Free Printable MA (New Mock-4, 23)

1.

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

a)

b & c

b)

b&d

c)

c & d

d)

a & d

2.

Which of the following is the definition of flexible budgeting?

a)

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

b)

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

c)

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

d)

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

3.

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)

a) & c)

b)

b) & c)

c)

b) & a)

d)

b) & d)

4.

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

a)

1) Strategic

2) Strategic

b)

1) operation

2) operation

c)

1) Strategic

2) operation

d)

1) Strategic

2) Strategic

5.

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)

a & y

b)

y & b

c)

a & c

d)

y & x

6.

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 ?

a)

Installation cost of the machine

b)

Depreciation on the new machine

c)

The cost of the Feasibility study

d)

The finance director’s current salary

7.

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)

A= 72000/60000= 120.0 %

b)

B=75000/60000= 125.0 %

c)

C=74000/61000=96.0%

d)

D=75000/50000= 80.0%

8.

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)?

a)

$=1.36

b)

$=1.38

c)

$=1.35

d)

$=1.32

9.

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

a)

Number of new products sold by the division

b)

Market share of division competitors

c)

Machine operating efficiency rates at a key divisional factory

d)

Total annual profit of the division

10.

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?

a)

$368

b)

$336

c)

$338

d)

$160

11.

For each of the following indicate which category of data source the activity falls into.

1. Placing an order on –line shopping site

2. Product reviews by a video blogger on a social media platform

Machine Data Transactional Data Human Data

a)

1 . Machine Data
2 . Human Data

b)

1 . Machine Data
2.Transactional Data

c)

1 . Transactional Data
2 . Human Data

d)

1 . Human Data
2 . Machine Data

12.

Overheads in the production cost centre are absorbed on the basis of direct hours. Actual direct labour hours in the period were 42,520 and overheads were over – absorbed by $4.484.

What was the overhead absorbed rate?

a)

$ 4.34

b)

$ 4.01

c)

$ 4.12

d)

$ 4.22

13.

Overheads in the production cost centre are absorbed on the basis of direct hours. Actual direct labour hours in the period were 42,520 and overheads were over – absorbed by $4.484.

What was the overhead absorbed rate?

a)

$ 5.40

b)

$ 5.00

c)

$ 8.60

d)

$ 14.00

14.

Which TWO of the following are features of top- down budgeting?

a) Goal congruence is most likely to be achieved

b) Budget holders are unlikely to be motivated to achieve the targets set

c) Budgetary slack (budgetary bias) may result in targets that are easier to achieve

Lower level managers do not participate in the budget setting process

a)

b) & d)

b)

a) & d)

c)

a) & b)

d)

b) & c)

15.

Which two of the following are cost reduction techniques?

a) Marginal costing

b) Value engineering

c) Participative budgeting

d) Work study

a)

b) & c)

b)

a) & c)

c)

b) & d)

d)

a) & d)

16.

Elephant Co makes bespoke items of wooden furniture which it sells to shops throughout its home country. It sources the wood from forests in its home country Elephant Co only employs experienced craft workers in production. Who are paid a premium for their skills.

Which one of the following policies by government will have an impact on operating costs that the company should consider when measuring performance?

a)

Increase in import tax on wood

b)

Increase in corporation taxation

c)

Increase in subsidies for employing school leavers in production

d)

Increase in energy tax

17.

Budgeted net profit using absorption costing would be $6,700 for a period with each unit of inventory valued at $10. Net profit using marginal costing for the same period would be $5,500 with inventory valued at $6 per unit.

What would be the change in the level of inventory during the period ?

a)

-300 units

b)

-120 units

c)

+300 units

d)

+120 units

18.

Taurns Co uses a costing system which separates total overheads costs into cost pools and charges overheads to products by allocating the costs on the basis of cost drivers.

Which of the following costing system is used by Taurns Co?

a)

Activity based costing

b)

Absorption costing

c)

Target costing

d)

Life cycle costing

19.

Which Two of the following statements about time series analysis are correct ?

a)

There are only two components of time sense analysis trend and seasonal variations

b)

Seasonal variations can be ignored if the analysis is within a time period of a year

c)

The line of best fit can be used to estimate the trend if the time series is approximately linear

d)

A time series is a set of observations taken at equal time intervals.

20.

Are the following statements with regard to standard costing true or false ?

a. It can be used in the control of revenues

b. It can be in the control of costs

a)

a - True

b - True

b)

a - True

b - False

c)

a - False

b - False

d)

a - False

b - True

21.

The following data relate to the manufacture of a product last period.

Input 2000 units at a total cost of $7,200

Expected Output – 1800 units

Actual Output – 1 680 units

There are no opening & Closing inventories.

What is the cost of the abnormal loss in the process account for last period?

a)

$480

b)

$432

c)

$1152

d)

$1280

22.

In month for a manufacturing company has an adverse labour rate variance and adverse labour efficiency variance.

Which Two of the following statements contain actions that could simultaneously help to eliminate BOTH of the variances?

a)

Increase the standard rate and standard time

b)

Delay the annual agreed pay rise until month 6

c)

Stop using inexperienced and expensive temporary labour

d)

Use less skilled staff with a lower hourly pay rate

23.

Castle Co uses a standard marginal costing system. The accountant has been asked to prepare a report to reconcile budgeted and actual profit.

