Questions and instructions are provided in screenshots below

1. When considering a firm's monthly and annual accounts, which one of the following would be classified as a direct cost?

a. The wages paid to maintenance staff working on machines

b. The cost of cleaning the factory floor

c. The Carriage inwards on raw materials used in production

d. The cost of the office photocopying machine

(1 Mark)

2. Which of the following is normally a task of the cost accountant?

a. Producing a trial balance

b. Preparing bank reconciliation statements

c. Providing performance reports for managers and directors

d. Maintaining the purchases ledger

(1 Mark)

3. Which of the following best describes the process of allocation of overheads?

a. Allotment of specific overhead costs to a single department

b. Splitting overheads between several departments according suitable bases

c. Spreading overheads over individual units of production

d. Spreading service department costs over production departments

(1 Mark)

Use the information below to answer questions 4 and 5

The sale performance of a business can be summarized as follows

Actual Budget

Units produced 20,900 22,200

Selling price per unit ($) $55 $48

Standard cost per unit ($) $32 $35

4. What was the selling price variance?

a. $118,800 favourable

b. $115,000 favourable

c. $146,300 favourable

d. $100,000 favourable

(1 Mark)

5. What was the sales volume variance?

a. $16,900 adverse

b. $7,000 favourable

c. $6,500 favourable

d. $8,400 adverse

6. The annual demand for a certain product is 50,625 units. The company informs you that every time an order is placed for this product the cost per order incurred is $100.You are also told that the cost of holding one unit for a year is $0.5. The economic order quantity of the product using the EOQ =2 CoD is closest to:

Ch

a. 3,000units

b. 4,500units

c. 1,987 units

d. 2,481 units

(1 Mark)

7. Which of the following would normally be classified as an indirect cost in a manufacturing company?

a. Machine operator's salary

b. Production royalty paid per unit produced

c. Cost of raw materials used in the product

d. Building insurance

(1 Mark)

8. Angelo Limited is preparing its budget for the next year. It produces and sells a single product. The expected sales for the first 4 months of next year are:

Month January February March April

Production units 12,000 14,000 16,000 18,000

The product requires 2.5 kg of Material A1 per unit. It is the company's policy to hold in inventory at the end of a month 20% of the material requirement for the following month.

The material purchases for the month of February based on the information provided is:

a. 28,000kg

b. 24,300kg

c. 36,000kg

d. None of the above

(1 Mark)

9. Prime cost is:

a. The total overhead cost

b. The production overhead cost

c. The total of the direct production costs

d. The cost of indirect labour

(1 Mark)

10. The Goods received note is sent to the Accounts department by:

a. The factory manager

b. The purchasing manager

c. The Store keeper

d. The accounts department

Use the information below to answer questions 11 to 13

The following table summarises the receipts and issues of an item of inventory, by the stores of a particular company.

Date Receipts Issues (units)

Number of units Value per unit ($) Total value ($)

5th of June 400 4.0 1,600

12th June 300 4.5 1,350

18th June 350

24th June 500 5.0 2,500

30th June 570

Total

11. The value of closing inventory under the FIFO method would be:

a. $1,400

b. $2,500

c. $3,300

d. $950

(1 Mark)

12. The value of the closing inventory under the LIFO method would be:

a. $2,000

b. $1,120

c. $1,500

d. $ 3,000

(1 Mark)

13. The value of the first issue on the 18th of June under the AVCO method would be closest to:

a. $1,475

b. $3,300

c. $2,600

d. $800

(1 Mark)

Use the following information to answer questions 14 and 15.

A company has the following information in its standard cost card:

$

Material 5kg at the price of $2/kg = 10.00

During the month the company recorded the following:

Units produced = 1,500 units

Material used = 7,650kg

Material cost = $15,180

14. The material price variance is:

a. $120 favourable

b. $ 300 favourable

c. $120 adverse

d. $180 adverse

(1 Mark)

15. The material usage variance is:

a. $400 adverse

b. $300 adverse

c. $600 adverse

d. $300 favourable

(1 Mark)

16. When preparing an overhead analysis sheet the order of the steps to be followed would be:

a. Allocation of specific overheads, Apportionment of general overheads, reapportionment of service centre overheads, absorption of overheads to product units

b. Absorption of overheads to product units, apportionment of general overheads, allocation of specific overheads, reapportionment of service centre costs to production centres

c. Reapportionment of service centre costs to production centres, allocation of specific overheads, apportionment of general overheads, absorption of overheads to product units

d. Apportionment of general overheads, Absorption of overheads to units, Allocation of specific overheads, reapportionment of service centre costs to production centres

(1 Mark)

17. Which of the following would be the most suitable base for sharing the Canteen costs to the other departments?

a. Labour hours in each department

b. Floor area of each department

c. Number of employees in each department

d. Machine hours worked in each department

(1 Mark)

18. A company reports a profit of $25,400 under absorption costing. The company produced and sold a single product, and at the beginning of the month the level of inventory for the product was 1,000unit. The closing inventory for the month was 1,400 units and the fixed overhead absorption rate used was $3.00. The profit under marginal costing would be:

a. $18,000

b. $24,200

c. $19,900

d. $23,000

(1 Mark)

19. Which one of the following is not an advantage of holding inventory?

a. Allows customers demand to be satisfied

b. Reduces interruption to the production process

c. Gives the company the opportunity to benefit from bulk discounts

d. Deterioration, obsolescence, and theft

(1 Mark)

20. A profit centre is:

a. A production or service location, activity, or item of equipment relating to which costs is accumulated.

b. A production or service location, activity, or item of equipment relating to which revenues are accumulated.

c. A production or service location, activity, or item of equipment relating to which both costs and revenues accumulated.

d. A production or service location, activity, or item of equipment relating to which costs and revenues are accumulated, and in respect of which a manager is responsible for capital investment

Part B: Answer the question below.

Question 01

Acorns limited produce and sells a single product known as the acres. The following details relate to the production of one unit of the acre.

$ Per acre

Material cost = 12.00

Labour cost (1 hour) = 10.00

Variable overhead cost =8.00

The budgeted and actual details for the month are as follows:

Budgeted production 6,000 acres

The selling price per acre is $100

Actual production was 6,200 acres

Opening inventory 800 acres

Closing inventory 600 acres.

The actual fixed production overhead cost for the month is the same as the budgeted fixed cost at $30,000. The company uses a predetermined overhead absorption rate calculated based on labour hours to absorb fixed overheads to products. The budgeted labour hours for May were 6,000.

The other overhead costs of the company are as follows:

Selling and distribution:

Fixed per month =$10,000

Variable per unit =$3

Administration:

Fixed per month =$5,000

Required:

a.

(i) Calculate the fixed production overhead cost per unit.

(3 Marks)

(ii) Calculate the number of units sold during the month.

(3 Marks)

(iii) Calculate the production cost per unit

(3 Marks)

(iv) Calculate the over/under absorbed overhead cost for the period.

(3 Marks)

b. Prepare a profit statement under Absorption costing for the month.