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Cima Official Learning System Fundamentals Of Management Accounting 4th Edition Janet Walker - Solutions

The direct labour effi ciency variance for the latest period was adverse. Which of the following reasons could have contributed to this variance? (tick all that apply).(a) Output was higher than budgeted(b) The purchasing department bought poor quality material which was diffi cult to process(c)
The following variances have been calculated for the latest period:£Sales volume contribution variance 11,245 (F)Material usage variance 6,025 (F)Labour rate variance 3,100 (A)Variable overhead expenditure variance 2,415 (A)All other variances were zero. The budgeted contribution for the period
Budgeted sales of product V are 4,800 units per month. The standard selling price and variable cost of product V are £45 per unit and £22 per unit respectively.During June the sales revenue achieved from actual sales of 4,390 units of product V amounted to £231,900.(a) The sales price variance
During a period, 25,600 labour hours were worked at a standard rate of £7.50 per hour.The direct labour effi ciency variance was £8,250 adverse.The number of standard hours produced was .
In a period, 6,500 units were made and there was an adverse labour effi ciency variance of£26,000. Workers were paid £8 per hour, total wages were £182,000 and there was a nil rate variance.How many standard labour hours were allowed per unit?(A) 3(B) 3.5(C) 4(D) They cannot be calculated
In a period, 11,280 kg of material were used at a total standard cost of £46,248. The material usage variance was £492 adverse. What was the standard allowed weight of material for the period?(A) 11,520 kg(B) 11,280 kg(C) 11,394 kg(D) 11,160 kg.
The variable overhead expenditure and effi ciency variances are:Expenditure Effi ciency(A) £6,750A £1,500A(B) £6,750A £1,500F(C) £8,250A £ 1,500A(D) £8,250F £1,500F
The direct labour rate and effi ciency variances are:Labour rate Labour effi ciency(A) £24,120F £7,200F(B) £24,120A £7,200A(C) £24,120A £7,560A(D) £31,320A £7,200A
JR Limited produces product H. The standard cost card indicates that each unit of H requires 4 kg of material W and 2 kg of material X at a standard price of £1 and £5 per kg, respectively.Standard direct labour hours required per unit are 14 at a standard rate of £8 per hour.Variable production
Which of the following are not provided by a system of standard costing and variance analysis?(A) Unit standard costs as a benchmark for comparison.(B) Variances to direct managers ’ attention where control action will be most worthwhile.(C) Actual unit costs to be incurred in the future.(D) Unit
Triproduct Ltd makes and sells three types of electronic security systems for which the following information is available:Standard cost and selling prices per unit Day scan Product Night scan Omni scan£ £ £Materials 70 110 155 Manufacturing labour 40 55 70 Installation labour 24 32 44 Variable
The following budgeted information is available for a company that manufactures four types of specialist paints:Product W Product X Product Y Product Z per batch per batch per batch per batch£ £ £ £Selling price 20.00 15.00 15.00 17.50 Variable overhead 9.60 6.00 9.60 8.50 Fixed overhead 3.60
Z plc operates a single retail outlet selling direct to the public. Profi t statements for August and September are as follows:August September£ £Sales 80,000 90,000 Cost of sales 50,000 55,000 Gross profi t 30,000 35,000 Less:Selling and distribution 8,000 9,000 Administration 15,000 15,000 Net
Tick the correct boxes.A company makes and sells a single product. If the fi xed costs incurred in making and selling the product increase:Increase Decrease Stay the same(a) the breakeven point will(b) the contribution to sales ratio will(c) the margin of safety will
A company makes a single product which generates a contribution to sales ratio of 30 per cent. In a period when fi xed costs were £30,000 the net profi t was £56,400. Direct wages are 20 per cent of variable costs.The direct wages cost for the period was £ .
This graph is known as a:(A) conventional breakeven chart.(B) contribution breakeven chart.(C) semi-variable cost chart.(D) profi t–volume chart.
X Ltd produces and sells a single product, which has a contribution to sales ratio of 30 per cent. Fixed costs amount to £120,000 each year.The number of units of sale 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.
