Questions and Answers of Cost And Management Accounting An Introduction

Preparation of a flexible budget performance report The Viking Smelting Company established a division, called the reclamation division, two years ago, to extract silver from jewellers’ waste
Preparation of flexible budgets Data Rivermede Ltd makes a single product called the Fasta. Last year, Steven Jones, the managing director of Rivermede Ltd, attended a course on budgetary control. As
Demand forecasts and preparation of flexible budgets Data Happy Holidays Ltd sells holidays to Xanadu through newspaper advertisements. Tourist are flown each week of the holiday season to Xanadu,
Responsibility centre performance reports Data Jim Smith has recently been appointed as the Head Teacher of Mayfield School in Midshire. The age of the pupils ranges from 11 years to 18 years. For
During a period 25 600 labour hours were worked at a standard cost of £7.50 per hour. The direct labour efficiency variance was £8250 adverse. How many standard hours were produced?A 1100. B 24500.
In a period, 11 280kg of material were used at a total standard cost of £46 248. The material usage variance was £492 adverse.What was the standard allowed weight of material for the period? AB C D
S plc has the following fixed overhead cost data for October:The values of over-absorption/under-absorption caused by volume and expenditure effects are: Budgeted cost 100 000 Actual cost 101 400
The following information relates to R ple for October: Bought 7800 kg of material R at a total cost of 16380 Stocks of material R increased by 440 kg Stocks of material R are valued using standard
P Limited has the following data relating to its budgeted sales for October:During October actual sales were 11000 units for a sales revenue of £99 000.P Limited uses an absorption costing
The following details have been extracted from a standard cost card of X ple:During October the budgeted production was 5000 units of product X and the actual production was 4650 units of product X.
In a period, 5792 units were made with a standard labour allowance of 6.5 hours per unit at £5 per hour. Actual wages were £6 per hour and there was an adverse efficiency variance of £36000.
J Limited uses a standard costing system and has the following data relating to one of its products:Budgeted sales for April 2000 were 800 units, but the actual sales were 850 units. The revenue
T ple uses a standard costing system, with its material stock account maintained at standard cost. The following details have been extracted from the standard cost card in respect of direct
Z ple uses a standard costing system and has the following labour cost standard in relation to one of its products: 4 hours of skilled labour @ 12.00 per hour = 48.00 per unit During April 2000, 3350
Flexible budgets and computation of labour and material variances(a) JB ple operates a standard marginal cost accounting system. Information relating to product J, which is made in one of the company
Computation of labour and material variances for a hotel You work as the assistant to the management accountant for a major hotel chain, Stately Hotels plc. The new manager of one of the largest
Computation of labour and material variances and reconciliation statements Malton Ltd operates a standard marginal costing system. As the recently appointed management accountant to Malton’s
Reconciliation of actual and budgeted profit (including overhead variances)A local restaurant has been examining the profitability of its set menu. At the beginning of the year the selling price was
Reconciliation of standard and actual cost for a variable costing system Data You are employed as the assistant management accountant in the group accountant’s office of Hampstead plc. Hampstead
Variance analysis and reconciliation of budgeted and actual profit The Perseus Co. Ltd, a medium-sized company, produces a single produce in its one overseas factory. For control purposes, a standard
Calculation of labour, material and overhead variances and reconciliation of budgeted and actual profit You are the management accountant of T ple. The following computer printout shows details
Discussion and calculation of overhead variances(a) Explain fully how the variances between actual and standard production overhead costs may be analysed, where overhead absorption is based upon
Calculation of labour, material and overhead variances The summary production budget of a factory with a single product for a four week period is as follows:Variable overheads are absorbed at a
Computation of variable overhead variances The following details have been extracted from the standard cost card for product X:During October 5450 units of the product were made compared to a
Material price and usage variances and calculation of material price and usage working backwards from variances AB Ltd manufactures a range of products. One of the products, Product M, requires the
Calculation of actual quantities working backwards from variances The following profit reconciliation statement summarizes the performance of one of SEW’s products for March.The budget for the same
Calculation of labour variances and actual material inputs working backwards from variances A company manufactures two components in one of its factories. Material A is one of several materials used
Comparison of absorption and marginal costing variances You have been provided with the following data for S ple for September:Required:(a) Calculate:(i) the standard contribution per unit;(ii) the
Accounting entries for a standard costing system A company uses Material Z in several of its manufacturing processes. On 1 November, 9000 kilos of the material were in stock. These materials cost
Calculation of labour, material and overhead variances plus appropriate accounting entries JC Limited produces and sells one product only, Product J, the standard cost for which is as follows for one
Calculation of variances and accounting entries for an interlocking standard costing system B Ltd manufactures a single product in one of its factories. Information relating to the month just ended
Accounting entries for a standard costing system Fischer Ltd manufactures a range of chess sets, and operates a standard costing system. Information relating to the ‘Spassky’ design for the month
Fixed costs are conventionally deemed to be:A constant per unit of output;B constant in total when production volume changes;C outside the control of management;D those unaffected by inflation.CIMA
Prepare a report for the Managing Director of your company explaining how costs may be classified by their behaviour, with particular reference to the effects both on total and on unit costs. Your
