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

Is the following sentence true or false? Tick the correct box.Interim payments that are received from a customer as a contract progresses are known as retention monies.True False
Calculate the selling price for each job (a) to (c) (to the nearest penny), and write the correct answer in the box provided.(a) Total cost of job £ 45. Profi t mark-up 25 per cent of cost. Job selling price £ .(b) Production cost of job £ 38. Percentage to be added to production cost to
Match the organisational activities below to the most appropriate costing method by writing (a), (b) or (c) in the box provided.Costing methods(a) Job costing(b) Batch costing(c) Contract costing Organisational activities● Accounting and taxation services● Shoe manufacturing● Plumbing and
BH Ltd is currently undertaking a contract to build an apartment block. The contract commenced on 1 January year 2 and is expected to take 13 months to complete. The contract value is £ 54 m. The contractor’s fi nancial year ends on 30 September.The contract account for the building of the
Job 3 was completed during the period and consisted of a batch of 2,400 identical circuit boards. The fi rm adds 50 per cent to total production costs to arrive at a selling price. What is the selling price of a circuit board?(A) It cannot be calculated without more information.(B) £ 31.56(C) £
Jobs 1 and 2 were the only incomplete jobs. What was the value of closing work in progress?(A) £ 81,900(B) £ 90,175(C) £ 140,675(D) £ 214,425
The following items may be used in costing jobs:(i) Actual material cost.(ii) Actual manufacturing overheads.(iii) Absorbed manufacturing overheads.(iv) Actual labour cost.Which of the above are contained in a typical job cost?(A) (i), (ii) and (iv) only.(B) (i) and (iv) only.(C) (i), (iii) and
Which of the following are characteristics of contract costing?(i) Homogeneous products.(ii) Customer-driven production.(iii) Short timescale from commencement to completion of the cost unit.(A) (i) and (ii) only.(B) (ii) and (iii) only.(C) (i) and (iii) only.(D) (ii) only.
Which of the following are characteristics of job costing?(i) Customer-driven production.(ii) Complete production possible within a single accounting period.(iii) Homogeneous products.(A) (i) and (ii) only.(B) (i) and (iii) only.(C) (ii) and (iii) only.(D) All of them.
Inventories of material W are valued at their standard price of £7 per kilogram. Last period, 900 kg of W were purchased for £5,400, of which 800 kg were issued to production.Which of the following accounting entries would arise as a result of these transactions? (Tick all that apply.)£(a) Raw
Is the following statement true or false?If material inventory is valued at standard cost then the material price variance calculation should be based on the materials actually used during the period.True False
Details of the production wages for a company last period are as follows:Gross wages PAYE/NI£000 £000 £000 Direct wages paid 40 10 30 Indirect wages paid 20 6 14 Which of the following accounting entries would be used to record this data? (Tick all that are correct.)£000 (a) Debit Wages control
The production overhead absorption rate is £3 per direct labour hour. During the period 23,000 direct labour hours were worked.Production overhead control account£ £Wages control 44,000 Work in progress control A Bank 22,000 Depreciation 8,000 Raw materials control 2,000 76,000(a) In the
Look at the following account and then identify whether statements (a) to (c) are true or false.Wages control account£ £Bank 82,500 Work in progress control 52,500 PAYE/NI payable 9,500 Production overhead control 39,500 92,000 92,000 True False(a) Gross wages for the period amounted to £82,500.
A company purchased materials costing £30,000. Of these, materials worth £1,000 were issued to the maintenance department and materials worth £22,000 were issued to the production department. Which of the following accounting entries would arise as a result of these transactions? (Tick all that
A manufacturing fi rm is very busy and overtime is being worked.The amount of overtime premium contained in direct wages would normally be classifi ed as:(A) part of prime cost.(B) production overheads.(C) direct labour costs.(D) administrative overheads.
