Questions and Answers of Cost And Management Accounting An Introduction

Shown below is next year's budget for the Forming and Finishing departments of Tooton Ltd. The departme nts manufacture three diff erent types of component wh ich are incorporated into the outpu t of
Mahler Products has two manufacturing departments each producing a single standardised product. The data for unit cost and selling price of these products are as follows :The factory cost figures are
1. Shown below is an extract from next year's budget for a company manufacturing two products in two production departments.Hourly wage rates for direct operatives are budgeted at £4 per hour in
Juliet Miles has savings of £10,000 and she has decided to open a retailing business . The predicted sales and purchases for the first six months areShe predicts that 10% of the sales will be for
Kerryblue Ltd is a company manufacturing two products using one type of material and one grade of labour. Shown below is an extract from the company's working papers for the next period's budgetThe
Clothar(a) Clothar pic manufactures one standard product and in common with other companies in the industry is suffering from the current depression in the market. Currently it is operating at a
(a) At the end of December the management accountant has in front of him the company's budgeted profit and loss account figures for each of the months from the following January to June. The July and
A company produces a product which has a standard variable production cost of £8 per unit made up as follows :Fixed manufacturing costs are treated as period costs . The following information is
(a) Discuss the factors which should be considered when setting the standard labour cost of a product.(b) Settah Ltd manufactures two different types of component in two production departments, a
A company has the following budget for a financial period:The actual variable overheads for the period are £1.520 and 1,400 actual hours are worked to produce 1.600 standard hours of production.
Chemico Ltd manufactures and distributes an industrial cleaning compound known as Splodge. the standard direct costs per cylinder of whi ch are:The budgeted monthly production/sales is 500 cylinders
Standard Company A company manufactures a number of products, data for one of wh ich are shown below:Standard costYou are required to calculate the :(a) actual output;(b) actual price per unit of
Describe how the three sales margin variances are calculated.
What are the three variable overhead variances. and how are they calculated?
For a specified level of production. the standard usage of materials is 25 metres and the standard price is £3.00 per metre . The actual usage is 23 metres and the actual price £3.50 per metre .
The workforce of a company takes 460 actual hours to achieve 500 standard hours of production . The standard wage rate is £4.50 per hour and the actual rate paid is £5.00 per hour. Calculate the
Explain the term variance analysis, and its use.
What are the advantages of standard costing?
What matters do management need to consider when sett ing a production budget?
What are the advantages of flexible budgets?
Discuss the relative advantages of accounting systems based upon full absorption and marginal cost ing principles, and provide a simplified example for each system of the likely format of an income
What are the advantages of absorption costing?
Explain the impact on profit of increases in stock at the end of a period under marginal costing compared to that under marginal costing.
What are the main features of marginal costing and absorption costing?
Criticially examine the assumptions underlying traditional break-even analysis, and consider the extent to whi ch such analyses may be used effectively.
A company has fixed costs of £50,000 and produces one product with a selling price of £12.00 each and variable costs of £7.00 per unit. The maximum factory capacity is 20,000 units and it
A company makes a product with a selling price of £5.00 per unit and variable costs of £3.00 per unit. The fixed costs for the period are £10,000. What must be the sales value for the company to
What is the purpose of cost and management accounting?
Briefly describe the different costing methods used in the modern business.
How does cost and management accounting contribute to the other functions of management?
What are the main differences betwe en cost accounting and management accounting?
Explain what is meant by the following:(a) Budgetary control.(b) Absorption costing.(e) Contract costing.(d) Specific order costing.
What are the main differences between financial accounting and cost and management accounting?
A friend. who is an engineer. owns a small factory and has relied on the annual accounts to show him the financial state of the company. You have suggested that he employs a Management Accountant.
A colleague claims that cost and management accounting is of value only in a manufacturing environment. Describe in which other organisations it would be useful. and give some examples to illustrate
From the following list identify which activities are concerned mainly with cost and management accounting and which are concerned with financial accounting:(a) Drawing up the balance sheet of a
Autovee Ltd is a small company manufacturing a range of motor vehicle components . The company sells approximately one-third of its production direct to motor vehicle manufacturers, the remaining
A small company manufacturing garden furniture has drawn up a list of the costs it has incurred over the last 6 months. They are as followsRearrange this list to show :(a) The total cost for
What is meant by perpetual inventory?
What are the advantages of continuous stocktaking?
What factors should be taken into account when deciding the predetermined maximum level of an item of stock?
From the following data. compute the value of 100 units of closing stock under both the FIFO and LIFO methods:1 June Received 200 kilos at £15.00 per kilo 2 June Issued 150 kilos 6 June Received 200
From the following stock records. value the stock held at the end of January using FIFO. LIFO. Replacement and Weighted average price methods .The replacement price on 31 January is £2.60. Purchase
(a) Outline a suitable system for collecting the material cost of each job in a manufacturing company employing historic job costing .(b) Zeppo Ltd manufactures a range of products from one basic
At the beginning of November the opening stock of a particular component was 440 units, total value £2,200.During the month the following supplies were received:There is a standard carriage charge
What are the advantages and disadvantages of piecework schemes?
How are job cards used within a company?
A company operates a piecework scheme where the hourly rate is £3.00 per hour and the agreed rate of production is 600 units per hour. In an 8 hour day a worker produces 7,200 units . Calculate the
What are the advantages and disadvantages of group incentive schemes?
