements for written answers (e.g. for an explanation
or comment). These are easy marks to gain.

Presentation
Write in black ink only.
Use a ruler for underlining headings (e.g. the title of the statement you have been asked
to present).
Use a short sentence to convey each point that you are making.
Show all your workings and cross-reference (W1, etc) them to the face of your answer.
Do not use Tipp-Ex or other correction fluid.

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