Which Two of the following will appear in the report?

a) Sales volume variance valued at standard profit margin

b) Sales price variance

c) Fixed overhead expenditure variance

d) Fixed overhead volume variance

a)

a) & d)

b)

b) & d)

c)

b) & c)

d)

a) & b)

24.

The following data relates to the manufactures of one unit of a product using two materials (M1 and M2)

M1 – 5kg. at $5 per kg.

M2 – 4kg. at $4 per kg.

Production for period four is budgeted to be 500 units. No closing inventory of materials M1 and M2 is required at the end of period four. Opening inventory at the beginning of period four is 400 kg of M1 and 500 kg of M2.

What is the cost of material M1 and material M2 purchased in period four?

a)

$10,500 for M1 and $ 6,400 for M2

b)

$12,500 for M1 and $ 6,400 for M2

c)

$10,500 for M1 and $ 6,000 for M2

d)

$12,500 for M1 and $ 6,000 for M2

25.

In relation to stages in the budgeting process which of the following should be carried out BEFORE preparing the master budget?
1) Identifying the principal budget factor

2)Communicate detailed and agreed budgets to managers
3)Prepare functional budgets

a)

2 and 3 only

b)

1,2 and 3

c)

1 and 3 only

d)

1 and 2 only

26.

Which of the following are features of cost accounting but not financial accounting?

a)

Cost Variance

b)

Overhead absorption

c)

Periodic stocktaking

d)

Control accounts

27.

A film uses flexible budgets. The fixed budget and actual result for last period were as follows :

Fixed budget Actual budget

Production(units) 6,000 5,800

Direct labour cost $60,000 $57,000

What was the labour total variance for the last period?

a)

$3,000 Favorable

b)

$3,000 Adverse

c)

$1,000 Favorable

d)

$1,000 Adverse

28.

In relation o recording inventory movements, Which of the following items of information would be found on a bin card?

i. Quality of goods received

ii. Units of inventories held

iii. Unit price

iv. Inventory valuation

a)

1 only

b)

1 and 2

c)

2 and 4

d)

3 and 4

29.

The management accountant of a manufacturing business has calculated the following performance indicators using data concerning direct labour hours.

Capacity Ratio .............83. 6 %

Efficiency Ratio.......104.8 %
What is the Production volume ratio (to one decimal place) ?

…………… %

a)

77.6%

b)

87.6 %

c)

88 %

d)

87 %

30.

?Overheads are recovered using an overhead absorption rate of 250% prime cost.

What should be recovered as WIP for Job C229 as at the end of the period ?

a)

$34,750

b)

$26,050

c)

$45,500

d)

$30,450

31.

In a computer spreadsheet :

Cells A1, A2, A3, A4 and A5 contain values 8, 7, 6,3 and respectively.

Cell B1 contains the formula =SUM(A1:A5)

Cell B2 contains the formula =Average(A1:A5)

Cell B3 contains the formula =Max(A1:A5)

What will be the values in cells B1,B2 and B3 respectively?

a)

9, A3, A4

b)

25, 5, 7

c)

25, 6, 3`

d)

9, 6, 7

32.

Libra University applies for funding from three sources for the research of new technology for electric cars. The probability of receiving funding from each sources is shown in the table below. The university is able to accept funding from the project from more than one donor.

What would be the expected value of the funding received (to the nearest $”000)?

$................

a)

700000

b)

725000

c)

625000

d)

800000

33.

A film uses predetermined hourly overhead absorption rates. The following information relates to the machining cost centre for last month :

What were the actual machine hours last month?

a)

8,110

b)

8, 610

c)

11,890

d)

12,390

34.

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 labour hours. In a recent period when there was no opening inventory of finished goods. 20,000 units were produced using 1,00,000 labour hours. 18,000 units were sold. The actual profit was $4, 64,000.

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

a)

$5, 60,000

b)

$3, 68,000

c)

$4,40,000

d)

$3,44,000

35.

Contrast Co runs a tourist train service between two towns. The total distance for a return journey is 30 km (15 km each way) and is expected to tale 1 hour.

Details of the budget revenue and costs of the service are as follows :

(1) On average 20 adults & 30 children purchase return ticket for each journey. These cost $32 for an adults & $16 for a child. 15 adults purchase one way tickets on the outward journey. These cost 60 % of the adult return ticket. No one way tickets are purchased on the return journey.

(2) Fuel cost $2.80 per liter. Fuel is used at a rate of 12 liters per km if the train travels at an average speed of 20 km per hour. Fuel usage increase to 16 liters per km if the average speed increases to 30 km per hour. The speed on the 15 km outward journey averages 20 km per hour, but the speed on the 15 km homeward journey is 30 km per hour.

(3) The train operating staff are a driver, who paid $16 per hour, and a fireman who is paid $12 per hour. They are paid for the expected journey time plus an allowance of two hours per return journey to cover waiting time.

(4) Two catering staff sell food & drinks to passenger. They each receive a fixed payment of $20 per return journey.

(5) Fixed operating costs excluding staff costs amount to $320,000 per year over which 2000 return journeys are budgeted.

Calculate the following budgeted costs and revenues for Contrast Co.

1 . Total revenue for return and single tickets $............

2 . The cost of the train operating staff per return journey $............

(driver and fireman)

a)

$ 1666000

$ 168000

b)

$ 1856000

$ 168000

c)

$ 1850000

$ 160000

d)

$ 1756000

$ 200000

36.