A domestic appliance retailer with multiple outlets sells a popular toaster known as the Autocrisp 2000, for which the following information is available:

Average sales 75 per day

Maximum sales 95 per day

Minimum sales 50 per day

Lead time 12-18 days

Reorder quantity 1,750

Based on the data above, what is the maximum inventory level?

Which of the following is correct with regard to inventories?

(i) Stock-outs arise when too little inventory is held.

(ii) Safety inventories are the level of units maintained in case there is unexpected demand.

(iii) A re-order level can be established by looking at the maximum usage and the maximum leadtime.

What is the economic batch quantity used to establish?

Optimal

The demand for a product is 12,500 units for a three month period. Each unit of product has a purchase price of $15 and ordering costs are $20 per order placed. The annual holding cost of one unit of product is 10% of its purchase price.

What is the Economic Order Quantity (to the nearest unit)?

A company determines its order quantity for a raw material by using the Economic Order Quantity (EOQ) model.

What would be the effects on the EOQ and the total annual holding cost of a decrease in the cost of ordering a batch of raw material?

EOQ & Total annual holding cost

Data relating to a particular stores item are as follows:

Average daily usage 400 units

Maximum daily usage 520 units

Minimum daily usage 180 units

Lead time for replenishment of inventory 10 to 15 days

Reorder quantity 8,000 units

What is the reorder level (in units) which avoids stockouts (running out of inventory)?

The material stores control account for a company for March looks like this:

Material stores control account (all in $)

Balance b/d 12,000 Work in progress 40,000

Suppliers 49,000 Overhead control 12,000

Work in progress 18,000 Balance c/d 27,000

79,000 79,000 balance b/d 27,000

Which of the following statements are correct?

(i) Issues of direct materials during March were $18,000

(ii) Issues of direct materials during March were $40,000

(iii) Issues of indirect materials during March were $12,000

(iv) Purchases of materials during March were $49,000

A manufacturing company uses 25,000 components at an even rate during a year. Each order placed with the supplier of the components is for 2,000 components, which is the economic order quantity. The company holds a buffer inventory of 500 components. The annual cost of holding one component in inventory is $2. What is the total annual cost of holding inventory of the component?

For a particular component, the re-order quantity is 6,000 units and the average inventory holding is 3,400 units. Using the list, select the level of safety inventory (in whole units).

The following data relates to component L512:

Ordering costs $100 per order

Inventory holding costs $8 per unit per year

Annual demand 1,225 units

What is the economic order quantity (to the nearest whole unit)?

ACB Co gradually receives its re-supply of inventory at a rate of 10,000 units a week. Other information is available as follows.

Weekly demand 5,000 units

Set-up costs for each production run $125

Weekly cost of holding one unit $0.0025

What is the economic production run?

A company uses an item of inventory as follows.

Purchase price $25 per unit

Annual demand 1,800 units

Ordering cost $32

Annual holding cost $4.50 per unit

EOQ 160 units

What is the minimum total cost assuming a discount of 2% applies to the purchase price and to holding costs on orders of 300 and over?

G Co makes the following purchases and sales.

1 January Purchases 4,000 units for $10,000

31 January Purchases 1,000 units for $2,000

15 February Sales 3,000 units for $13,000

28 February Purchases 1,500 units for $3,750

14 March Sales 500 units for $1,200

At 31 March which of the following closing inventory valuations using FIFO is correct?

G Co makes the following purchases and sales.

1 January Purchases 4,000 units for $10,000

31 January Purchases 1,000 units for $2,000

15 February Sales 3,000 units for $13,000

28 February Purchases 1,500 units for $3,750

14 March Sales 500 units for $1,200

At 31 March which of the following closing inventory valuations using LIFO is correct?

A wholesaler had opening inventory of 300 units of product Emm valued at $25 per unit at the beginning of January. The following receipts and sales were recorded during January.

Date                2 Jan    12 Jan   21 Jan   29 Jan

Issues               250      400        200        75

The purchase cost of receipts was $25.75 per unit. Using a weighted average method of valuation, calculate the value of closing inventory at the end of January.

Budgeted and actual production data for the year that has just ended are as follows.

