Questions and Answers of Accounting A Level And AS Level

(a) Explain the following terms: (i) Cost Centre (ii) Cost Unit (b) Julie and Cleary Ltd manufactures toy soldiers. The company has three production departments - Moulding, Sanding and
Teepops Ltd manufactures a single product which passes through four stages of production: machining, painting, assembly and packing. The following expenditure has. been incurred by the company in the
Auckland (Manufacturers) Ltd has two manufacturing departments: (i) Machining (ii) Assembly. It also has two service departments:(i) Maintenance (ii) Power house. The
A company provides the following information:What is the overhead absorption rate based on direct labour hours? A. $37.14 B. $38 C. $40 D. $40.42 Actual direct labour hours
Luvlibix Foods has three production departments: mixing, bakery and packaging. It also has two service departments: stores and canteen. The following information is provided.Required Apportion
The following information is provided by a company.Which of the following correctly describes the overhead absorbed? 12 400 $198 400 Actual direct labour hours ago Actual overhead
Which of the following could cause an under- absorption of overhead expenditure? 1. Absorption rate calculated on actual production and actual number of units produced 2. Units produced
(a) Define the term 'overhead expenses". (b) Explain the meaning of the following terms as they relate to overhead expenditure: (i) Allocation (ii) Apportionment. (c) Explain the
Trimble Ltd manufactures two products, Dimbles and Gimbles. The number of direct labour hours required for each unit is: Dimbles 1.3; Gimbles 0.7. In July the company plans to produce 5000
Egbert Ltd manufactures two products which it markets under the brand names 'Sovrin' and 'Ginny'. The following information is available for a six-month period.Required (a) Calculate an
Makeit-by-Robot Ltd uses 10 machines to produce its goods. The machines are used 7 hours a day for 6 days per week. In a period of 13 weeks it is planned to produce 1200 units, and the overheads are
Upandown Ltd has provided the following information about its overhead expenditure for four quarterly periods ended 31 December.Required Calculate the under-absorption or over-absorption of
Which of the following operations would involve a system of continuous costing? A. Construction of houses B. Generating electricity C. Hiring out boats in a fun park D. Publishing
Luvlibrek manufactures breakfast cereal. Its cost unit is 1000 packets of the cereal. The following information is given.Required Calculate the cost of one unit of breakfast cereal. Number of
Borlix Ltd makes a number of products, one of which is Super Borlix, which passes through three production departments, A, B and C. The following details are relevant to the production of Super
Curepipe Successful Promotions Ltd has two departments: (i) Printing (ii) Marketing and Promotion. The following information is available for the next six months.Departmental overhead
Wipup Ltd has received an order for 1000 packs of paper towels. Each pack contains six rolls of towels. The following information is given.100 packs of towels are manufactured per
Geoffrey Pannell is a professional researcher. He has been commissioned to conduct research into allegations that mobile phones are bad for public health. Geoffrey estimates that the project will
The Kelang Gum Boots Company has received a contract to manufacture 2000 pairs of children's boots. The boots pass through three departments: Moulding, Lining and Finishing. The following information
Retep Ltd hired a drilling machine for use on job 160. The machine was not used on any other job. Which of the following statements is true? A. Rent of the machine will be charged as a direct
The Sitrah Processing Company, which passes its product through three refining processes, provides the following. information for one month.All the material which was input to process I completed
The Taranaki Milk Products Company manufactures products which pass through three processes. The costing records for processes 1 and 2 give the following information.Further information Process
The Harare Metal Alloy Company manufactures two products which involve three processes. They pass through processes 1 and 2 as a single product and separate into product X and product Y in process
Which of the following industries would use process costing? A. Building construction B. Chemical C. Hotel D. Road haulage
The Trinbago Refining Company produces two substances know as Animo and Lactino. In one week, 3400 litres of Animo and 5100 litres of Lactino were produced. The input to the process was as
The following information is given about a process in which normal waste of 10% is incurred.What is the prime cost of production?A. $127 000 B. $142 000C. $145 000D. $148 000 Direct
