No, not typical/correct behaviour at all.

Sounds like a memory problem related to the U8 5101 - either that chip is not receiving voltage to retain settings or a fault with the chip (most likely the former) Check their is voltage present at the input to the U8 5101 chip when machine is off.

The 40 credits at start up is typical of a memory loss issue too. If the back-up memory is working properly it will boot up to whatever the remaining credits were (& retain other selected input settings too) when the game was switched off. I'm not aware of any mod/setting that sets the game at a 40 credit default on boot up? could be though.

I have seen a set up where a second switch (which is wired to a coin up switch) has been piggy backed to the start switch. So when the start switch is pressed it adds a credit at the same time effectively leaving the credits always at the same number (whatever it is to start with)

Yes, your back up battery supplies constant power to U8 to keep all the memory settings/bookkeeping when the game is off.
You need to first check (with the game off) with a meter that you have approx 5 volts present coming from the battery at the connection points on the MPU board to determine if the problem is the battery, if you have power there coming from the battery, then check pin 22 (top left pin) on the U8 chip to see if the 5 volts is getting there to enable the memory on the chip.

There were old rom chip mods that did this. (and external circuits as well). It could also just be the lack of batteries.

Does your game have an original battery on the MPU? If it does, remove it and replace with NVRAM.