If the organisation implements the new production methods and wishes to achieve the same profi t as that under the existing method, how many units would need to be produced and sold annually to achieve this?(A) 7,132 units(B) 8,000 units(C) 8,500 units(D) 9,710 units JJ Ltd manufactures a product
If the change in production methods were to take place, the breakeven output level would be:(A) 122 units higher(B) 372 units higher(C) 610 units lower(D) 915 units higher JJ Ltd manufactures a product which has a selling price of £14, a variable cost of £6 per unit.The company incurs annual fi
Data for product Q are as follows.Direct material cost per unit £54 Direct labour cost per unit £87 Direct labour hours per unit 11hours Production overhead absorption rate £7 per direct labour hour Mark-up for non-production overhead costs 3%10,000 units of product Q are budgeted to be sold
Data concerning one unit of product B produced last period are as follows.Direct material 3 kg @ £9 per kg Direct labour: department A 4 hours @ £14 per hour department B 6 hours @ £11 per hour Machine hours: department A 3 hours department B 2 hours Production overhead is absorbed at a rate of
(a) The management accountant of X Ltd is preparing the budgeted overhead analysis sheet for the year 20X2/X3. The company has two production cost centres (Machining and Assembly) and two service departments (Stores and Maintenance). The directly attributable production overheads have already been
TRI-D Ltd has three production departments – Extrusion, Machining and Finishing –and a service department known as Production Services which works for the production departments in the ratio of 3:2:1.The following data, which represent normal activity levels, have been budgeted for the period
Tick the box to indicate whether the overhead was over- or under-absorbed, and insert the value of the under- or over-absorption.XY operates a standard absorption costing system. Data for last period are as follows:Budgeted labour hours 48,500 Actual standard labour hours 49,775 Budgeted overheads
XX Ltd absorbs overheads based on units produced. In one period, 23,000 units were produced, actual overheads were £276,000 and there was £46,000 under absorption.The budgeted overhead absorption rate per unit was:(A) £10(B) £12(C) £13(D) £14.
A company absorbs overheads on standard machine hours which were budgeted at 11,250 with overheads of £258,750. Actual results were 10,980 standard machine hours with overheads of £254,692.Overheads were:(A) under-absorbed by £2,152.(B) over-absorbed by £4,058.(C) under-absorbed by £4,058.(D)
A method of accounting for overheads involves attributing them to cost units using predetermined rates. This is known as(A) overhead allocation.(B) overhead apportionment.(C) overhead absorption.(D) overhead analysis.
Wages paid to which of the following would be classifi ed as direct labour costs of the organisation’s product or service (tick all that apply):A driver in a taxi company A carpenter in a construction company An assistant in a factory canteen A hair stylist in a beauty salon.
The following extract is taken from the stores ledger record for material M:Date September Qty Receipts Price £ Qty Issues Price £ Qty Balance Price £1 12 18.00 3 6 2.10 12.60 18 30.60 7 8 2.35 18.80 26 49.40 12 5 A 14 8 B C The values that would be entered on the stores ledger record as A, B
The R Organisation is experiencing rapid infl ation in its raw material prices. Which of the following inventory valuation methods is most likely to ensure that the prices at which material issues are charged to cost of production approximate the economic cost of the materials?First In, First Out
Is the following statement true or false?With all average price systems where it is required to keep prices up to date, the average price must be recalculated each time an issue is made from inventory. True False
The effect of using the last in, fi rst out (LIFO) method of inventory valuation rather than the fi rst in, fi rst out (FIFO) method in a period of rising prices is(A) to report lower profi ts and a lower value of closing inventory.(B) to report higher profi ts and a higher value of closing
ABC Ltd had an opening inventory value of £880 (275 units valued at £3.20 each) on 1 April.The following receipts and issues were recorded during April:8 April Receipts 600 units £3.00 per unit 12 April Issues 200 units 15 April Receipts 400 units £3.40 per unit 30 April Issues 925 units Using
Is the following statement true or false?‘ The only cost that is really useful in setting a selling price for a particular service to be provided is the full cost ’ .True False
Which of the following costs would a local council classify as a direct cost of providing a door-to-door refuse collection service (tick all that apply)?(i) Depreciation of the refuse collection vehicle(ii) Wages paid to refuse collectors(iii) Cost of leafl ets sent to customers to advertise refuse
Which of the following could be used as a cost object in an organisation’s costing system(tick all that apply)?(i) Customer number 879(ii) Department A(iii) The fi nishing process in department A(iv) Product H (v) Employee number 776 (vi) Order processing activity
Select the correct equation below .AG Ltd rents an offi ce photocopier for £300 per month. In addition, the cost incurred per copy taken is 2 pence. If £ y total photocopying cost for the month and x the number of photocopies taken, the total photocopying cost for a month can be expressed
The following data relate to the overhead expenditure of a contract cleaner at two activity levels:Square metres cleaned 12,750 15,100 Overheads £73,950 £83,585 What is the estimate of the overheads if 16,200 square metres are to be cleaned?(A) £88,095(B) £89,674(C) £93,960(D) £98,095.
