FM015 PART C SET 3

1. Which of the following statements about predetermined overhead absorption rates are true?

• 1 and 2 only
• 1 and 3 only
• 2 and 3 only
• All of them

2. Last year, Bryan Air carried excess baggage of 250,000 kg over a distance of 7,500 km at a cost of $3,750,000 for the extra fuel. What is the cost per kg-km?

• $0.002 per kg-km
• $2.00 per kg-km
• $33.33 per kg-km
• $500.00 per kg-km

3. The occupancy rates for a hotel over a two year periods are shown below:

• A The occupancy rate for Year 1 is higher than Year 2 for quarters 3 and 4
• B The occupancy rate for Year 2 is higher than Year 1 for quarters 1, 2 and 3
• C The occupancy rate for Year 2 is higher than Year 1 for all four quaters
• D The occupancy rate for Year 1 is higher than Year 2 for quarters 1, 2 and 3

4. E8 operates a marginal costing system. For the forthcoming year, variable costs are budgeted to be 60% of sales value and fixed costs are budgeted to be 10% of sales value. If E8 were to increase the selling price by 10% and all other costs and production and sales volumes were to remain the same, what would be the effect on E’s contribution?

• A decrease of 2%
• An increase of 5%
• An increase of 10%
• An increase of 25%

5. The following graph shows the wages earned by an employee during a single day:

• Piecework with a guaranteed minimum daily wage
• A straight piece rate scheme
• A flat rate per hour with with a premium for overtime
• A differential piece rate scheme

6. A company manufactures Chemical X, in a single process. At the start of the month there was no work in progress. During the month 300 litres of raw material were input into the process at a total cost of $6,000. Conversion costs during the month amounted to $4,500. At the end of the month 250 litres of Chemical X were transferred to finished goods inventory. The remaining work in progress was 100% complete with respect to materials and 50% complete with respect to conversion costs. There were no losses in the process.

7. Two products QW and TC are created from a joint process. QW can be sold immediately after split-off. TC requires further processing before it is in a saleable condition. There are no opening inventories and no work in progress. The following data are available for last period:

• $36,400
• $37,520
• $40,264
• $45,181

8. Varo produces various inks at its Normanton factory. Production datails for Process 1 are as follows:

• 1,250
• 1,000
• 850
• 680

9. In times of rising prices, the valuation of inventory using the First-In-First-Out method, as opposed to the Weighted Average Cost method, will result in which ONE of the following combinations?

• A
• B
• C
• D

10. A finishing department absorbs production overheads using a direct labour hour basis. Budgeted production overheads for the year just ended were $268,800 for the department, and actual production overhead costs were $245,600. If actual labour hours worked were 45,000 and production overheads were over absorbed by $6,400, what was the overhead absorption rate per labour hour?

• $5.32
• $5.60
• $5.83
• $6.12