Which ONE of the following is a characteristic of FINANCIAL ACCOUNTING?

• Purpose is to provide info for managers

• Based on future events

• Purpose is to provide info for owners/investors

• Timing/content of reports is decided by managers

Which ONE is a characteristic of MANAGEMENT ACCOUNTING?

• Complies with company law and accounting

• Based on past events

• Provides info for people outside of the business

• Based on future events

Which one of the following is used when classifying costs by NATURE?

• Materials, Labour, Overheads

• Direct, Indirect

• Production, Admin, Selling & distribution, finance

Which one of the following is used when classifying costs by ELEMENT?

• Materials, Labour, Overheads

• Direct, Indirect

• Production, Admin, Selling & distribution, finance

Which one of the following is used when classifying costs by FUNCTION?

• Materials, Labour, Overheads

• Direct, Indirect

• Production, Admin, Selling & distribution, finance

A cost centre is a section of a business where costs can be charged, income identified and profit calculated

• True

• False

The formula for absorption of overheads (units of output method) is:

• Budgeted overheads/budgeted units of output

• Actual overheads/actual units of output

• Budgeted overheads/budgeted labour hours

• Budgeted overheads/budgeted machine hours

What absorption method would a labour intensive business use?

• Budgeted overheads/budgeted units of output

• Actual overheads/actual units of output

• Budgeted overheads/budgeted labour hours

• Budgeted overheads/budgeted machine hours

A factory has £153,000 of budgeted overheads and £12,750 of machine hours. What is the overhead absorption rate using machine hours method?

• 1,950,750,000

• 153,000

• 12.00

• 0.083

A factory has an overhead absorption rate of £3.00 per hr. One of the products in the factory takes 1hr 15 mins to make. What is the total overhead absorbed amount for the product?

• £4.15

• £2.60

• £3.75

• £3.45

Answer explanation

One hour (60 min) = £3.00 (100%)

Three quarters of an hour (45 min) = £2.25

(75% so times by 0.75)

Half an hour (30 min) = £1.50

(50% so times by 0.50)

Quarter of an hour (15 min) = £0.75

(25% so times by 0.25)