Gross wages incurred in department 1 in June were £54,000. The wages analysis shows the following summary breakdown of the gross pay:Paid to direct labour Paid to indirect labour£ £Ordinary time 25,185 11,900 Overtime basic pay 5,440 3,500 premium 1,360 875 Shift allowance 2,700 1,360 Sick pay
In a standard cost bookkeeping system, when the actual hourly rate paid for labour is less than the standard hourly rate, the double entry to record this is:(A) debit wages control account; credit labour rate variance account.(B) debit work in progress control account; credit labour rate variance
A fi rm uses standard costing and an integrated accounting system. The double entry for an adverse material usage variance is:Debit Credit(A) Stores control account Work in progress control account(B) Material usage variance account Stores control account(C) Work in progress control account
The bookkeeping entries in a standard cost system when the actual price for raw materials is less than the standard price are:Debit Credit(A) Raw materials control account Raw materials price variance account(B) WIP control account Raw materials control account(C) Raw materials price variance
Q Ltd uses an integrated standard costing system. In October, when 2,400 units of the fi nished product were made, the actual material cost details were:Material purchased 5,000 units @ £4.50 each Material used 4,850 units The standard cost details are that two units of the material should be used
Data for the fi nishing department for the last quarter are as follows:Budgeted cost centre overhead £320,000 Actual cost centre overhead £311,250 Budgeted direct labour hours 40,000 Actual direct labour hours 41,500 The accounting entries to record the under- or over-absorbed overhead for the
In an integrated cost and fi nancial accounting system the correct entries for the provision for depreciation of production machinery are:Debit Credit(A) Provision for depreciation account Work in progress account(B) Work in progress account Provision for depreciation account(C) Overhead control
XYZ Ltd operates an integrated accounting system. The material control account at 31 March shows the following information:Material control account£ £Balance b/d 50,000 Production overhead control account 10,000 Payables 100,000 ? 125,000 Bank 25,000 Balance c/d 40,000 175,000 175,000 The
In the cost ledger the factory cost of fi nished production for a period was £873,190.The double entry for this is Debit Credit(A) Cost of sales account Finished goods control account(B) Finished goods control account Work in progress control account(C) Costing income statement Finished goods
At the end of a period, in an integrated cost and fi nancial accounting system the accounting entries for £18,000 overheads under-absorbed would be:Debit Credit(A) Work in progress control account Overhead control account(B) Income statement Work in progress control account(C) Income statement
In an integrated cost and fi nancial accounting system, the accounting entries for factory overhead absorbed would be:Debit Credit(A) Work in progress control account Overhead control account(B) Overhead control account Work in progress control account(C) Overhead control account Cost of sales
During a period £35,750 was incurred for indirect labour. In a typical cost ledger, the double entry for this is:Debit Credit(A) Wages control account Overhead control account(B) WIP control account Wages control account(C) Overhead control account Wages control account(D) Wages control account
A fi rm operates an integrated cost and fi nancial accounting system. The accounting entries for an issue of direct materials to production would be:Debit Credit(A) Work in progress control account Stores control account(B) Finished goods account Stores control account(C) Stores control account
Carshine Services employs a number of people providing a car cleaning and valeting service which operates in the car parks of local supermarkets and railway stations. In an attempt to control costs and revenues the company has established the following standard cost and fee per car cleaned and
An offi ce worker who processes insurance claims is paid an hourly wage of £9 per hour plus a bonus based on the time saved to process claims compared with a standard time allowance. The bonus paid is 40 per cent of the time saved, at the basic hourly rate.Last week the employee worked 30 hours
Extracts from the standard cost card for product N are as follows:£Direct labour: 14 hours @ £11 per hour 154 Variable production overhead: 14 hours @ £3 per hour 42 During the latest period, 390 units of product N were produced. Details concerning direct labour and variable production overhead
The budgeted contribution for last month was £43,900 but the following variances arose:£Sales price variance 3,100 adverse Sales volume contribution variance 1,100 adverse Direct material price variance 1,986 favourable Direct material usage variance 2,200 adverse Direct labour rate variance
If employees are more skilled than had been allowed for in the original standard cost, which four of the following variances are most likely to result?(a) favourable material usage;(b) adverse material usage;(c) favourable labour effi ciency;(d) adverse labour effi ciency;(e) favourable labour
The direct material usage variance for last period was £3,400 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.(c) The original standard usage was
The idle time variance for the period is:(A) £24 adverse(B) £24 favourable(C) £192 adverse(D) £192 favourable
The labour rate variance for the period is:(A) £259 favourable(B) £259 adverse(C) £325 favourable(D) £325 adverse
If the company reports idle time separately, the labour effi ciency variance for the period is:(A) £126 favourable(B) £142 favourable(C) £66 adverse(D) £126 adverse
The labour cost graph above depicts:(A) a piece-rate scheme with a minimum guaranteed wage.(B) a straight piece-rate scheme.(C) a time-rate scheme, where the employee is paid for each hour of attendance.(D) a differential piece-rate scheme. Output
The following data relates to an employee in production department A:Normal working day 7 hours Hourly rate of pay £8 Standard time allowed to produce one unit 6 minutes Bonus payable at basic hourly rate 50% of time saved What would be the gross wages payable in a day when the employee produces
