1.
Which of the following are part of the prime cost for a
manufacturing entity?
A
B
C
D
Cost of lubricating a machine used in production
Salary cost of supervisors overseeing direct employees
Cost of a canteen used by production employees
Hire of specialist equipment for a particular job
(
2.
Direct costs are:A
B
C
D.
costs which can neither be identified with a cost centre
nor identified with a single cost unit
costs which can be identified with a single cost unit
costs incurred regardless of production level
all of the above
(
3.
) (2)
) (2)
Edgarese Co has recorded the following distribution costs
during the last three months.
Month
Apr
May
Jun
Volume
in units
32,000
40,000
50,000
Total cost
$
100,000
120,000
145,000
What will be the distribution cost (to the nearest $) in July
when the expected activity level is 42,500 units?
$...............
(2)
2
Use the following information for questions 4 and 5
Cost and selling price details for product Mottel are as follows.
$ per unit
Direct material
4.20
Direct labour
3.00
Variable overhead
1.00
Fixed overhead
2.80
------11.00
Profit
4.00
------Selling price
15.00
Budgeted production for month 10,000 units
Actual production for month 12,000 units
Actual sales for month 11,200 units
Actual fixed overhead cost incurred during month $31,000
4.
Based on the above data, the variable costing profit for the
month is:A
B
C
D
$44,800
$45,160
$50,600
$76,160
(
5.
)(2)
Based on the above data, the absorption costing profit for the
month is:A
B
C
D
$42,200
$44,800
$45,160
$47,400
(
) (2)
3
6.
Kay Hien Pte Ltd absorbs overheads on the basis of machine
hours. Details of budgeted and actual figures for the latest
period are as follows.
Overheads
Output
Machine hours
Budget
$350,000
70,000 units
35,000 hours
Actual
$400,000
60,000 units
30,000 hours
Which ONE of the following statements is correct?
A. Overheads were $50,000 over absorbed.
B. Overheads were $50,000 under absorbed.
C. Overheads were $100,000 over absorbed.
D. Overheads were $100,000 under absorbed.
(
7.
) (2)
A factory consists of two production cost centres (PP and QQ)
and two service cost centres (XX and YY). The total allocated
and apportioned overhead for each is as follows:
PP
$95,000
QQ
$82,000
XX
$46,000
YY
$30,000
It has been estimated that each service cost centre does work
for the other cost centres in the following proportions:-
Percentage of service cost centre X to
Percentage of service cost centre Y to
PP
40
30
QQ
40
60
XX
–
10
YY
20
–
After the reapportionment of service cost centre costs has
been carried out using a method that fully recognizes the
reciprocal service arrangements in the factory, what is the
total overhead for production cost centre P?
A $122,400
B $124,716
C $126,000
D $127,000
(
) (2)
4
8.
Mun Wai uses a spreadsheet package to produce budgets for
its long established product. An extract from the
spreadsheet is shown below. It is Mun Wai’s policy to always
maintain finished goods inventory at a level equal to 30%
of next month’s forecast sales.
A
1
2
3
4
5
6
Production budget
Sales (units)
Production (units)
B
C
D
January
February
March
5,000
6,000
8,000
Which of the following is a correct formula for cell C6?
A =5000-6000*0.3+5000*0.3
B =1.3*C5-D5*0.3
C =C5+C5*0.3-0.7*D5
D =C5+(D5-C5)*0.3
(
9.
)
A sales budget is:J.
K.
A.
B.
derived from the production budget.
management's best estimate of sales revenue for the year.
not the starting point for the master budget.
prepared only for credit sales.
(
)
5
10.
Jon Tey Food Manufacturing has the following budget for the
next month:Finished Product
Sales 7,000 units
Production units 7,200 units
Materials
Usage per unit 3 kg
Opening stock 400 kg
Closing stock 500 kg
What is the material purchases budget for the month?
A 20,900 kg
B 21,100 kg
C 21,500 kg
D 21,700 kg
(
11.
) (2)
Which of the following are purposes of having a budget?
