MAF - Revision 2 1.

In A contract costing system, which of the following documents are used to record the movement of materials from
stores to a contract? a) Material requisition c) Purchase requisition b) Purchase invoice d) Goods received note

2.

Charles Ltd uses a standard costing system and therefore values all stocks at standard cost. During December, the price paid for material E was 2 per kg more than the standard price. The following information for material E relates to December. Data: Quantity purchased Quantity issued Standard quantity for output Quantity (kg) 250 200 220 c) 40 adverse d) 500 adverse

What was the material price for E in December? a) 2 adverse b) 400 adverse

3. The prime cost of product Zacky is as follows:

Data: Materials: KP4 7Kg @ 9.00 per kg Labour Department A 4 hours @ 6.00 per hour Department B 6 Hours @ 8.00 per hour Total - Prime Cost: Overheads are absorbed at 6.00 per labour hour in Department A and 4.00 per labour hour n Department B. 24.00 What will be the production cost of Product Zacky? 48.00 183 135.00 63.00

4. Prathibani & Co uses a job costing system and charges overheads to products on a direct labour cost basis.
Budgeted direct labour hours for the period were 75,000 at a cost of 337,500. Budgeted production overheads were 675,000 and actual production overheads for the period were 721,000. Job TNJ has the following production costs. Production costs: Direct material Direct labour Total 11340 15425 26765

What will be the production overheads to be charged to Job TNJ? 5. Which of the following would be the cost appropriate cost unit for a transport delivery service? a) Gallon b) Tonne mile c) Gallon tonne d) Tonne delivered

6. The following data relate to two activity levels of the information department of Thilini & Co
Data: Enquiries Overheads 12650 145025 14280 158880

What is the amount of fixed overheads? 37500 7. The fixed overhead expenditure variance is: a) The difference between the budgeted fixed overheads and the fixed overheads absorbed b) The difference between the fixed overheads incurred and the fixed overheads absorbed

c) d)

The difference between the fixed overheads incurred and those budgeted The under or over absorbed fixed overhead

8. If a company has a limiting factor, profit will be maximised by: a) Producing most of the product with the highest contribution per unit of limiting factor b) Producing most of the product wit the highest profit per unit c) Producing most of the product with the highest contribution per unit d) Producing most of the product which uses least units of the limiting factor.

9. Narendra Alwis Ltd. is preparing the production cost budget for the forthcoming year and has found that there is a
linear relationship between production volume and production costs. They have found that a production volume of 1600 units results in production overheads of 40000 and that a production volume of 3200 units a cost of 48000. What would be the production costs for a production volume of 4000 units?

a)

120000

b) 60000

c) 100000

d) 52000

10. Which of the following would not be considered a specific order costing system? a) Batch costing b) Contract costing c) Job Costing
Costing 11. A profit margin of 20% of sales is the same as a profit on total cost of 25.% When preparing the material purchases budget, the quantity to be purchased equals: a) Material usage + opening stock + closing stock b) Material usage + opening stock closing stock c) Material usage opening stock closing stock d) Material usage opening stock + closing stock Stock valuations, in order to be in line with SSAP 9, must include a share of: (i) Variable production overheads (ii) Variable selling and distribution overheads (iii) Fixed production overheads (iv) Fixed selling and distribution overheads

d) Process

a)

Which of the above statements is correct? (i) and (iii) c) (i) only

b) All of the above (i), (ii), (iii) and (iv) d) (iii) and (iv)

When making a decision, for a cost or revenue to be classified as relevant it must be: Incremental (ii) Notional Cash (iv) Future

a) (i), (ii) and (iv) only c) (i), (ii) and (iii) only 15.

b) (i), (iii) and (iv) only d) (ii), (iii) and (iv) only

A budget that is continuously updated by adding a further accounting period when the earliest period has expired is known as: a) A participative budget b) A incremental budget c) A rolling budget d) A zero base budget