Which of the following costs would be classifi ed as step costs (tick all that apply)?(i) The cost of materials is £3 per kg for purchases up to 10,000 kg. From 10,001 kg to 15,000 kg the cost is £2.80 per kg.Thereafter the cost is £2.60 per kg.(ii) The cost of supervisory labour is £18,000 per
The following data have been collected for four cost types – W, X, Y, Z – at two activity levels:Cost 100 units Cost 140 units Cost type £ £W 8,000 10,560 X 5,000 5,000 Y 6,500 9,100 Z 6,700 8,580 Where V variable, SV semi-variable and F fi xed, assuming linearity, the four cost types
The Arcadian Hotel operates a budgeting system and budgets expenditure over eight budget centres as shown below. Analysis of past expenditure patterns indicates that variable costs in some budget centres vary according to occupied room nights (ORN), while in others the variable proportion of costs
A small manufacturing fi rm is to commence operations on 1 July. The following estimates have been prepared:July August September Sales (units) 10 36 60 Production (units) 40 50 50 Opening inventory (units) NIL It is planned to have raw material inventories of £10,000 at the end of July, and to
The distribution manager is paid a bonus of 5% of any savings he achieves against a fl exible budget cost allowance for distribution costs each period.The budget cost allowances for distribution costs for the previous two periods were as follows.Tonnes distributed Budget cost allowance£11,200
The following extract is taken from the catering costs budget of a company that provides training courses.Number of delegates 120 170 Catering cost £1,470 £2,020 In a fl exible budget for 185 delegates, the budget cost allowance for catering costs will be £
F Limited uses a fl exible budgeting system to control the costs incurred in its staff canteen.The budget cost allowance for consumable materials is fl exed according to the average number of employees during the period.Complete the following equation by inserting ‘ ’ , ‘ ’ or ‘ ’
Which of the following best describes the principle of reporting by exception?Sending budget reports only to those exceptional managers who are able to understand their content.Providing detailed reports only on those areas of the business that are performing exceptionally well and providing only
The totals from KM Ltd’s budgetary control report for February are as follows;Fixed budget Flexible budget Actual results£ £ £Total sales revenue 124,310 135,490 134,580 Total variable costs 93,480 98,450 97,920 Total contribution 30,830 37,040 36,660 Complete the following table, ticking the
Tick the correct box.A system of budgeting whereby the budget is continuously updated by adding a further accounting period when the earliest accounting period has expired, is known as a system of:rolling budgets incremental budgets
Each fi nished unit of product H contains 3 litres of liquid L. Ten per cent of the input of liquid L is lost through evaporation in the production process. Budgeted output of product H for June is 3,000 units. Budgeted inventories of liquid L are:● Opening inventory, 1 June 1,200 litres●
PR Ltd’s cash budget forewarns of a short-term surplus. Which of the following would be appropriate actions to take in this situation? (Select all that are correct).(a) Increase receivables and inventory to boost sales.(b) Purchase new non-current assets.(c) Repay long-term loans.(d) Pay
Assuming that sales volume is the principal budget factor, place the following budgets in the order that they would be prepared in the budgetary planning process.Indicate the correct order by writing 1, 2, 3, etc. in the boxes provided.Sales budget Materials purchases budget Materials inventory
Is the following statement true or false?The principal budget factor is always the forecast sales volume.True False
Which of the following items of information would be contained in the budget manual? (Tick all that are correct.)(a) An organisation chart.(b) The timetable for budget preparation.(c) The master budget.(d) A list of account codes.(e) Sample forms to be completed during the budgetary process.
Tick the correct box.A participative budgeting system may also be described as a:bottom-up budget top-down budget
Budgeted sales of product Y next period are 8,690 units. Each unit of product Y requires 8 kg of material Z. Budgeted inventories are as follows:Product Y Material Z units kg Opening inventory 875 6,300 Closing inventory 920 6,180 The budgeted purchases of material Z, in kg, next period are:(A)
A recent budgetary control report shows the following information:Fixed budget Flexible budget Actual results£ £ £Total sales revenue 585,847 543,776 563,945 Total variable costs 440,106 418,482 425,072 Total contribution 145,741 125,294 138,873 The sales volume contribution variance for the
A master budget comprises:(A) the budgeted income statement.(B) the budgeted cash fl ow, budgeted income statement and budgeted balance sheet.(C) the budgeted cash fl ow.(D) the entire set of budgets prepared.
