MATS Lesson 7 starter (recap 6)

The value of inventory under absorption costing is lower than the value under marginal costing

• True

• False

The absorption cost of a product always includes fixed non-production overheads

• True

• False

Identify which TWO of the following are included in the value of inventory under marginal costing.

• Fixed production overheads

• Period costs

• Prime costs

• Variable production overhead

A department has materials which are no longer required in production and have been returned to Inventory. What are the TWO journal entries required to record this transaction ?

• Dr Inventory

• Dr production

• Cr Inventory

• Cr Production

During November, 20,800kg of flour was issued to the production of basic cupcakes, with a value of £51,168

Identify the correct journal to record the issue.

• Dr Inventory Cr Bank

• Dr Bank Cr Inventory

• Dr Production

  Cr Inventory

• Dr Inventory

  Cr Production

Contribution equals fixed costs less variable costs

• True

• False

Contribution can be calculated per unit and as a total figure

• True

• False

Total cost increases in an equal proportion as the volume of output increases

• Fixed cost

• Semi-variable cost

• Stepped cost

• Variable cost

Total cost has an element of both fixed and variable cost

• Fixed cost

• Semi-variable cost

• Stepped cost

• Variable cost

The standard material price of a product can be established by multiplying the ​ (a)  

by the ​ ​ (b)  

• price per metre
• rate per hour
• quantity of material per unit
• total number of units
• number of labour hours per unit