Okara Quality Carpets Ltd makes a product which involves two processes. Process 1 results in the production of a low-priced by-product which the company sells. 2000 units of the product were made in
The following is the marginal cost statement for the production of 3000 units of product Q.Fixed costs amount to $82 000. Required Calculate the profit or loss from the sale of (i)
Information about a product is given.Fixed costs total $50 000 and planned production is 2000 units. Which action is necessary to break even? Decrease cost of: A. Direct labour by
Barkis & Co. Ltd manufacture specialised containers for use under water. The business uses two machines. These machines have different levels of efficiency. The following information applies to
Production of 5000 units of Product Q is planned. The following information is given.Required (a) Calculate: (i) The break-even point of product Q in terms of units and revenue (ii)
The annual results of a company with three departments are as follows.Head office fixed costs have been apportioned on the basis of the respective sales of the departments and will not be reduced if
Angelicus and Co. manufactures three different qualities of lock, Domestic, Commercial and Industrial. The company's results for the year ended 31 March 2003 were as follows.Fixed overheads are
A company makes three products, X, Y and Z, all of which require the use of the same material. Information about the products is as follows.The material is in short supply. Which order of priority
Veerich Ardson Lid makes and sells mobile phones. The following information is given.Fixed overheads amount to $70 000. Required Calculate the profit or loss from the sale of (i) 10
Castries Ltd makes three products: Gimie, Gros and Petit. The budgeted production for three months is as follows.Direct material costs $2 per litre. Direct labour is paid at $10 per hour. Fixed
Castries Ltd has been informed that supplies of material are not limited, but only 3395 direct labour hours are available. All the other information is as in exercise 6. RequiredPrepare a
The following budget has been prepared for the production and sales of 20 000 units of a product.Required Calculate the profit and the break-even point if (i) Fixed costs increase by 15%
Cohort Ltd makes three products: Legion, Centurion and Praefect. All three products are made from the same material. The production budget for June 2004 is as follows.Required (a) Calculate the
The Cockpit Country Industrial Co. Ltd has a maximum production capacity of 20 000 units. Each unit sells for $25. The following are the costs for a single unit of production.Required (a)
A bedside table is made from 4 kg of raw material. Production for six months is based on the following data.How many kilograms of raw material will be purchased for the six months? A. 18 000
The sales budget for Roh Ltd for the six months to 30 November 2003 is as follows.Further information is as follows: 1. All units are sold for $60. Customers are allowed 1 month's
Flannel and Flounder Ltd's sales budget in units for six months ending 30 June 2005 is as follows: January 1000; February 1200; March 1300; April 1500; May 1700; June 1800. The price per unit will be
Flannel and Flounder Ltd (see exercise 1, $34.4) manufacture their goods one month before the goods are sold. Monthly production is 110% of the following month's sales. Budgeted sales for July 2005
Debtors at the year-end are $40 000. It is planned to double turnover in the next year and to reduce the debtors' collection period from 45 days to 30 days. What will the debtors be at the end
The sales budget for four months from January to April is as follows. January $80 000 February $100 000 March $110 000 April $130 000 The cost of the raw material used in the
Flannel and Flounder Ltd (see exercise 2, 34.5) use 2.5 litres of material in each unit of their product. The price of the material is currently $4.10 per litre, but the company has learned that the
The directors of Greenfields Ltd have prepared functional budgets for the four months ending 30 April 2005. To discover the effect that the budgets will have on the company at the end of the four
Flannel and Flounder Ltd's overheads and other expenses for six months to 30 June 2005 are budgeted as follows. 1. Purchases are paid for in the following month. 2. Wages of $4000 per month
A company plans to purchase a new machine costing $40 000. It will part exchange one of its existing machines for the new one. The existing machine has a net book value of $4000 and the part exchange
Brekkifoods Ltd's budget for the production of 100000 packets of Barleynuts in the year ending 31 December 2005 was as follows.The actual output for the year ended 31 December 2005 was 110 000