XYZ Ltd is planning to make 120,000 units per period of a new product. The following standards have been set:Per unit Direct material A 1.2 kg at £11 per kg Direct material B 4.7 kg at £6 per kg Direct labour:Operation 1 42 minutes Operation 2 37 minutes Operation 3 11 minutes All direct
The budgeted sales of product Y are 230 units per period at a standard sales price of£43 per unit. Last period the sales volume contribution variance was £1,100 favourable and all units were actually sold for £46 per unit. The sales price variance was£840 favourable.The standard variable cost
The following data relate to product R for the latest period.Budgeted sales revenue £250,000 Standard selling price per unit £12.50 Standard contribution per unit £5.00 Actual sales volume (units) 19,500 Actual sales revenue £257,400 The sales variances for the period are:Adverse Favourable(a)
The following extract is taken from the standard cost card of product H.£ per unit Direct labour 4 hours @ £12 per hour 48 Variable production overhead 8 During the latest period the number of direct labour hours worked to produce 490 units of product H was 1,930. The variable production overhead
Is the following statement true or false?Standard costing cannot be applied in an organisation that manufactures specialist furniture to customers ’ specifi cations because every cost unit is unique.True False
The standard cost card for product K shows that each unit requires four hours of direct labour at a standard rate of £8 per hour. Last period, 420 units were produced and the direct labour cost amounted to £15,300. The direct labour effi ciency variance was £160 adverse.The actual rate paid per
The standard cost card for product F shows that each unit requires 3 kg of material at a standard price of £9 per kilogram. Last period, 200 units of F were produced and £5,518 was paid for 620 kg of material that was bought and used. Calculate the following variances and tick the correct box to
Tick the correct box .A standard which assumes effi cient levels of operation, but which includes allowances for factors such as waste and machine downtime, is known as an:attainable standard ideal standard
The sales volume contribution variance for period 9 was:(A) £147 favourable(B) £147 adverse(C) £154 favourable(D) £154 adverse
The sales price variance for period 9 was:(A) £465 favourable(B) £465 adverse(C) £472 favourable(D) £472 adverse
XYZ Ltd uses standard costing. It makes an assembly for which the following standard data are available:Standard labour hours per assembly 24 Standard labour cost per hour £8 During a period 850 assemblies were made, there was a nil rate variance and an adverse effi ciency variance of £4,400.How
During a period 17,500 labour hours were worked at a standard cost of £6.50 per hour. The labour effi ciency variance was £7,800 favourable. The number of standard labour hours expected for the output achieved was:(A) 1,200(B) 16,300(C) 17,500(D) 18,700.
ABC Ltd uses standard costing. It purchases a small component for which the following data are available:Actual purchase quantity 6,800 units Standard allowance for actual production 5,440 units Standard price 85p per unit Purchase price variance (adverse) (£544)What was the actual purchase price
The variable overhead effi ciency variance is:(A) £151 adverse(B) £160 adverse(C) £160 favourable(D) £280 adverse
The variable overhead expenditure variance is:(A) £1,254 favourable(B) £1,254 adverse(C) £1,534 favourable(D) £1,534 adverse
The labour effi ciency variance is(A) £680 adverse(B) £720 adverse(C) £720 favourable(D) £1,260 adverse
The labour rate variance is(A) £325 favourable(B) £325 adverse(C) £1,045 favourable(D) £1,045 adverse
The ingredients usage variance is:(A) £100 favourable(B) £100 adverse(C) £105 favourable(D) £860 adverse
The ingredients price variance is:(A) £1,503 favourable(B) £1,503 adverse(C) £1,603 favourable(D) £1,603 adverse
A standard cost is:(A) the planned unit cost of a product, component or service in a period.(B) the budgeted cost ascribed to the level of activity achieved in a budget centre in a control period.(C) the budgeted production cost ascribed to the level of activity in a budget period.(D) the budgeted
ABC Ltd makes three products, all of which use the same machine, which is available for 50,000 hours per period.The standard costs of the product, per unit, are:Product A£Product B£Product C£Direct materials 70 40 80 Direct labour:Machinists (£8/hour) 48 32 56 Assemblers (£6/hour) 36 40 42
A manufacturer of cell phones is considering the following actions. Which of these is likely to increase the manufacturer’s C/S (contribution/sales) ratio (tick all that apply)?(i) taking advantage of quantity discounts for bulk purchases of material;(ii) introducing training programmes designed
The following tasks are undertaken when deciding on the optimum production plan when a limiting factor exists. Write 1, 2, 3 or 4 in the boxes to indicate the correct sequence of tasks.Rank the products according to the contribution per unit of limiting factor used.Calculate each product’s
PH Ltd has spare capacity in its factory. A supermarket chain has offered to buy a number of units of product XZ each month, and this would utilise the spare capacity. The supermarket is offering a price of £ 8 per unit and the cost structure of XZ is as follows:£ per unit Direct material 3
Select true or false for each of the following statements about a profi t–volume chart.(a) The profi t line passes through the origin.True False(b) Other things being equal, the angle of the profi t line becomes steeper when the selling price increases.True False(c) Contribution cannot be read
Match the following terms with the labels a to d on the graph. Writea, b, c or d in the relevant boxes.Margin of safety Fixed cost Contribution Profi t Sales Total cost Variable cost b Units
Product J generates a contribution to sales ratio of 30 per cent. Fixed costs directly attributable to product J amount to £75,000 per month. The sales revenue required to achieve a monthly profi t of £15,000 is £ .