Describe three different methods of cost classification and explain the utility of each method.(11 marks)ACCA Level I Costing LO1
Cost classification used in costing include:(i) period costs(11) product costs(111) variable costs(iv) opportunity costs Required:Explain each of these classifications, with examples of the types of
(a) Describe the role of the cost accountant in a manufacturing organization. (8 marks)(b) Explain whether you agree with each of the following statements:(i) ‘All direct costs are variable.’(ii)
‘Costs may be classified in a variety of ways according to their nature and the information needs of management.’ Explain and discuss this statement, illustrating with examples of the
It is commonly suggested that a management accounting system should be capable of supplying different measures of cost for different purposes.You are required to set out the main types of purpose for
Opportunity cost and sunk cost are among the concepts of cost commonly discussed.You are required:(i) to define these terms precisely; (4 marks)(ii) to suggest for each of them situations in which
Distinguish between, and provide an illustration of:(i) ‘avoidable’ and ‘unavoidable’ costs;(11) ‘cost centres’ and ‘cost units’.(8 marks)ACCA Foundation Paper 3 LO1
For the relevant cost data in items (1)-(7), indicate which of the following is the best classification.(a) sunk cost (b) incremental cost(c) variable cost (d) fixed cost(e) semi-variable cost (f)
A company manufactures and retails clothing. You are required to group the costs which are listed below and numbered (1)(20) into the following classifications (each cost is intended to belong to
(a) ‘Discretionary costs are troublesome because managers usually find it difficult to separate and quantify the results of their use in the business, as compared with variable and other fixed
Analysis of costs by behaviour for decisionmaking The Northshire Hospital Trust operates two types of specialist X-ray scanning machines, XRI and XR50. Details for the next period are estimated as
Sunk and opportunity costs for decisionmaking Mrs Johnston has taken out a lease on a shop for a down payment of £5000. Additionally, the rent under the lease amounts to £5000 per annum. If the
Relevant costs and cost behaviour(a) Distinguish between ‘opportunity cost’ and‘out of pocket cost’ giving a numerical example of each using your own figures to support your answer. (6
Describe the essential requirements of an effective material stock control system. (17 marks)ACCA Level I Costing LO1
You have been given full responsibility for stocktaking of your company’s inventory and its subsequent valuation. There are approximately 4000 different categories of stock, ranging from small
The management of a company manufacturing electrical components is considering introducing an historic batch costing system into its factory.Required:(a) Outline the information and procedures
Stores pricing Z, Ltd had the following transactions in one of its raw materials during AprilYou are required to:(a) write up the stores ledger card using (i) FIFO and (ii) LIFO methods of stock
Stores pricing and calculation of EOQ(a) Atlas Limited Is having difficulty costing material X to the various jobs that it is used on. The material is bought in bulk and recent receipts and issues
Stores pricing and calculation of EOQ and max./min. stock levels You have been appointed as inventory accountant to a company where material is a major element of cost. The chief accountant wants to
Stores pricing and labour cost accounting S. Poynter Public Limited Company, an engineering company constructing special-purpose equipment to customer specification, employs a system of job costing
Evaluation of an incentive scheme XYZ Ltd is considering introducing an incentive scheme. Current production for the period is 100 units, and total wages paid are £600 for this production. Material
Calculation of earnings The following information is available:calculate earnings based on:(i) piecework, where earnings are guaranteed at 80% of time-based pay;(ii) premium bonus system.LO1 Normal
Calculation earnings A company currently remunerates its factory workers on a time basis and is now considering the introduction of alternative methods of remuneration.The following information
Calculation of earnings and a discussion of time-based and individual performancebased remuneration systems(a) Describe the characteristics of factory direct and indirect labour cost and explain the
Calculation of labour turnover and efficiency ratio X Ltd has an average of 42 workers employed in one of its factories in a period during which 7 workers left and were replaced. The company pays a
Computation of earnings and analysis by direct and indirect categories(a) Explain how the following cost items, relating to direct personnel, would be processed in a manufacturing business’s cost
Effect of incentive scheme on company costs(a) Shown below is a summary of the previous week’s payroll data for the moulding department in Peal Public Limited Company, a company manufacturing two
A domestic appliance retailer with multiple outlets stocks a popular toaster known as the Autocrisp 2000, for which the following information is available:LO1 Average sales Maximum sales 75 per day
Calculation of EOQ and frequency at ordering A company is planning to purchase 90 800 units of a particular item in the year ahead. The item is purchased in boxes, each containing 10 units of the
(a) Write short notes to explain each of the following in the context of materials control:(i) Continuous stocktaking.(ii) Perpetual inventory system.(iii) ABC inventory analysis.(b) State the
Calculation of EOQ XYZ Ltd produces a product which has a constant monthly demand of 4000 units. The product requires a component which XYZ Ltd purchases from a supplier at £10 per unit. The
Calculation of EOQ Most textbooks consider that the optimal re-order quantity for materials occurs when ‘the cost of storage is equated with the cost of ordering’. If one assumes that this
Calculation of EOQ and average stocks A company uses Material Z (cost £3.50 per kg) in the manufacture of Products A and B. The following forecast information is provided for the year
Calculation of EOQ Sandy Lands Ltd carries an item of inventory in respect of which the following data apply:You are required to:(i) calculate the minimum annual cost of ordering and stocking the
Calculation of re-order and maximum stock levels A retail company has been reviewing the adequacy of its stock control systems and has identified three products for investigation. Relevant details
Calculation of minimum purchase cost when cost per unit is not constant A company is reviewing the purchasing policy for one of its raw materials as a result of a reduction in production requirement.