Kings Ltd makes an electronic device for finding lost keys, which it has patented under the trademark 'Gonkeys'. The product passes through two processes and the budget for the production of 10 000
Flannel and Flounder Ltd's sales in November 2004 were $18 000 and in December 2004 were $17 600. Of total sales revenue, 50% is on a cash basis, 40% is received one month after sale. Cash discount
Flexers Ltd has prepared the following budgets for the production of time locks.RequiredPrepare a flexed budget for the production of 9000 time locks. QUOT-52 mods 2010 200 No. of locks 6000 TOCKS
A company manufactures a product which requires 2 hours of direct labour per unit. Normal output is 1400 units and the standard labour rate is $6.50 per hour. In one month the company
Pembroke Ltd makes an item of furniture known as a Tripos. The standard cost per Tripos is as follows.Further information for the three months ending 30 June 2005: 1. The budgeted amount for
A company makes a single product which requires two types of raw material: ionium and zetonium. The standard cost of materials to produce one unit of the product is shown:100 units of the product
Enigma Ltd has prepared a budget based on standard costs. It is shown below together with the actual results.Required (a) Prepare a flexed budget for 4250 units (b) Calculate: (i)
A company's standard cost statement shows the following variances: (F favourable; A adverse).What is the effect in total of variances 3, 6 and 9 on the profit of the company? A. $1175
Underpar Ltd has prepared a budget based on standard costs. It is shown below together with the actual results.Required (a) Prepare a flexed budget for 6300 units. (b) Calculate: (i)
The following information is available about a product.What is the sales price variance? A. $51 000 (A) B. $51 000 (F) C. $72 000 (A)D $72 000 (F) Standard selling price per
Details of direct material costs are as follows.What is the direct material price variance? A. $49 500 (A) B. $49 500 (F) C. $52 800 (A)D. $52 800 (F) Budget 41 500 kg at $12 per
Dandelion Ltd manufactures a health food known as 'Pickup'. The standard material cost of a packet of Pickup is as follows: 3 litres at $5 per litre. In one month Dandelion Ltd produced 12 000
Larabee Ltd prepared a budget for the production of 300 units in April 2004 as follows.The production for the month was 400 units and the costs were as follows.Required (a) Calculate the
A company's cost of production is made up of the cost of direct materials and the cost of direct labour. The following variances have been calculated at the end of three month's production:The actual
Dandelion Ltd has a standard direct labour cost for the production of one packet of Pickup based on 1 labour hour at $10 per hour. The production of 12 000 packets of Pickup required 1.25 hours paid
Cantab Ltd's standard costing records provide the following information for three month's production and sales.Required Prepare a statement to show the actual profit made by Cantab Ltd in the
The directors of Joloss plc intend to purchase an additional machine to manufacture one of their new products. Two machines are being considered: Milligan and Bentine. The company depreciates its
The net present value of a project has been calculated as follows:What is the internal rate of return on the project? A. 10% B. 12.1% C. 17.9% D. 20% 2560 at 10% at 20% duongala
Baseball Ltd intends to introduce a new product that is expected to produce the following profits over a period of six years.The project will require the use of a machine that was purchased some
Jane Pannell Ltd proposes to purchase a new machine costing $120 000. It will be sold at the end of four years for $20 000. The company depreciates machinery using the straight-line method. The
Mapleduck Ltd is planning to replace one of its machines. It has two choices of replacements: Duckbill and Kwak, each costing $90 000. The following information is available for the
Why are cash flows discounted for investment appraisal? A. $1 now is more useful than $1 receivable at a future time. B. It is prudent to state future cash flows at a realistic
Nomen Ltd is considering buying a machine and has three options, machine A, B or C, only one of which it will buy. Each machine costs $135 000 and will have a five-year life with no residual value at
The information is given as for Nomen Ltd in exercise 3 in 36.4, with the addition of the discounting factors for 20%: year 1 0.833; year 2 0.694; year 3 0.579; year 4 0.482; year 5
Which method of investment appraisal may be based on either actual cash flows or discounted cash flows? A. Accounting rate of return B. internal rate of return C. Net present valueD.