The P/V ratio is the ratio of profi t generated to the volume of sales.True False
OT Ltd plans to produce and sell 4,000 units of product C each month, at a selling price of £18 per unit. The unit cost of product C is as follows:£ per unit Variable cost 8 Fixed cost 4 12 To the nearest whole number, the monthly margin of safety, as a percentage of planned sales is %.
Z Ltd manufactures three products, the selling price and cost details of which are given below:Product X£Product Y£Product Z£Selling price per unit 75 95 95 Costs per unit:Direct materials (£5/kg) 10 5 15 Direct labour (£8/hour) 16 24 20 Variable overhead 8 12 10 Fixed overhead 24 36 30 In a
P Ltd provides plumbing services. Due to a shortage of skilled labour next period the company is unable to commence all the plumbing jobs for which customers have accepted estimates.When deciding which plumbing jobs should be commenced, the jobs should be ranked according to the:(A) Contribution to
An organisation currently provides a single service. The cost per unit of that service is as follows:£Selling price 130 Direct materials 22 Direct labour 15 Direct expenses 3 Variable overheads 10 Total variable cost 50 Total fi xed costs for the period amount to £1,600,000. How many units of
For the forthcoming year, E plc’s variable costs are budgeted to be 60 per cent of sales value and fi xed costs are budgeted to be 10 per cent of sales value.If E plc increases its selling prices by 10 per cent, but if fi xed costs, variable costs per unit and sales volume remain unchanged, the
B Ltd manufactures a single product which it sells for £9 per unit. Fixed costs are£54,000 per month and the product has a variable cost of £6 per unit.In a period when actual sales were £180,000, B Ltd’s margin of safety, in units, was:(A) 2,000(B) 14,000(C) 18,000(D) 20,000.
A Ltd has fi xed costs of £60,000 per annum. It manufactures a single product which it sells for £20 per unit. Its contribution to sales ratio is 40 per cent.A Ltd’s breakeven point in units is:(A) 1,200(B) 3,000(C) 5,000(D) 7,500.
