Questions and Answers of Cost And Management Accounting An Introduction

In process costing, where losses have a positive scrap value, when an abnormal gain arises, the abnormal gain account is A. debited with the normal production cost of the abnormal gain units.B.
Process B had no opening stock. 13500 units of raw material were transferred in at £4.50 per unit.Additional material at £1.25 per unit was added in process. Labour and overheads were £6.25 per
A chemical process has a normal wastage of 10%of input. In a period, 2500 kgs of material were input and there was an abnormal loss of 75 kgs.What quantity of good production was achieved?Ave 2i7S ks
Intermediate KL Processing operates the FIFO method of accounting for opening work in process in its mixing process. The following data relates to April:Losses in processes are expected to be 10% of
The following details relate to the main process of Z Limited, a paint manufacturer:All losses occur at the end of the process.The numbers of equivalent units to be included in Z Limited’s
Preparation of process accounts with all output fully completed A product is manufactured by passing through three processes: A, B and C. In process C a byproduct is also produced which is then
Preparation of process accounts with all output fully completed A chemical compound is made by raw material being processed through two processes. The output of Process A is passed to Process B where
Equivalent production and no losses A firm operates a process, the details of which for the period were as follows. There was no opening work-in-progress. During the period 8250 units were received
Losses in process (weighted average)A company operates expensive process plant to produce a single product from one process. At the beginning of October, 3400 completed units were still in the
Losses in process (weighted average)A company manufactures a product that goes through two processes. You are given the following cost information about the processes for the month of November.You
Losses in process (weighted average)(a) A company uses a process costing system in which the following terms arise:conversion costs work-in-process equivalent units normal loss abnormal
Losses in process and weighted averages method ABC ple operates an integrated cost accounting system and has a financial year which ends on 30 September. It operates in a processing industry in which
Losses in process (weighted average method) and decision-making based on relevant costs ABC ple manufactures processed foods in two successive processes.During April 2000, ABC ple produced a total
Losses in process (weighted average)Chemical Processors manufacture Wonderchem using two processes, mixing and distillation. The following details relate to the distillation process for a
Process accounts involving an abnormal gain and equivalent production The following information relates to a manufacturing process for a period:10000 units of output were produced by the process in
Preparation of process accounts with output fully completed and a discussion of FIFO and average methods of WIP valuation(a) Z Ltd manufactures metal cans for use in the food processing industry. The
FIFO method and losses in process The manufacture of one of the products of A Ltd requires three separate processes. In the last of the three processes, costs, production and stock for the month just
(a) Explain briefly the term ‘joint products’ in the context of process costing.(b) Discuss whether, and if so how, joint process costs should be shared amongst joint products.(Assume that no
Process costing FIFO method (no losses in process) and apportionment as joint cost(a) The following information relates to the final process in a factory for the month just ended:There is no loss of
Preparation of joint product account and a decision on further processing PQR Limited produces two joint products—P and Q — together with a by-product R, from a single main process (process 1).
Joint cost apportionment and decision on further processing(a) Polimur Ltd operates a process that produces three joint products, all in an unrefined condition.The operating results of the process
Joint cost apportionment and decisien on further processing BK Chemicals produces three joint products in one common process but each product is capable of being further processed separately after
Joint cost apportionment, decision on further processing and allocation of scarce capacity Three products are produced from a single process.During one period in which the process costs are expected
Joint cost apportionment and decision on further processing A company manufactures four products from an input of a raw material to process |. Following this process, product A is processed in
Profitability analysis and a decision on further processing C Ltd operates a process which produces three joint products. In the period just ended costs of production totalled £509640. Output from
When comparing the profits reported under marginal and absorption costing during a period when the level of stocks increased, A absorption costing profits will be higher and closing stock valuations
Preparation of variable and absorption costing statements Solo Limited makes and sells a single product. The following data relate to periods 1 to 4.There were no opening stocks at the start of
Preparation of variable and absorption costing profit statements and an explanation of the change in profits A company sells a single product at a price of £14 per unit. Variable manufacturing costs