16. It is a company policy that the closing stock of finished goods must be equal to 20% of the
following months budgeted sales. The budget sales for November and December are 62000 and 50000 respectively. What will be the budgeted production for November? 59600

17. A standard labour cost for a component of Marie is 15.00 (5 hours at 3 per hour). Last month,
6000 hours were worked at a cost of 17000 to produce 1100 components. The labour efficiency variance is: a) 1,500 Adverse b) 1,000 Adverse c) 1,000 Favourable d) 1,500 Favourable 18. Which type of costs do the following figures represent? Output (units) Cost per unit () 500 250 1000 150 b) Fixed 2500 90 c) Variable d)

a)

Curvi-linear Semi-variable The unit data for a product are: Selling price 12 Variable cost 6

If selling prices are reduced by 10% and variable costs are increased by 12.5%, which o the following is the revised contribution to sales ratio?

a)

0.542

b) 0.5

c) 0.375

d) 0.4875

20. It is a company policy that the closing stock of finished goods must be equal to 10% of the
following months budgeted sales. The budget sales for November and December are 8000 and 9000 units respectively. The budgeted production for November will be:

a)

1700 units d) 8100 units

b) 8900 units

c) 900 units

21. If fixed costs are increased, the gradient of the line plotted on a profit/volume (PV) cart will be: a) Not as steep b) Steeper c) Unchanged d) Curvilinear 22. A standard hour is: A measure of time c) A measure of output 23. a) b) c) d)

a)

b) The standard time taken to produce one unit d) The actual time taken to produce one unit.

Normal loss which has a scrap value in a process should be valued at: Nil value A full share of the process cost minus the scrap value of the normal loss Scrap value only A full share of the process costs on the same basis as good production

Marginal Costing: (i) Forms the basis for CVP analysis

(ii) Apportions fixed costs to products/service (iii) Complies with SSAP9 (iv) Uses pre-determined fixed overhead absorption rates

a)

Which of the above statements is correct? All of them b) (i) only 25.

c) (i) and (ii)

d) (ii) and (iii)

Which of the following cannot be used to split costs into fixed and variable elements? b) Scatter graph c) Absorption costing d) Regression analysis

a) High-low method

a)

26. Within a relevant range of output, the fixed cost per unit of a product will: Impossible to tell without more information b) Increase as total output increases c) Reduce as total output increases d) Remain constant as total output increases.

27. Sarvanathan & Mathini Ltd. produces a chemical in a single process. Information for this process
last month is as follows: (i) (ii) (iii) (iv) (v) (vi) Opening work in progress 10000 kg valued at 10000 for direct material and 7500 for conversion costs. Materials input 25000 kg at 1.10 per kg. Conversion costs - 17000 Output during the month 23000 kg. There were 7500 units of closing stock work in progress which was complete as to materials and 30% complete as to conversion. Normal loss for the month was 10% and all losses have a scrap value of 80p per kg.

(i) What was the value of the normal loss during the month? (ii) What was the average cost per kg of finished output during the month? a) 1.78 b) 1.10 c) 1.99 d) 1.90

A company uses an integrated accounting system: The accounting entries for the sale of goods on credit would be: a) b) c) d) Debit: Sales account Debit: Sales account Debit: Debtors control account Debit: Debtor control account Credit: Debtors control account Credit: Finished goods control account Credit: Cost of sales account Credit: Sales account

29. Four men work as a team for a company which operates a group incentive scheme. The agreed
quota is 80 units of output per hour. If the group exceed this output all members of the group receive a bonus calculated as follows: 1. Production in excess of the agreed quota is calculated and 70% of this excess is considered the team share. 2. The bonus at the rate of 0.40p per unit is to be shared equally. The output of the team on Tuesday 20 September when 9 hours was worked was 836 units. What is the bonus payable to each team member? a) 8.12 b) 46.40 c) 29.26 d) 11.60

30.