(i) establishing strategic options
(ii) motivating management
(iii) establishing long term objectives
(iv) planning operations
A (i) and (iii) only
B (i) and (iv) only
C (ii) and (iv) only
D (ii), (iii) and (iv) only
(
) (2)
6
The following information relates to questions 12 and 13:In the following price, cost and revenue functions, which have been
established by a company for one of its products, Q represents the
number of units produced and sold per week:
Price ($ per unit) = 40 – 0.03Q
Marginal revenue ($ per unit) = 40 – 0.06Q
Total cost per week ($) = 3,500 + 10Q
12.
What price should be set in order to maximise weekly profits?
A $10
B $15
C $25
D $30
(
13.
) (2)
What would be the profit per week if the selling price of the
product was set at $31 per unit?
A $2,800
B $3,150
C $5,490
D $5,800
(
14.
) (2)
Ayer Hitam Travels incurs the following costs at various
activity levels:
Total cost
$
250,000
312,500
400,000
Activity level
Units
5,000
7,500
10,000
Using the high-low method what is the variable cost per unit?
A $25
B $30
C $35
D $40
(
) (2)
7
15.
Edgar has been reviewing its total costs over the last few
periods and has established the following:
Period
(units)
1
2
3
Sales
$
225
150
350
Total cost
2,300
1,500
2,800
The company is aware that fixed costs increase by $500 when
sales exceed 200 units.
What would be the total cost at a sales level of 180 units?
P
Q
R
S
$2,120
$1,800
$1,695
$1,620
(
16.
) (2)
A cost is described as staying the same over a certain activity
range and then increasing but remaining stable over a revised
activity range in the short term.
What type of cost is this?
A A fixed cost
B A variable cost
C A semi-variable cost
D A stepped fixed cost
(
17.
) (2)
For which of the following is Edger, profit centre manager,
normally responsible?
A Costs only
B Revenues only
C Costs and revenues
D Costs, revenues and investment.
(
) (2)
8
18.
A company operates a job costing system. Job number #007
requires $45 of direct materials and $30 of direct labour.
Direct labour is paid at the rate of $7.50 per hour. Production
overheads are absorbed at a rate of $12.50 per direct labour
hour and non-production overheads are absorbed at a rate of
60% of prime cost.
What is the total cost of job number #007?
A $170
B $195
C $200
D $240
(
19.
) (2)
The following information relates to a management
consultancy organisation:-
Salary cost per hour for senior consultants
Salary cost per hour for junior consultants
Overhead absorption rate per hour applied to all hours
$40
£25
$20
The organisation adds 40% to total cost to arrive at the final
fee to be charged to a client.
Assignment “Project Runway” took 54 hours of a senior
consultant’s time and 110 hours of junior consultants’ time.
What is the final fee to be charged for “Project Runway”?
R $6,874
S $10,696
T $11,466
U $12,642
(
) (2)
9
20.
A company has a budget for two products Aple and Bola as
follows:-
Sales (units)
Production (units)
Product Aple
2,000
1,750
Product Bola
4,500
5,000
Labour:Skilled at $10/hour
Unskilled at $7/hour
2 hours/unit
3 hours/unit
2 hours/unit
4 hours/unit
What is the budgeted cost for unskilled labour for the period?
Answer - …………………..
21.
(2)
The following statements relate to labour costs:There would be an increase in the total cost for labour as a
result of:(i)
additional labour being employed on a temporary basis.
(ii)
a department with spare capacity being made to work
more hours.
(iii) a department which is at full capacity switching from the
production of one product to another.
Which of the above is/are correct?
B (i) only
C (ii) only
D (iii) only
E (i) and (iii) only
(
) (2)
10
22.
A company produces three products which have the following
details:-
Direct materials (at $5/kg)
Contribution per unit
Contribution per kg
of material
Demand (units)
(excluding special contract)
AA
Per unit
8 kg
$35
Product
BB
Per unit
5 kg
$25
CC
Per unit
6 kg
$48
$4.375
$5
$8
3,000
5,000
2,000
The company must produce 1,000 units of Product AA for a
special contract before meeting normal demand.
Unfortunately there are only 35,000 kg of material available.
What is the optimal production plan?
A
B
C
D
AA
1,000
1,000
2,875
3,000
Product
BB
4,600
3,000
–
2,200
CC
2,000
2,000
2,000
–
(
23.
) (2)
Which of the following is correct?