Preparation of variable and absorption costing profit statements and CVP analysis R Limited is considering its plans for the year ending 31 December 2001. It makes and sells a single product, which
Preparation of variable and absorption costing profit statements and comments in support of a variable costing system A manufacturer of glass bottles has been affected by competition from plastic
Under/over-recovery of fixed overheads and preparation and reconciliation of absorption and variable costing profit statements(a) Discuss the arguments put forward for the use of absorption and
Equivalent production and preparation of variable and absorption costing profit statements A new subsidiary of a group of companies was established for the manufacture and sale of Product X. During
Preparation of variable and absorption costing profit statements for FIFO and AVECO methods The following information relates to product J, for quarter 3, which has just ended:The selling price of
Calculation of overhead absorption rates and an explanation of the differences in profits A company manufactures a single product with the following variable costs per unitThe selling price of the
Z plc currently sells products Aye, Bee and Cee in equal quantities and at the same selling price per unit. The contribution to sales ratio for product Aye is 40%; for product Bee it is 50% and the
A Limited has fixed costs of £60000 per annum. It manufactures a single product which it sells for£20 per unit. Its contribution to sales ratio is 40%.A Limited’s breakeven point in units is:A
The following data relate to the overhead expenditure of a contract cleaners at two activity levels: Square metres cleaned 12750 15 100 Overheads 73 950 83 585 What is the estimate of the overheads
A company which makes a single product has a contribution to sales ratio of 30%. Each unit is sold at £8. In a period when fixed costs were £30000 the net profit was £56 400.What was the total of
The following data have been extracted from the budget working papers of BL Limited: Production volume 1,000 units 2,000 units per unit per unit Direct materials 8.00 8.00 Direct labour 7.00 7.00
(a) Briefly describe the parts of the above breakeven chart marked (i) to (vi). (6 marks)(b) State and explain the assumptions of breakeven analysis. (8 marks)(c) Prepare a report addressed to the
Figure 9.8 shows a typical cost-volume-profit chart:Required:(a) Explain to a colleague who is not an accountant the reasons for the change in result on this cost-volume-profit chart from a loss at
Separation of fixed and variable costs and construction of a break-even graph A building company constructs a standard unit which sells for £30000. The-company’s costs can be readily identifiable
Profit-volume graph and changes in sales mix A company produces and sells two products with the following costs:Required:(a) Calculate the break-even sales revenue per period, based on the sales mix
Multi-product profit-volume graph JK Limited has prepared a budget for the next twelve months when it intends to make and sell four products, details of which are shown below:Budgeted fixed costs are
Break-even chart with an increase in fixed costs and incorporating expected values A manufacturer is considering a new product which could be produced in one of two qualities— Standard or De Luxe.
Analysis of costs into fixed and variable elements and break-even point calculation(a) ‘The analysis of total cost into its behavioural elements is essential for effective cost and management
Non-graphical CVP analysis and calculation of margin of safety Z Ltd manufactures and sells three products with the following selling prices and variable costs:The company is considering expenditure
Calculation of sales by _ individualproducts to achieve a target contribution A company manufactures and sells three products which currently have the following annual trading performance:For each
Decision-making and non-graphical CVP analysis York plc was formed three years ago by a group of research scientists to market a new medicine that they had invented. The technology involved in the
Marginal costing and absorption costing profit computations and calculation of breakeven point for a given sales mix A company has two products with the following unit costs for a period:Production
Analysis of change in profit arising from changes in volume and production methods plus sales revenue required to achieve a desired profit A company has the following summary performance over two
Decision-making and non-graphical CVP analysis Fosterjohn Press Ltd is considering launching a new monthly magazine at a selling price of £1 per copy. Sales of the magazine are expected to be 500
describe activity-based costmanagement.Appendix
explain how standard costs are set;Appendix
explain the meaning of standard hours produced;Appendix
define basic, ideal and currently attainable standards;Appendix
explain how a standard costing system operates;Appendix
calculate labour, material, overhead and sales margin variances and reconcile actual profit with budgeted profit;Appendix
identify the causes of labour, material, overhead and sales margin variances;Appendix
construct a departmental performance report;Appendix
distinguish between standard variable costing and standard absorption costing;Appendix
prepare a set of accounts for a standard costing system.Appendix
During a period, 17500 labour hours were worked at a standard cost of £6.50 per hour.The labour efficiency variance was £7800 favourable.How many standard hours were produced?Appendix 1200 16300
