1.

ABC Ltd makes widgets. It has no opening inventory and the closing inventory is 500 units. The budgeted and actual fixed manufacturing costs are $1,000 and the budgeted and actual production is 2,000 units.

The variable manufacturing cost was $2 per unit and the selling price was $8 per unit. Sales commissions of 4.5% of sales revenue are paid to sales people.

Other non-manufacturing fixed costs total $500.

What is the difference in profit between variable and absorption costing?

2.

Which of the following is NOT a factor that helped lead to the development of Activity Based Costing?

Select one:

A. Increased computing power to deal with complexity of ABC calculations.

B. Decreased levels of non-volume-driven manufacturing overhead costs.

C. Increased proportions of non-manufacturing costs

D. Increased levels of competition, meaning it is more important to charge the 'correct' price.

3.

The major difference between the weighted average and FIFO methods is

Select one:

A. how ending inventory is treated.

B. how beginning inventory is treated.

C. how completed and transferred units are treated.

D. how current period costs are treated.

4.

In a normal costing system, applied overhead is added using a predetermined overhead rate and, at the end of the period, all variances from standard are adjusted for.

True or False