A
B
C
D
When considering limiting factors the products should
always be ranked according to contribution per unit sold
If there is only one scarce resource linear programming
should be used
In linear programming the point furthest from the origin
will always be the point of profit maximisation
The slope of the objective function depends on the
contributions of the products
(
) (2)
11
24.
The following relate to procedures for materials:1.
2.
3.
4.
Check the goods received note
Raise a stores requisition note
Update the stores ledger account for the purchase
Raise a purchase order
What would be the correct order of the above when in the
process of purchasing and using materials?
A 4, 2, 1, 3
B 2, 1, 3, 4
C 4, 1, 3, 2
D 1, 4, 3, 2
(
25.
) (2)
When considering the economic batch quantity model what
does (1–D/R) represent?
A The rate at which production decreases.
B The rate at which production increases.
C The rate at which stock decreases.
D The rate at which stock increases.
(
26.
) (2)
Edgarise Co uses process costing to value output. During the
last month the following information was recorded:
Output: 2,800 kg valued at $7.50/kg
Normal loss: 300 kg which has a scrap value of $3/kg
Actual loss: 200 kg
What was the value of the input?
A $22,650
B $21,900
C $21,600
D $21,150
(
) (2)
12
27.
28.
Which of the following best describes the term ‘equivalent
units’ when using the FIFO method?
A
The number of units worked on during a period
including the opening and closing stock units.
B
The number of whole units worked on during a period
ignoring the levels on completion of opening and closing
stock units.
C
The number of effective whole units worked on during a
period allowing for the levels of completion of opening
and closing stock units.
D
The total number of whole units started during a period
ignoring the opening stock units as these were started
in the previous period.
(
) (2)
Regression analysis is being used to find the line of best fit (y
= a + bx) from eleven pairs of data. The calculations have
produced the following information:Σx = 440, Σy = 330, Σx2 = 17,986, Σy2 = 10,366 and
Σxy = 13,467
What is the value of ‘a’ in the equation for the line of best fit
(to 2 decimal places)?
A 0.63
B 0.69
C 2.33
D 5.33
(
) (2)
13
29.
The following statements relate to the calculation of the
regression line y = a + bx using the information on the
formulae sheet at the end of this examination paper:(i) n represents the number of pairs of data items used
(ii) (Σx)2 is calculated by multiplying Σx by Σx
(iii) Σxy is calculated by multiplying Σx by Σy
Which statements are correct?
A (i) and (ii) only
B (i) and (iii) only
C (ii) and (iii) only
D (i), (ii) and (iii)
(
30.
) (2)
Optic Pointer has just purchased a new machine, costing
$150,000, for a contract. It has an installation cost of $25,000
and is expected to have a scrap value of $10,000 in five
years’ time. The machine will be depreciated on a straight line
basis over five years.
What is the relevant cost of the machine for the contract?
A $140,000
B $150,000
C $165,000
D $175,000
(
) (2)
14
31.
Ah Long Tau Co has just secured a new contract which
requires 500 hours of labour.
There are 400 hours of spare labour capacity. The remaining
hours could be worked as overtime at time and a half or
labour could be diverted from the production of product X.
Product X currently earns a contribution of $4 in two labour
hours and direct labour is currently paid at a rate of $12 per
normal hour.
What is the relevant cost of labour for the contract?
A $200
B $1,200
C $1,400
D $1,800
(
32.
) (2)
The following statements relate to long-term contracts:(i)
(ii)
(iii)
Levels of completion of the contract can be estimated
using either costs to date or work certified to date.
Any anticipated losses should be taken as soon as they
are expected.
If the contract is half complete it is expected that half
the expected profit will always be taken.
Which of the above are correct?
A (i) and (ii) only
B (i) and (iii) only
C (ii) and (iii) only
D (i), (ii) and (iii)
(
) (2)
15
33.
The following statements relate to business objectives:(i)
(ii)
(iii)
The short-term objectives of an organisation are
described in very general terms.
Corporate objectives relate to the organisation as a
whole.
It is possible for a division of an organisation to have its
own specific objectives.
Which of the above are correct?
A (i) and (ii) only
B (i) and (iii) only
C (ii) and (iii) only
D (i), (ii) and (iii)
(
34.
