MA (New Mock-4, 23)

Which Two of the following statements about  cost classifications are correct ?

a)      Prime cost is direct materials, direct labour, direct expenses plus variable production overheads

b)      Administrative costs, selling costs ,distribution costs and finance costs are all non-production costs

c)      Costs can be classified by function into fixed, semi-variable or stepped fixed

d)     Total production cost is variable production costs plus fixed production overheads 

• b & c

• b&d

• c & d

• a & d

Which of the following is the definition of flexible budgeting?

•   A budget which by recognizing cost behavior patterns is designed to change as the volume of activity changes

• A budget which bases this period’s costs and revenues on last period’s costs and revenues with appropriate changes for inflation

• A budget which is continually changed by adding a further accounting period when the most recent period has expired

•   A budget that requires each cost element included to be justified as thought the activity was being  undertaken for the first time

The costs of two separate operations have been plotted as straight line graphs, with output as the independent variable. The line representing the cost of operation A rises more steeply than that representing the costs of operation B, but both touch the vertical at the same point.

 

Which TWO of the following statements are correct?

a)      The  variable costs per unit of operation A are higher Than those of operation B

b)      The fixed costs of operation A are lower than those of operation  B .

c)      The fixed costs of operation A are the same as those of operation  B

d)     The variable costs per unit of operation A are lower than those of operation B.

• a) & c)

• b) & c)

• b) & a)

• b) & d)

Would the following be classified as strategic or as operation objectives ?

Strategic       operation

(1)   To achieve a return on capital employed in excess of that achieved by the main competitor

(2)   To grow market Share by 5% per year for the next five years

                  

 

• 1) Strategic

  2) Strategic

• 1) operation

  2) operation

• 1) Strategic

  2) operation

• 1) Strategic

  2) Strategic

Regression analysis can be used to determine total costs at Different activity levels. The following equation is used to calculate these costs

 

Y = a + bx 

 Which two of the following are correct definitions for the letters included in the equation ?

 a = total fixed costs

y = activity level

b = variable cost per unit of activity

x =  gradient of the line

• a & y

• y & b

• a & c

• y & x

A company is about  to make a decision  on whether to purchase a new machine in order to expand  production. A Feasibility study has already been conducted but not yet paid for. The company uses net present value ( NPV) to evaluate new investments.

Which of the following is relevant cost for calculating the NPV of the machine ?

• Installation cost of the machine

• Depreciation on the new machine

• The cost of the Feasibility study

• The finance director’s current salary

A firm monitor labour activity. Information for last period is as follows

 

Production budget ( in standard units )            5,000

Actual Production ( in standard units )             6,000

Actual hours worked                                         75,000

Standard labour hours per unit                           12

What was the labour capacity  ratio in the last period ?

• A= 72000/60000= 120.0 %

• B=75000/60000= 125.0 %

• C=74000/61000=96.0%

• D=75000/50000=  80.0%

A haulage operation transported 470 tones of goods in a period  over a total distance of 5,600 kilometers (km). Costs   incurred in the period totaled $3,579, 520.

What was the cost per tonner per km in the period  ( to two decimal places)?

• $=1.36

• $=1.38

• $=1.35

• $=1.32

Which of the following is LEAST likely to be used by a divisional manager of a large company to measure achievement of strategic objectives ?

• Number of new products sold by the division

• Market share of division  competitors

• Machine operating efficiency rates at a key divisional factory

• Total annual profit of the division

Rates per hour ; $8.00 basic, overtime premium $2.00.

There are 12 direct workers in the department and basic wages apply to a normal working week of 40  hours. Overtime is worked to meet the general requirements of production, and the idle time and training  time are regarded as normal.

What is the total amount to be charged as indirect costs of labour for the week?

• $368

• $336

• $338

•   $160