The following extract is taken from the production cost budget of S Limited:Production (units) 2,000 3,000 Production cost (£) 11,100 12,900 The budget cost allowance for an activity level of 4,000 units is(A) £7,200(B) £14,700(C) £17,200(D) £22,200.
A fl exible budget is:(A) a budget which, by recognising different cost behaviour patterns, is designed to change as the volume of activity changes.(B) a budget for a defi ned period of time which includes planned revenues, expenses, assets, liabilities and cash fl ow.(C) a budget which is prepared
The following details have been extracted from the receivables collection records of C Limited:Invoice paid in the month after sale 60%Invoice paid in the second month after sale 25%Invoice paid in the third month after sale 12%Bad debts 3%Invoices are issued on the last day of each month.Customers
Of the four costs shown below, which would not be included in the cash budget of an insurance fi rm?(A) depreciation of non-current assets(B) commission paid to agents(C) offi ce salaries(D) capital cost of a new computer.
The term ‘ budget slack ’ refers to:(A) the extended lead time between the preparation of the functional budgets and the master budget.(B) the difference between the budgeted output and the breakeven output.(C) the additional capacity available which can be budgeted for.(D) the deliberate
A job requires 2,400 actual labour hours for completion and it is anticipated that there will be 20 per cent idle time. If the wage rate is £10 per hour, what is the budgeted labour cost for the job?(A) £19,200(B) £24,000(C) £28,800(D) £30,000.
Happy Returns Ltd operates a haulage business with three vehicles. The following estimated operating costs and performance data are available:Petrol £0.50 per km on average Repairs £0.30 per km Depreciation £1.00 per km, plus £50 per week per vehicle Drivers ’ wages £300.00 per week per
Happy Stays hotel has 345 rooms. During the latest week, the following data was collected concerning unoccupied rooms.Day Number of unoccupied rooms Monday 77 Tuesday 43 Wednesday 26 Thursday 31 Friday 17 Saturday 12 Sunday 88(a) The number of occupied room nights during the week was .(b) The
Match the organisations with the most appropriate cost unit by writing (a), (b), (c),(d) or (e) in the box provided.Organisations● Hotel● Transport service● College● Restaurant● Accountancy service Cost units(a) Enrolled student(b) Meal served(c) Chargeable hour(d) Room night(e)
Records for a passenger limousine company reveal the following data for last period.No. of passengers Miles travelled 80 4 40 5 90 6 100 7 140 8 180 9 150 10 The drivers ’ wages cost incurred was £1,100.The drivers ’ wages cost per passenger mile was (to the nearest penny):(A) £0.03 (B)
An item of expenditure has the composite code number 109.433. The digits 109 indicate the nature of the expenditure, that is, whether it is material, labour or expense. This is:(A) classifi cation by cost behaviour(B) classifi cation by responsibility(C) objective classifi cation(D) subjective
Which of the following is a correct calculation of value added:(A) Sales revenue variable production costs(B) Sales revenue direct labour costs(C) Sales revenue all bought-in costs(D) Sales revenue all variable costs.
State which of the following are characteristics of managerial reports prepared in a service organisation:(i) a low incidence of work in progress at the end of a period(ii) the use of composite cost units(iii) the use of equivalent units(A) (i) only(B) (i) and (ii) only(C) (ii) only(D) (i), (ii)
A company operates an expensive processing plant to produce a single product from one process. At the beginning of October, 3,400 completed units were still in the processing plant awaiting transfer to fi nished goods. They were valued as follows:£Direct material 25,500 Direct wages 10,200
Chemical Processors manufacture Wonderchem using two processes – mixing and distillation.The following details relate to the distillation process for a period:No opening work in progress Input from mixing 36,000 kg at a cost of £ 166,000 Labour for period £ 43,800 Overheads for period £ 29,200
A fi rm operates a process, the details of which for the period were as follows:● There was no opening work in progress.● During the period, 8,250 units were received from the previous process at a value of£ 453,750, labour and overheads were £ 350,060 and material introduced was £
To the nearest £, what was the value of the work in process at the end of the period?
How many equivalent units will be used when calculating the cost per unit in relation to conversion cost?