) (2)
Joint Winnner Co is reviewing actual performance to budget to
see where there are differences. The following standard
information is relevant:$ per unit
Selling price
50
Direct materials
4
Direct labour
16
Fixed production overheads
5
Variable production overheads
10
Fixed selling costs
1
Variable selling cost
1
--Total costs
37
Budgeted sales units
Actual sales units
3,000
3,500
What was the favourable sales volume variance using
marginal costing?
Answer - …………………….
(2)
16
35.
Jewel Institute uses variance analysis to control costs and
revenues.
Information concerning sales
Budgeted selling price
Budgeted sales units
Budgeted profit per unit
Actual sales revenue
Actual units sold
is as follows:
$15 per unit
10,000 units
$5 per unit
$151,500
9,800 units
What is the sales volume profit variance?
A $500 favourable
B $1,000 favourable
C $1,000 adverse
D $3,000 adverse
(
36.
) (2)
Boh Leow Ltd produces and sells a single product, which has a
profit/volume ratio of 30%. Fixed costs amount to $120,000
each year.
The sales revenue required each year to break even
A is $156,000
B is $171,428
C is $400,000
D cannot be calculated from the data supplied.
(
) (2)
37. Which of the following would be included in the master budget?
A Sales budget
B Budgeted cash flow
C Material usage budget
(
)(1)
17
38. Which of the following is/are characteristics of contract costing?
(i) Work is often undertaken on the customer's premises
(ii) Work is often constructional in nature
A (i)
B (ii)
C (i) and (ii)
(
39.
) (1)
In which of the following situation(s) will job costing normally
be used?
(i)
(ii)
(iii)
Production is continuous
Production of the product can be completed in a single
accounting period
Production relates to a single special order
A (i) and (ii)
B (ii) and (iii)
C (i) and (iii)
(
40.
) (1)
Which of the following are characteristics of service costing?
(i) High levels of indirect costs as a proportion of total cost
(ii) Cost units are often intangible
(iii) Use of equivalent units
A (i) and (ii)
B (i) and (iii)
C (ii) and (iii)
41.
(
) (1)
(
) (1)
Which of the following is/are cost objects?
(i) A pint of milk produced by a dairy
(ii) A call taken at a call centre
(iii) One of a bank's business customers
A (i) and (ii)
B (ii) and (iii)
C All of them
18
42.
Which one of the following statements about a fixed budget
is/are correct? A fixed budget is:(i)
(ii)
(iii)
A budget which is most generally used for planning
purposes
A budget for a single level of activity
A budget for fixed costs
A (i) only
B (i) and (ii)
C (i), (ii) and (iii)
(
43.
) (1)
A joint product is:(i)
(ii)
(iii)
the incidental product produced as a result of a process.
not saleable at the point of separation and must always
be processed further.
one of two or more products separated during
processing, each having a significant sales value.
Which of the above is/are correct?
A (iii) only
B (i) and (iii) only
C (ii) and (iii) only
(
44.
) (1)
Which of these is not an essential quality of good information?
A. predictive value
B. completeness in accuracy
C. timely
D. relevance
(
45.
) (2)
Management accounting is guided by GAAP in presentation.
A.
B.
True
False
(
) (1)
19
46.
Controllable costs are costs within the authority of all levels of
management.
A.
B.
False
True
(
47.
Over- or under-absorption of overheads is the difference
between:A.
B.
Actual overhead incurred and overhead absorbed
Budgeted overhead and overhead absorbed
(
48.
) (1)
) (1)
Belachan operates a continuous process into which 3,000
units of material costing $10,000 were input during the period.
Conversion costs for the period were $10,970 and losses are
expected at a rate of 10% of input.
These losses can be sold for $1.50 per unit. There were no
opening or closing inventories, and output for the period was
2,900 units.
What was the valuation of the output for the period?
Answer - ………………………….
(2)
20
49.
Draw & Napier LLP has 40 reams of headed notepaper in
inventory and 100 reams on order with suppliers.
If the free inventory is 70 reams, the number of reams of
headed notepaper that have been requisitioned but not yet
issued is:Answer - …………………..
50.
(2)
A product is manufactured in two consecutive processes,
details of which for the latest period are as follows.
Opening work in progress
Materials added
Conversion costs
Closing work in progress
Process 1
$
3,290
10,000
8,350
9,080
Process 2
$
2,140
17,000
19,700
2,620
What is the output of Process 1 going into Process 2?
Answer - ……………………….
(2)
21