Mythini Ltd. Manufactures a good called Suboautomatic. The standard data for one of the chemicals used in production (chemical D) is as follows: a. 50 litres used per 100 litres of Suboautomatic produced b. Budgeted monthly production is 1000 litres of Suboautomatic The closing stock of chemical D for December valued at a standard price was as follows:

Date: Quantity (litres) 30 December 200 Actual results for the period during January were as follows: (i) 500 litres of chemical D was purchased for 1300. 550 litres of Chemical D was used 900 litres of Suboautomatic was produced.

Value () 500

It is a company policy to extract the material price variance at the time of purchase. A. What is the total direct material usage variance (to the nearest whole number)? a) 260 adverse b) 250 favourable c) 250 adverse B. What is the total direct material price variance (to the nearest whole number)? a) 55 adverse b) 50 favourable c) 50 adverse 31.

d) 260 favourable d) 55 favourable

The following costs apply to batch 325, which consists of 10000 units of identical products: Data: Direct material 20600 Direct labour 45200 Production overhead 32600 Total: 98400

The company charges selling and distribution costs at a rate of 20% of production costs and wishes to achieve a profit margin of 20% of sales. (i) What is the required selling price per unit of product? 14.76

32.
structure.

A company manufactures and sells a single product which has the following cost and selling price

Data: Selling price Less Direct Materials Direct Labour Variable Overhead Fixed overhead

per unit

per unit 68 12 26 8 10 56

Profit per unit

12

The fixed overhead absorption rate was based on normal capacity of 1800 units per month. Actual production and sales in the month was 2120 units and actual fixed production overheads incurred was 18,848. (i) What is the budgeted break-even point in sales units per month? 18 848/22=857units (ii) The actual profit for the month, assuming selling price and variable cost per unit are in line with budget, was: a) 27792 b) 44752 c) 25440 d) 28640

33.

A company issued its production budget based on an anticipated output of 750 units. Actual output was 900 units. The details of the costs are shown below: Data: Budget Actual Output (units) 750 900 Prime cost 24000 27000 Fixed overheads 50000 57000 Total Costs 74000 84000

The volume variance was . Adverse 34. Anitha Burgers wants to determine the economic order quantity for the meat that it uses in its burgers. Anitha Burgers have the following information. Information: Cost of each pound of meat () Annual demand for meat 0.20 600,000

Cost of each order () Cost of sorting 1 pound per year () What is the economic order quantity (EOQ)? a) 1,549 pounds b) 6,000 pounds

10.00 0.10 c) 60,000 pounds d) 10,954 pounds

35. A company issued its production budget based on an anticipated output of 2000 units. The actual output for the period was 1500 units. The details of the costs are shown below: Data: Budget Actual Output (units) 2000 1500 Prime cost 50000 31000 Fixed Overheads 130000 132000 Total Cost 180000 c) 163000 4500 adverse d) 17000 favourable

What was the budget expenditure variance? a) 18000 adverse b) 4500 favourable

36. Tharshini Ltd. produces a household product in a single process. Information for this process for last month is as
follows: A Materials input 11000 Litres at 2.00 per litre. B Conversion costs - 23000 C Output during the month 8000 litres D There were 2,000 units of closing work in progress which was complete as to materials and 35% to conversion. E Normal loss for the month was 5% and all losses have a scrap value of 50p per litre. (i) What was the value of work in progress at the end of the month (to the nearest )? a) 5,915 b) 6,195 c) 6,250 (ii) What was the value of the abnormal loss/gain during the month (to the nearest )? 2079

complete as

d) 8,945

The output and costs for two periods were as follows: Data: October Output (units) 1,000 Costs () 34,000

November 1,400 42,000

Fixed costs will remain constant, but during December, the variable cost per unit will increase by 35%. The output for December will be 1,900 units. What will be the budgeted total cost for December? 65300 38. An increase in variable costs per unit, were selling price and fixed costs remain constant, will result in which of the following: a) An increase in the margin of safety b) A fall in the number if units required to reach even c) A decrease in the contribution to sales ratio d) An increase in the contribution per unit Which of the following industries would not use process costing? a) House-building b) Food processing c) Brewing

d) Chemical