The exam consists of 8 tasks and is 2 ½ hours long:
- Task 1: Organisation and coding - sources of data, types of budget
- Task 2: Production resources
- Task 3: Operating budget
- Task 4: Forecasting – sampling methods, production requirements, cash flow forecast
- Task 5: Present a budget for approval
- Task 6: Standard costing and budget revision
- Task 7: Preparation of a flexed budget
- Task 8: Performance report
What to watch out for in the exam:
This task will involve calculation of production quantities, including wastage. Also tested will be raw material and labour requirements from data given.
The task will begin with completion of working schedules for materials, labour and overheads. You will then use the results from these workings to complete the operating budget for the period.
You will be asked to present a revised budget using data given. Information such as changes in selling price, volume, production requirements will be given. You may then be asked to calculate variances using the data given, splitting material or labour variances into their component parts.
This builds on knowledge tested at previous levels. A given budget will need to be flexed using cost behaviour assumptions. You will then be asked to calculate variances in both absolute and % terms, presenting results clearly.
There will be two “written” questions within the exam – Task 5 and Task 8. Task 5 will focus on budget setting and the budget approval process. You may have to suggest suitable performance indicators that could be used to monitor performance against the budget set as well as being able to explain the importance of planning and communication when setting budgets.
Task 8 will focus on how a flexed budget can be used for control purposes and you will be asked to explain possible reasons for variances arising from a flexed budget presented to you. The task may also ask you to explain other merits of using a standard costing system as well as the motivational aspects of budget setting.
To give you the best chance of passing, we recommend that you join a Kaplan course. There are various options available: Classroom, Live Online, and Distance Learning. Alternatively, you could purchase separate Kaplan Publishing study text and or revision kit.