A company manufactures a range of products one of which, product Y, incurs a total cost of £20 per unit. The company incurs a total cost of £600,000 each period and the directors wish to achieve a return of 18% on the total capital of £800,000 invested in the company.Based on this information
GY Limited budgets to produce and sell 3,800 units of product R in the forthcoming year. The amount of capital investment attributable to product R will be £600,000 and GY Limited requires a rate of return of 15 per cent on all capital invested.Further details concerning product R are as
The Crayfi eld Hotel has completed its initial allocation and apportionment of overhead costs and has established that the total budgeted annual overhead cost of its linen services activity is £836,000.The cost unit used to plan and control costs in the hotel is an occupied room night. The hotel
Production overhead in department A is absorbed using a predetermined rate per machine hour. Last period, the production overhead in department A was underabsorbed.Which of the following situations could have contributed to the under absorption? (tick all that apply)the actual production overhead
The number of machine and labour hours budgeted for three production cost centres for the forthcoming period is as follows:Machining Assembly Finishing Machine hours 50,000 4,000 5,000 Labour hours 10,000 30,000 20,000 The most appropriate production overhead absorption basis for each cost centre
Data for the machining cost centre are as follows:Budgeted cost centre overhead £210,000 Actual cost centre overhead £230,000 Budgeted machine hours 42,000 Actual machine hours 43,000 Complete the following calculation.£Overhead absorbed Actual overhead incurred Tick correct box:Overhead
Tick the correct box .Activity in the packing department of a company manufacturing fi ne china involves operatives bubble-wrapping fi nished items and placing them in boxes which are then sealed and labelled. Most of the boxes are sealed and labelled by specialised machines, but about a quarter of
The budgeted fi xed overhead absorption rate for last period was £5 per direct labour hour. Other data for the period are as follows:Actual fi xed overhead expenditure £234,500 Actual direct labour hours 51,300 Budgeted fi xed overhead expenditure £212,900 The number of direct labour hours
After the initial overhead allocation and apportionment has been completed, the overhead analysis sheet for a car repair workshop is as follows:Total overhead cost Vehicle servicing Crash repairs Tyre fi tting Canteen and vending£ £ £ £ £233,000 82,000 74,000 61,000 16,000 The costs of the
Maintenance costs are to be apportioned to production cost centres on the basis of the following number of maintenance hours worked in each cost centre.Machining Assembly Finishing Maintenance hours worked 1,000 700 300 Complete the following extract from the overhead analysis sheet:Overhead cost
Match the overhead costs to the most appropriate basis of cost apportionment. Write the correct letter in the box provided beside each apportionment basis. An apportionment basis may be selected more than once.Overhead cost(a) Canteen costs(b) Cleaning of factory premises(c) Power(d) Rent(e)
P Ltd absorbs overheads on the basis of direct labour hours. The overhead absorption rate for the period has been based on budgeted overheads of £150,000 and 50,000 direct labour hours.During the period, overheads of £180,000 were incurred and 60,000 direct labour hours were used.Which of the
Based on the data given above, what is the amount of overhead under-/over-absorbed?(A) £2,550 under-absorbed.(B) £2,529 over-absorbed.(C) £2,550 over-absorbed.(D) £7,460 under-absorbed.
Based on the data given above, what is the labour hour overhead absorption rate?(A) £17.50 per hour.(B) £17.20 per hour.(C) £18.44 per hour.(D) £18.76 per hour.
Over-absorbed overheads occur when:(A) absorbed overheads exceed actual overheads.(B) absorbed overheads exceed budgeted overheads.(C) actual overheads exceed budgeted overheads.(D) budgeted overheads exceed absorbed overheads.
An overhead absorption rate is used to:(A) share out common costs over benefi ting cost centres.(B) fi nd the total overheads for a cost centre.(C) charge overheads to products.(D) control overheads.
A method of dealing with overheads involves spreading common costs over cost centres on the basis of benefi t received. This is known as:(A) overhead absorption.(B) overhead apportionment.(C) overhead allocation.(D) overhead analysis.
A retailer currently uses the weighted average pricing method to value his inventory.In a period of rising prices, the retailer decides instead to use the FIFO method.Tick the correct box to complete the statement below.The gross profi t for the period will be:higher lower
Tick the correct box below to indicate whether the following statement is true or false. Economic cost is always higher than historical cost.True False
Which of the following documents will be used to record the receipt of materials from stores by a production cost centre, ready for use in production?Goods received note Material requisition
BB imports product U and sells the product to retail customers at a price of £14 per case. BB had no inventory at the beginning of February and during February the following receipts and sales were recorded.6 February Received 1,400 cases @ £8.20 per case 15 February Received 900 cases @ £9.10
In a period of rising prices, which of the following statements are true? Tick the box for any statement that is true.(a) Reported profi ts will be higher with FIFO than with LIFO.(b) The value of closing inventory will be higher with FIFO than with LIFO.(c) LIFO would be the preferable method for
Opening inventory for a particular component at the beginning of April was zero.The following receipts and issues were recorded during April.April 1 Received 100 components at a price of £6.00 each April 2 Issued 30 components April 8 Received 30 components at a price of £6.50 each April 10
During a period of rising prices, which one of the following statements is correct?(A) The LIFO method will produce lower profi ts than the FIFO method, and lower closing inventory values.(B) The LIFO method will produce lower profi ts than the FIFO method, and higher closing inventory values.(C)
Using the FIFO system for pricing issues from stores means that when prices are rising:(A) product costs are overstated and profi ts understated.(B) product costs are kept in line with price changes.(C) product costs are understated and profi ts understated.(D) product costs are understated and

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