Total machine hours worked in the period amounted to 29,000 hours.

What was the capacity ratio in the year, as a percentage to one decimal place?

Budgeted and actual production data for the year that has just ended are as follows.

Total machine hours worked in the period amounted to 29,000 hours.

What was the efficiency ratio in the year, as a percentage to one decimal place?

The following data relate to work in the finishing department of a certain factory. Normal working day - 7 hours

Basic rate of pay per hour - $5

Standard time allowed to produce - 1 unit 4 minutes

Premium bonus payable at the basic rate - 60% of time saved

On a particular day one employee finishes 180 units. What is his gross pay for the day?

An employee is paid on a piecework basis. The basis of the piecework scheme is as follows:

1 to 100 units – $0.20 per unit

101 to 200 units – $0.30 per unit

201 to 299 units – $0.40 per unit

with only the additional units qualifying for the higher rates. Rejected units do not qualify for payment. During a particular day the employee produced 210 units of which 17 were rejected as faulty.

What did the employee earn for their day's work?

Employee A is a carpenter and normally works 36 hours per week. The standard rate of pay is $3.60 per hour. A premium of 50% of the basic hourly rate is paid for all overtime hours worked. During the last week of October, Employee A worked for 42 hours. The overtime hours worked were for the following reasons:

Machine breakdown: 4 hours

To complete a special job at the request of a customer: 2 hours

How much of Employee A's earnings for the last week of October would have been treated as direct wages?

Which TWO of the following statements about group bonus schemes are true?

(1) Group bonus schemes are appropriate when increased output depends on a number of people all making extra effort

(2) With a group bonus scheme, it is easier to award each individual's performance

(3) Non-production employees can be rewarded as part of a group incentive scheme

(4) Compared with individual schemes, group bonus schemes are difficult to administer

X Co has recorded the following wages costs for direct production workers for November.

The overtime was not worked for any specific job.

What are the accounting entries for these wages costs?

A company had 30 direct production employees at the beginning of last year and 20 direct production employees at the end of the year. During the year, a total of 15 direct production employees had left the company to work for a local competitor. What is the labour turnover rate for last year?

Jane works as a member of a three-person team in the assembly department of a factory. The team is rewarded by a group bonus scheme whereby the team leader receives 40 per cent of any bonus earned by the team, and the remaining bonus is shared evenly between Jane and the other team member. Details of output for one day are given below.

Hours worked by team - 8 hours

Team production achieved - 80 units

Standard time allowed to produce one unit - 9 minutes

Group bonus payable at $6 per hour - 70% of time saved

What is the bonus element of Jane's pay for this particular day?

In a typical cost ledger, what is the double entry for indirect labour cost incurred?

A company has 4,000 staff at the start of 20X6 and at the end this had reduced to 3,800 due to redundancies being made. 210 staff took voluntary redundancy which was 10 more than the company had anticipated and these 10 employees were replaced.

What is the labour turnover rate per year (to two decimal places)?

The following extract of information is available concerning the four cost centres of EG Co.

The overhead cost of the canteen is to be re-apportioned to the production cost centres on the basis of the number of employees in each production cost centre. After the re-apportionment, what is the total overhead cost of the packing department, to the nearest $?

Budgeted information relating to two departments in a company for the next period is as follows.

Individual direct labour employees within each department earn differing rates of pay, according to their skills, grade and experience.

What is the most appropriate production overhead absorption rate for department 1?

Budgeted information relating to two departments in a company for the next period is as follows.

Individual direct labour employees within each department earn differing rates of pay, according to their skills, grade and experience.

What is the most appropriate production overhead absorption rate for department 2?

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

(1) Using a predetermined absorption rate avoids fluctuations in unit costs caused by abnormally high or low overhead expenditure or activity levels

(2) Using a predetermined absorption rate offers the administrative convenience of being able to record full production costs sooner

(3) Using a predetermined absorption rate avoids problems of under/over absorption of overheads because a constant overhead rate is available

(4) Using a predetermined absorption rate avoids the problems associated with choosing an appropriate absorption base

Over-absorbed overheads occur when

Overheads are absorbed using a rate per unit, based on budgeted output and expenditure.