T ple uses a standard costing system, which is material stock account being maintained at standard costs. The following details have been extracted from the standard cost card in respect of direct
PQ Limited operates a standard costing system for its only product. The standard cost card is as follows:Fixed overheads are absorbed on the basis of labour hours. Fixed overhead costs are budgeted
QR Limited uses a standard absorption costing system. The following details have been extracted from its budget for April:In April the fixed production overhead cost was under-absorbed by £8000 and
F Limited has the following budget and actual data:The fixed overhead volume variance:Appendix Budget fixed overhead cost Budget production (units) Actual fixed overhead cost Actual production
J Limited operates a standard cost accounting system. The following information has been extracted from its standard cost card and budgets:If it used a standard marginal cost accounting system and
BS Limited manufactures one standard product and operates a system of variance accounting.As assistant management accountant, you are responsible for preparing the monthly operating statements. Data
Bronte Ltd manufactures a single product, a laminated kitchen unit with a standard cost of 80 made up as follows:The standard selling price of the kitchen unit is £100. The monthly budget projects
The following data relate to actual output, costs and variances for the four-weekly accounting period number 4 of a company that makes only one product. Opening and closing work in progress figures
The following data have been collected for the month of April by a company which operates a standard absorption costing system: Appendix Actual production of product EM Actual costs incurred: Direct
Classify each of the following as being usually fixed (F), variable (V), semi-fixed (SF) or semivariable(SV):(a) direct labour;(b) depreciation on machinery;(c) factory rental;(d) supplies and other
Which of the following costs are likely to be controllable by the head of the production department?(a) price paid for materials,(b) charge for floor space;(c) raw materials used;(d) electricity used
If actual output is lower than budgeted output, which of the following costs would you expect to be lower than the original budget?A Total variable costs B__ Total fixed costs C_ Variable costs per
The following data relate to two output levels of a department:Appendix Machine hours Overheads 17.000 246 500 18 500 251 750 The variable overhead rate per hour is 3.50. The amount of fixed
Prime cost is: A all costs incurred in manufacturing a product; B the total of direct costs; C the material cost of a product; D the cost of operating a department. CIMA Stage 1Appendix
A direct cost is a cost which: A is incurred as a direct consequence of a decision; B C D E can be economically identified with the item being costed; cannot be economically identified with the
Which of the following would be classed as indirect labour?A assembly workers in a company manufacturing televisions;Ba stores assistant in a factory store;C plasterers in a construction company;D an
distinguish between payroll and labour cost accounting;Appendix
describe the materials recording procedure;Appendix
explain the accounting treatment of holiday pay, overtime premiums, employment costs, idle time, stores losses and delivery and materials handling costs;Appendix
calculate the cost of stores issues and closing stock values using FIFO, LIFO and average cost methods of stores pricing;Appendix
explain the arguments for and against using FIFO, LIFO and average cost methods of stores pricing;Appendix
justify which costs are relevant and should be included in the calculation of the economic order quantity(EOQ);Appendix
calculate the EOQ using the formula and tabulation methods;Appendix
describe the ABC classification method;Appendix
describe materials requirement planning (MRP)systems;Appendix
explain just-in-time (JIT) production and purchasing and list the benefits arising from adopting JIT concepts.
Using the first in, first out (FIFO) ean for pricing stock issues means that when prices are rising:A product costs are overstated and_ profits understated;B_ product costs are kept in line with
(a) A company is proposing to introduce an incentive scheme into its factory.Required:Three advantages and three disadvantages of individual incentive schemes. 6 marks(b) The company is undecided on
You have been approached for your advice on the proposed introduction of an incentive scheme for the direct operatives in the final production department of a factory producing one standard product.
On 1 January Mr G started a small business buying and selling a special yarn. He invested his savings of £40000 in the business, and during the next six months the following transactions
(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. 9 marks(b)
A large local government authority places orders for various stationery items at quarterly intervals.In respect of an item of stock coded A32, data are:annual usage quantity 5000 boxes minimum order
distinguish between causeand-effect and arbitrary cost allocations;Appendix
explain why different cost information is required for different purposes;Appendix
describe how cost systems differ in terms of their level of sophistication;Appendix
understand the factors influencing the choice of optimal cost system;Appendix
explain why departmental overhead rates should be used in preference to a single blanket overhead rate;Appendix

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