A company has $4 million to invest. Its investment opportunities are as follows.In which opportunities should the company invest? A. 1 and 3 B. 1 and 4 C. 2 and 3 D. 2 and 4
Baxter Ltd requires a new machine to use in the manufacture of a new product. Two machines are available: Big Gee and Maxi-Shadbolt. Baxter Ltd. depreciates machinery using the straight-line method.
A company proposes to replace an existing machine with a new one costing $150 000. It is estimated that the use of the new machine will result in net savings over the next four years of $50 000 per
El Dugar Peach Ltd sells canned fruit for which the following information is given.The company has received orders for: (i) 5000 cans of fruit at $16 000 per 1000 cans (ii) 3000 cans of
The following information relates to product Q.What is the marginal cost of each unit of product Q? A. $4.00 B. $6.00 C. $10.00 D. $18.00 Sales revenue at break even point Unit
Canterbury Planes Ltd supplies the following information for the production of 15 000 tools.Fixed expenses total $74 000. The tools sell for $16 each. Canterbury Planes Ltd has received the following
Banner Ltd's budget for the four months from January to April includes the following data. 1.2. One third of sales revenue is received one month after sale and the remainder is received two
The Taupo Sailing Club provides its members with a number of activities: (i) Hire of boats for members; non-members are charged an extra 20% for boat hire (ii) Yacht racing
Complete the entries for the following table. The first item has been done for you. 1. Noel pays a cheque into his business Bank account as capital 2. Purchases some stock and pays by cheque 3. Sells
The Wellington Drama Club has 120 members. The annual subscription is $20 per member. Subscriptions not paid in one year are written off if not paid by the end of the next year. The Club
The members of The Howzidun Magic Club meet to demonstrate their conjuring skills and to entertain visitors, who pay an entrance fee at the door. The club also has a shop for the sale of conjuring
The Civic Athletics Club's Receipts and Payments account for the year ended 31 May 2004 is as follows.Further information 1. Refreshment bar stocks were valued at $150 at 1 June 2003, and at
Which of the following will not be found in the accounts of a club? A. Accumulated fund B. Drawings account C. Receipts and Payments account D. Balance Sheet
The Hutt River Dining Club is funded partly by the members' annual subscriptions ($20 per member), partly by restaurant takings and partly from profits from the sale of books on dieting, healthy
The following information for a year is extracted from a sports club's accounts.What was the club's total income for the year? A. $10 000 B. $11 500 C. $12 500 D. $17 000
The Abracamagic Club's Bank Current account for the year ended 30 September 2001 was as follows.In order to increase funds the club has a shop which sells magic tricks. In addition to an annual
The following information relates to a club for a year.How much should be credited to the club's Income and Expenditure Account for annual subscriptions for the year? A. $1100 B.
A club's records provide the following information for a year.The club's policy is to credit life subscriptions to the Income and Expenditure Account over five years. How much should be credited
Geeta owns a shoe shop. The shop has three departments: ladies', men's and children's. Information extracted from Geeta's books for the year ended 31 March 2004 is given:Other balances at 31 March
Mason is a retailer selling furnishings, kitchen equipment and clothing. The following information has been extracted from his books for the year ended 30 April 2004.Further information 1. Mason
Spicer sells electrical goods from three departments: Kitchen Equipment, Radios and TVs, and Home Computers. The following is the summarised Trading and Profit and Loss Account for the year ended 30
Which basis is suitable for apportioning advertising cost between departments? A. Departmental cost of goods sold. gross profit B. Departmental C. Departmental turnover D. Number
Which basis should be used to apportion the cost of insuring plant and machinery between departments? A. Net book value B. Original cost C. Present disposable value D. Replacement
The following balances have been extracted from the books of Glupersoo at 30 April 2004.Further information 1. Stocks at 30 April 2004:2. The following expenses must be accrued at 30 April

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