The management of Fessil Ltd is reviewing alternative methods of remunerating its factory workers. At present all such employees are paid on a time rate basis and one suggest ion being considered is
A company is operating an integrated accounting system and at the beginning of a financial period the opening balances are:During the financial period the following transactions take place:Notes:(a)
A company operat ing an interlocking system has the following balances at the beginning of a financial period:The following information is available for the period :Administration and selling
3. CD Ltd, a company engaged in the manufacture of specialist marine engines, operates an historic job cost accounting system which is not integrated with the financial accounts.At the beginning of
4. Below are incomplete cost accounts for a period for which final accounts are to be prepared:The closing stock balances are:Stores ledger £12,000 Job ledger £10,000 80% of the production wages
4. Construct an overhead analysis from the following data to find the total overheads of the two production departments. Use the elimination method to apport ion the service departments overheads.
5. SP SP pic is engaged mainly in retailing fashion and leisure wear, camping equipment and protective clothing. The company's head office and warehouse are located on the east coast and the 50 shops
6. Factory(a) In a factory with four Production Departments and two Service Departments, the operating costs for the month of October were as shown below. The cost of running the canteen is
What is a 'blanket' or factory wide overhead absorption rate, and what are its disadvantages?
Describe three different overhead absorption rates, and the ir respective disadvantages and disadvantages.
What are the arguments in favour of using predetermined overhead absorp tion rates?
Kensington pic has two departments and the budget for the year is :A job No. 241Z is accepted wi th the following direct costs :In Dept A 20 machine hours will be required for the job , but none will
Write a short essay on the subject 'Overhead Absorption' , paying particular attention to:(a) the mean ing of the expres sion ;(b) the basic information required;(e) the methods commonly used ;
A light engineering company calculates its production overhead absorption rate at the end of each month by dividing the total actual overheads incurred by the total number of units produced in that
Bookdon Pic manufactures three products in two production departments. a Machine Shop and a Fitting Section; it also has two Service Departments. a canteen and a machine maintenance section. Shown
SM Ltd makes two products , Exe and Wye. For product costing purposes a single cost centre overhead rate of £3.40 per hour is used based on budgeted production overhead of £680,000 and 200,000
A company is preparing its production overhead budgets and determining the apportionm ent of these overheads to products.Cost centre expenses and related information have been budgeted as
A company has established the following annual budgets :A job has been accepted which has the following direct costs :Direct materials - 18 kilos at £5.10 per kilo Direct wages - Dept A1 18 hours at
Process plant division The process plant division of a group of companies has built a food packaging machine to a customer's requirements . A price of £49,000 has been quoted with the intention of
A company, with no idle capacity, can manufacture a component with variable costs of £5.00 per unit. To purchase the unit from an outside supplier the price would be £6.80 per unit. To manufacture
What is meant by 'opportunity cost'?
Describe the four different ways of ranking products , and the circumstances in which each one should be used.
(a) Explain what you understand by the term 'cost behaviour ', why it is important in the context of cost and management accounting, and what behaviour patterns may be encountered .(b) What factors
Seth pic manufactures a product with a selling price of £5.00 per unit. The variable costs are £2.00 for direct materials, £1.00 for direct labour and £1.00 for variable overheads . The fixed
What are the main management decisions which can be helped by the use of marginal costing?
Define variable costs and fixed costs , giving four examples of each.
Everymans Foods Pic has recently acquired a factory which processes soya beans. The soya beans pass through a series of processes, including cleaning, roasting and grinding to a soya powder.In the
(a) Outline the characteristics and purpose of :(il Job costing;(iii Process costing .(bl Explain carefully how material waste, or any other losses in production, should be treated in a process
At the end of a period for a particular process the total costs incurred are :materials £20,000 , labour £25,000 , overheads £15,000. At the end of the period there are 12,000 completed units and
Explain the different accounting treatments for normal and abnormal losses.
Describe the two different methods for valuing closing work in progress.
What are the main characteristics of a process costing system?
Explain the different methods which can be used for charging plant and machinery to a contract.
What is meant by:(a) an architect's certificate ;(b) retention monies?
2. Explain, with examples, why differences arise between the profits in the financial and cost accounts in an interlocking system.
1. Explain the main differences between interlocking and integrated accounts.
(a) Define the terms 'cost centre' and 'cost unit' .(b) Distinguish between direct and indirect costs. and discuss the factors. which should influence whether a particular cost is treated as direct
Classification and coding of costs :(a) Distinguish between classification and coding of costs .(b) What are the major requirements for a practical coding system?
John Lesdon rents a workshop for £50 per week and pays heating costs of£15 per week. He has to pay insurance which costs £5 per week . John makes soft toys all of the same size and the costs for
List the elements of cost making up the factory cost. with a brief explanation of each one.
Classify costs by function giving specific examples.
Explain the difference between a cost which is fixed and a cost which is variable.
What are the characteristics of a good coding system?
Describe the elements of cost.
Differentiate between direct and indirect costs .
What is meant by:(a) a cost unit;(b) a cost centre?
Draw up an example of a job cost card to be used for relatively small jobs.
Describe what is meant by batch costing.
What are the main stages in job costing?
3. Describe the THREE methods whereby Service Department overheads can be apportioned when there are reciprocal services .
2. What are the stages in constructing an overhead analysis?

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