In the following process, all losses were fully processed and scrap units from the process can be sold for £ 3 per unit.The values to be entered as A and B in the process account below are:A B Process account [extract]Units £Finished goods 4,000 88,000 Normal loss 90 A Abnormal loss 50 B
In process 2 at the end of a period, 200 units are in progress. They are 100 per cent complete in respect of materials, 50 per cent complete in respect of labour and 20 per cent complete in respect of overhead. The cost of an equivalent complete unit for the period was £ 4 for materials, £ 3 for
Last period, an abnormal gain of 50 kg arose in process 1. Normal loss was 400 kg.The cost of good output from process 1, after allowing for the abnormal gain, was£ 3.50 per kg. Scrap from process 1 can be sold for £ 0.20 per kg.The scrap account in respect of process 1 for the period is shown
Input to a process last period was 5,000 kg. There was no opening work in progress but 800 kg were in process at the end of the period. Normal loss is 20 per cent of input. During the period, 4,100 kg were transferred to the next process.(a) During the period, there was an:abnormal loss abnormal
When the actual loss in a process is less than the expected loss for the period, there is an:abnormal loss abnormal gain
The value of completed output for the period was(A) £ 171,555(B) £ 201,500(C) £ 274,488(D) £ 322,400
How many equivalent units are used when calculating the cost per unit in relation to labour?(A) 450(B) 850(C) 1,250(D) 1,300
The number of conversion-equivalent units was:(A) 27,100(B) 27,300(C) 28,000(D) 30,100
The number of material-equivalent units was:(A) 24,000(B) 28,000(C) 30,000(D) 31,000
What is the value of the closing work in progress (to the nearest £ )?(A) £ 4,403(B) £ 4,698(C) £ 4,892(D) £ 4,947
What is the value of the output (to the nearest £ )?(A) £ 39,139(B) £ 43,488(C) £ 43,680(D) £ 43,977
What is the value of the abnormal loss (to the nearest £ )?(A) Nil(B) £ 489(C) £ 544(D) £ 546
What is the value of the output?(A) £ 3,724(B) £ 4,370(C) £ 4,655(D) £ 4,900
What is the value of the abnormal loss?(A) £ 60(B) £ 196(C) £ 230(D) £ 245
What value will be credited to the process account for the scrap value of the normal loss?(A) £ 300(B) £ 530(C) £ 980(D) £ 1,021
In process costing, where losses have a positive scrap value, when an abnormal gain arises the abnormal gain account is:(A) credited with the normal production cost of the abnormal gain units.(B) debited with the normal production cost of the abnormal gain units and credited with the scrap value of
A chemical process has a normal wastage of 10 per cent of input. In a period, 2,500 kg of material were input and there was an abnormal loss of 75 kg.What quantity of good production was achieved?(A) 2,175 kg(B) 2,250 kg(C) 2,325 kg(D) 2,475 kg
In a process account, abnormal losses are valued:(A) at their scrap value.(B) at the same rate as good production.(C) at the cost of raw materials.(D) at good production cost less scrap value.
Process B had no opening WIP. 13,500 units of raw material were transferred in at£ 4.50 per unit. Additional material at £ 1.25 per unit was added in process. Labour and overheads were £ 6.25 per completed unit and £ 2.50 per unit incomplete. If 11,750 completed units were transferred out, what
HR Construction plc makes up its accounts to 31 March each year. The following details have been extracted in relation to two of its contracts as at 31 March 20 5:Contract A Contract B Commencement date 1 April 20 4 1 December 20 4 Target completion date 31 May 20 5 30 June 20 5£000
A commercial decorating organisation budgets for 4 per cent idle time on all its jobs.The estimated number of active labour hours required to complete decorating job no. D47 is 120 hours. The hourly labour rate is £ 11.The estimated labour cost of job no. D47 is (to the nearest £ ) £
A particular contract has earned a nominal profi t to date but the contract overall is expected to incur a loss by the time it is completed. The loss should not be recognised in the accounts until the period when the loss actually occurs.True False
A company calculates the prices of jobs by adding overheads to the prime cost and adding 30 per cent to total costs as a profi t margin. Complete the following job cost summary information:Job Y256 £Prime cost Overheads 694 Total cost Profi t margin Selling price 1,690
The cost incurred on contract D372 to date is £ 465,000. The cost to be incurred to complete the contract is £ 116,250 and no problems are foreseen before its completion.The value of work certifi ed is £ 545,000 and the cash received from the customer is £ 517,750. The fi nal contract value is
A plant with a net book value of £ 40,000 is delivered to contract ZX on 31 March.The plant is still in use on the contract at the company’s year end, 31 December.Company policy is to depreciate all contract plant on a reducing balance basis, at a rate of 25 per cent per annum.Complete the box

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