A firm makes special assemblies to customers’orders and uses job costing. The data for a period are:(i) What overhead should be added to job number CC20 for the period?A £24600 B £65457 CG
A company absorbs overheads on machine hours.In a period, actual machine hours were I/D)actual overheads were £496500 and there was under-absorption of £12 520.What was the budgeted level of
The following information is to be used for subquestions(i) and (ii) below:(i) Based on the data above, what is the labour hour absorption rate (to 2 decimal places) as conventionally calculated?AV
The following data are to be used for questions (i)and (ti) below:(i) Based on the data above, how many machine hours (to the nearest hour) were budgeted?A 11398 B 11500 C 11825 D 11950 (ii) Based on
(a) Specify and explain the factors to be considered in determining whether to utilize a single factory-wide recovery rate for all production overheads or a separate rate for each cost centre,
Overhead analysis, calculation of overhead rate and overhead charged to a unit of output A company makes a range of products with total budgeted manufacturing overheads of £973560 incurred in three
Overhead analysis sheet and calculation of overhead absorption rates PTS Limited is a manufacturing company which uses three production departments to make its product. It has the following factory
Overhead analyis and calculation of product costs A furniture-making business manufactures quality furniture to customers’ orders. It has three production departments and two service
Overhead analysis sheet and calculation of overhead rates Dunstan Ltd manufactures tents and sleeping bags in three separate production departments. The principal manufacturing processes consist of
Computation of three different overhead absorption rates and a cost-plus selling price A manufacturing company has prepared the following budgeted information for the forthcoming year:It has recently
Various overhead absorption rates and under-/over-recovery The following data relate to a manufacturing department for a period:Job ZX was one of the jobs worked on during the period. Direct material
Calculation of overhead absorption rates and under-/over-recovery of overheads BEC Limited operates an absorption costing system. Its budget for the year ended 31 December shows that it expects its
Calculation of overhead absorption rates and under-/over-recovery of overheads A manufacturing company has two production cost centres (Departments A and B) and one service cost centre (Department C)
Various overhead absorption rates AC Limited is a small company which undertakes a variety of jobs for its customers.An enquiry has been received, and the production department has produced estimates
Calculation of fixed and variable overhead rates, normal activity level and under-/over-recovery of overheads(a) C Ltd is a manufacturing company. In one of the production departments in its main
Calculation of overhead absorption rates and product costs Bookdon Public Limited Company manufactures three products in two production departments, a machine shop and a fitting section; it also has
Reapportionment of service department overheads and a calculation of under-/overrecovery of overheads An organization has budgeted for the following production overheads for its production and
Reapportionment of service department costs JR Co. Ltd’s budgeted overheads for the forthcoming period applicable to its production departments, are as follows:Required:Apportion the service
A company operates an integrated cost and financial accounting system.The accounting entries for the return of unused direct materials from production would be: A DR Work-in-progress account; CR
In an interlocking accounting system, the profit shown in the financial accounts was £79252 but the cost accounts showed £74 294 profit.The following stock valuations were the only differences
Integrated accounts and computation of the net profit Set out below are incomplete cost accounts for a period for a manufacturing business:1. Raw materials:Issues of materials from stores for the
Preparation of interlocking accounts from incomplete information(a) Describe briefly three between:(i) financial accounting, and(ii) cost and management accounting.(6 marks)(b) Below are incomplete
Preparation of cost accounts from reconci- liation statement (a) The cost accountant and the financial accoun- tant of C Limited had each completed their final accounts for the year. Shown below are
Integrated accounts and stores pricing On 30 October 2002 the following were among the balances in the cost ledger of a company manufacturing a single product (Product X) in a single process
Stores pricing and preparation of relevant ledger accounts V Ltd operates interlocking financial and cost accounts. The following balances were in the cost ledger at the beginning of a month, the
Integrated accounts, profits computation and reconciliation relating to absorption and marginal costing A company manufactures two products (A and B).In the period just ended production and sales of
Labour cost accounting(a) Describe briefly the purpose of the ‘wages control account’. (3 marks)(b) A manufacturing company has approximately 600 weekly paid direct and indirect production
Labour cost accounting and recording of journal entries(a) Identify the costs to a business arising from labour turnover. (5 marks)(b) A company operates a factory which employed 40 direct workers
Computation of contract profit A company has been carrying out work on a number of building contracts (including Contract ABC) over the six-month period ended 31 May 2002. The following information
Contract costing(a) PZ ple undertakes work to repair, maintain and construct roads. When a_ customer requests the company to do work PZ ple supplies a fixed price to the customer and _allocates a

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