Updated: Aug 19, 2019
ACCA F2 June 2018 exam pass rate is published. A good news to be shared is the pass rate in June 2018 attempt is the best in latest five attempts! It hits 67%!
In the past five sessions, ACCA Management Accounting pass rates are stable which ranged between 63% and 67%.
Among all three Applied Knowledge papers, i.e. Accountant in Business (F1), Management Accounting (F2) and Financial Accounting (F3), F2 is considered the most difficult paper with the lowest pass rate.
In my opinion, Management Accounting paper should be taken just before you take Performance Management (PM, was F5) as their strong linkage in knowledge.
There are total 5 areas in the syllabus in exam. Syllabus
It begins with understanding the nature and purpose of cost and management accounting. Next, you are asked about costing techniques, preparation of budget, standard costing and variances analysis.
The final part is about measuring and monitoring organization performance.
The exam is divided into two parts. Section A of the exam contains 35 objective test questions and each question worth 2 marks. Section B contains 3 MTQs worth ten marks each.
All questions are compulsory.
In the Specimen paper (Link: Specimen paper), we found around 24 marks is in Part B of the syllabus, which is Costing Techniques.
Budgeting (Part C) is around 20 marks and followed by Performance Measurement (Part E) which is 12 marks.
Nature of management accounting (Part A) contributes 8 marks and Standard Costing shares another 6 marks.
In general, numeric questions in Section A share around 45% of 70 marks and another 55% is on discursive questions.
In Section B, each MTQ focus in only 1 area in the syllabus. Therefore, only 3 parts will be examined in Section B of the exam. They are Budgeting (Part C), Standard Costing (Part D) and Performance Measurement (Part E).
Questions require calculation in Section B share around 55% of total marks while the remaining goes to discursive questions.
Since the marks are evenly distributed into different areas of the syllabus, you need to study the whole syllabus in order to pass.
However, your strength in Budgeting, Costing Techniques and Performance Measurement is definitely helpful to have higher chance to pass the exam.
In the report (Examiner’s Report), ACCA F2 Examiner highlights what you should know to prepare the exam by sharing which questions are more difficult to students.
It is highly recommended to read through the Examiner’s Report for your exam preparation. Here I would like to take the most important parts to share with you.
Section A Performance
Section A contains 35 2-mark objective test questions. It covers all areas in the syllabus. However, as mentioned before, more marks are found in Costing Techniques (Part B) and Budgeting (Part C) from Specimen paper.
June 2018 Examiner’s Report discusses three examples. Usually, these examples are important as many students cannot do them well but the knowledge is considered to be core in the syllabus.
The examples shared by Examiner are:
Calculation of abnormal gain
Financial performance (profitability, liquidity, activity and gearing)
High low analysis
Among these examples, Examiner highlights financial performance question is the one students need to pay more attention.
Details are discussed below.
Example 1 – Calculation of abnormal gain
Question: A process is subject to a normal loss of 12% of input. Losses can be sold for $5 per kg. In the last period 10,000 kg of material costing $100,000 was input to the process. Conversion costs for the period were $50,000 and output was 9,200 kg.
What is the credit to the statement of profit or loss from the abnormal gain account in the last period?
The correct answer is C, $4,545. How to get this? There are three steps to find out the answer.
First, you need to find what is ‘normal’. With the information provided, the normal output, considering normal loss of 12%, is:
10,000 kg x (1 – 12%) = 8,800 kg
Next, you should work out the cost per kg of output at normal level. Total costs are the sum of material input and conversion costs, minus the sale proceeds of normal level loss, that is:
$100,000 + $50,000 – (10,000 x 12%) x $5 = $144,000
The cost per kg is then: $144,000 / 8,800 kg = $16.36 / kg
Final step is to find the abnormal gain to be credited in profit or loss statement.
Abnormal gain is the surplus between the actual output and normal output, that is:
9,200 kg – 8,800 kg = 400 kg
Since the loss can be sold for $5 per kg, the net value is then:
$16.36 / kg - $5 / kg = $11.36 per kg
Therefore, abnormal gain is $11.36 per kg x 400 kg = $4,545
Example 2 – Financial performance (Profitability, liquidity, activity and gearing)
It is an example highlighted by examiner that many students did not know the definitions of the ratios involved.
Question: A company borrows $10,000 repayable in five years’ time and immediately uses the loan to repay its overdraft. What will be the effect on the company’s capital gearing and current ratios?
Capital gearing Current ratio
Correct answer is A.
Capital gearing is measured by non-current liabilities divided by ordinary shareholders funds.
A five year bank loan will increase the company’s non-current liabilities. Under the definition above this will increase capital gearing.
The current ratio is calculated as current assets divided by current liabilities.
A reduction in overdraft will reduce a company’s current liabilities will therefore increase the value of the current ratio.
Example 3 – High low analysis
Question: The following observations of output and cost have been made:
Output (units) Costs
It is known that at output levels above 15,000 units, variable cost per unit drops by $1 per unit for all subsequent units produced. What is the variable cost for each unit of output above 15,000 units?
Correct answer is A.
An important information provided is the output level above 15,000 units will lower variable costs by $1 per unit.
If no cost drop, the total costs for output level at 20,000 units is:
$68,000 + (20,000 – 15,000) x $1 = $73,000
Next, we can find the variable cost for output level between 8,000 and 20,000 which is:
($73,000 - $39,400) / (20,000 – 8,000) = $2.80 per unit
Last, we can get the answer of variable cost for each unit of output above 15,000 units by:
$2.80 - $1 = $1.80
Section B Performance
Section B contains 3 MTQs from 3 areas in the syllabus which are areas C Budgeting, D Standard Costing and E Performance Measurement.
A general problem found is a number of students is difficult with questions presented in spreadsheet format.
Regarding to each area, the following summarize the issue:
Budgeting – An inability to calculate payback, NPV and IRR;
Standard Costing – An inability to calculate standard cost variances, difficulty in reconciling actual and budgeted figures via standard costing variances;
Performance Measurement – An inability to calculate residual income and ROCE.
Management Accounting pass rate is the lowest among all papers in Applied Knowledge Module. On average, half of the marks is from numeric questions while another half is from conceptual questions.
It is noted that students are relatively weak in calculation.
So, what’s the exam tips to you?
Practice makes perfect!
Number entry questions can be improved by practicing as many questions as possible in different formats.
It really helps your performance and chance to pass!
In addition, remember to attempt all questions as there are no negative marks for incorrect answers.
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