A company has the following actual and budgeted data for year 4.

What was the fixed production overhead absorbed amount during year 4?

Overheads are absorbed using a rate per unit, based on budgeted output and expenditure.

A company has the following actual and budgeted data for year 4.

Using the list select how much the fixed production overhead was under or over absorbed.

Which of the following would be the most appropriate basis for apportioning machinery insurance costs to cost centres within a factory?

Factory overheads can be absorbed by which of the following methods?

(i) Direct labour hours

(ii) Machine hours

(iii) As a percentage of prime cost

(iv) $x per unit

The production overhead control account for R Co at the end of the period looks like this.

Which TWO of the following statements are correct?

(1) Indirect material issued from inventory was $22,800

(2) Overhead absorbed during the period was $210,000

(3) Overhead for the period was over absorbed by $8,400

(4) Indirect wages costs incurred were $180,400

Which of the following is correct when considering the allocation, apportionment and reapportionment of overheads in an absorption costing situation?

A company has over-absorbed fixed production overheads for the period by $6,000. The fixed production overhead absorption rate was $8 per unit and is based on the normal level of activity of 5,000 units. Actual production was 4,500 units.

What was the actual fixed production overheads incurred for the period?

A company manufacturers two products, X and Y, in a factory divided into two production cost centres, Primary and Finishing.

The following budgeted data are available:

What is the budgeted fixed overhead cost per unit for product Y?

A company uses an overhead absorption rate of $3.50 per machine our, based on 32,000 budgeted machine hours for the period. During the same period the actual total overhead expenditure amounted to $108,875 and 30,000 machine hours were recorded on actual production.

By how much was the total overhead under or over absorbed for the period?

A factory consists of two production cost centres (P and Q) and two service cost centres (X and Y). The total allocated and apportioned overhead for each is as follows:

After the reapportionment of service cost centre costs has been carried out using a method that fully recognises the reciprocal service arrangements in the factory, what is the total overhead for production cost centre P?

The following data is available for a paint department for the latest period. Budgeted production overhead $150,000

Actual production overhead $150,000

Budgeted machine hours 60,000

Actual machine hours 55,000

Which of the following statements is correct?

Actual overheads $496,980

Actual machine hours 16,566

Budgeted overheads $475,200

Based on the data above, and assuming that the budgeted overhead absorption rate was $32 per hour, what were the budgeted number of hours (to the nearest hour) budgeted to be worked?

Budgeted overheads $690,480

Budgeted machine hours 15,344

Actual machine hours 14,128

Actual overheads $679,550

Based on the data above, what is the machine hour absorption rate (to the nearest

$)?

A company absorbs overheads on machine hours. In a period, actual machine hours were 22,435, actual overheads were $496,500 and there was over absorption of $64,375.

What was the budgeted overhead absorption rate per machine hour (to the nearest $)?

A company absorbs fixed production overheads in one of its departments on the basis of machine hours. There were 100,000 budgeted machine hours for the forthcoming period. The fixed production overhead absorption rate was $2.50 per machine hour.

During the period, the following actual results were recorded:

Standard machine hours 110,000

Fixed production overheads $300,000

What was the fixed production overhead under/over absorption amount?

Consider the following statements, regarding the reapportionment of service cost centre overheads to production cost centres, where reciprocal services exist.

Which TWO statements are correct?

(1) The direct method results in costs being reapportioned between service cost centres

(2) If the direct method is used, the order in which the service cost centre overheads are reapportioned is irrelevant

(3) The step down method results in costs being reapportioned between service cost centres

(4) If the step down method is used, the order in which the service cost centre overheads are reapportioned is irrelevant

A company uses standard absorption costing to value inventory. Its fixed overhead absorption rate is $12 per labour hour and each unit of production should take four hours. In a recent period where there was no opening inventory of finished goods, 20,000 units were produced using 100,000 labour hours. 18,000 units were sold. The actual profit was $464,000.

What profit would have been earned under a standard marginal costing system?

A company uses a blanket overhead absorption rate of $5 per direct labour hour. Actual overhead expenditure in a period was as budgeted.

Which of the following statements is true?