Question
1. A company has recorded the following in the three most recent periods: Month Total cost of production Volume of production $ Units July 406,000
1. A company has recorded the following in the three most recent periods: Month Total cost of production Volume of production
$ Units
July 406,000 24,000
August 346,000 18,000
September 368,000 20,000
Using the high-low method, compute the best estimate of the company's fixed costs per period.
a. $166,000.
b. $166,667.
c. $168,000.
d. $180,000.
2.A company has recorded the following in the three most recent periods: Month Total cost of production Volume of production
$ Units
July 406,000 24,000
August 346,000 18,000
September 368,000 20,000
Compute the estimated cost of production for October if the volume of production is expected to be 22,000 units.
a. $386,000.
b. $387,000.
c. $388,000.
d. $400,000.
3. A company produces a single product and budgets to sell 200,000 units of the product next year. The opening and closing inventory of the product are expected to be 13,500 units and 15,000 units respectively. Compute the units of the product to be produced next year.
a. 198,500 units.
b. 201,500 units.
c. 213,500 units.
d. 215,000 units.
4.
Grace Industrial Limited is going to quote a one-off order. The order requires 300 units of material Y. There are 100 units of material Y in inventory which were purchased at a cost of $20 per unit. They are not required for normal production and can be sold for $18 per unit. The current purchase cost of material Y is $23 per unit. Compute the relevant cost of material Y for the one-off order.
a. $6,000.
b. $6,300.
c. $6,400.
d. $6,600
5. Joyful Manufacturing Limited ("JML") manufactures and sells a single product. JML maintains a standard costing system. Standard cost of direct materials and direct labor for the year just ended are:
$
Direct materials (10 kg at $5) 50
Direct labor (3 hours at $60) 180
20,000 units were produced for the year just ended. Other actual data for the same year ended are as follows:
Direct materials purchased 210,000 kg
Direct material price variance (at the time of purchase) $42,000 Adverse
Direct material quantity/usage variance $50,000 Favorable
Direct labor 61,000 hours
Direct labor rate variance $305,000 Favorable
Compute the total cost of direct materials purchased for the year just ended.
a. $1,008,000.
b. $1,040,000.
c. $1,092,000.
d. $1,100,000.
6.
Identify which of the following statements is correct.
a. Activity-based costing facilitates cross subsidization of products.
b. Activity-based costing is easily adopted in most servicing companies.
c. A cost driver is a factor influencing the level of cost of an activity.
d. A cost pool is a profit center for which all the costs associated with the cost driver are grouped.
7. A company determines its order quantity for an inventory by using the Economic Order Quantity ("EOQ") model. The EOQ order quantity for last year was 300 units while the cost of placing a purchase order was $50 and the cost of holding one unit of the inventory per annum was $15. Calculate the number of orders for last year.
a. 30 orders.
b. 45 orders.
c. 60 orders.
d. 90 orders.
7. Identify the possible causes of adverse labour efficiency variance.
Use of sub-standard materials.
Errors in allocating time to jobs. (3) Low staff motivation and commitment.
a. (1) and (2) only.
b. (1) and (3) only.
c. (2) and (3) only.
d. All of the above
8. Identify the possible advantage(s) of participative budgets.
a. They decrease an operational manager's commitment to organizational objectives.
b. They decrease the period of time taken to draw up the budgets.
c. They are based on information from employees most familiar with the department. d. All of the above.
9. A company's budgeted sales for last month were 20,000 units with a standard selling price of $25 per unit and a standard contribution to sales ratio of 60%. Actual sales for last month were 21,000 units with total revenue of $504,000. Compute the sales price variance for last month.
a. $20,000 Adverse.
b. $20,000 Favorable.
c. $21,000 Adverse.
d.$21,000 Favorable.
10.
The following data relates to the Polishing Department of Glory Production Limited for last year.
Budgeted production overhead cost $360,000
Budgeted labor hours 80,000 hours
Actual production overhead cost $380,000
Actual labor hours 82,000 hours
Calculate the pre-determined overhead absorption rate per labor hour for the Polishing Department for last year.
a. $4.39 per labor hour.
b. $4.50 per labor hour.
c. $4.63 per labor hour.
d. $4.75 per labor hour.
11. The following data relates to the Polishing Department of Glory Production Limited for last year.
Budgeted production overhead cost $360,000
Budgeted labor hours 80,000 hours
Actual production overhead cost $380,000
Actual labor hours 82,000 hours
Calculate the amount of the over- or under-absorbed (over or under-applied) production overhead cost for the Polishing Department for last year.
a. Over-absorbed (over-applied) production overhead cost of $20,000.
b. Under-absorbed (under-applied) production overhead cost of $20,000.
c. Under-absorbed (under-applied) production overhead cost of $11,000.
c. Under-absorbed (under-applied) production overhead cost of $9,000.
12. What is the name given to a budget that has been prepared by re-evaluating activities and comparing the incremental costs of those activities with their incremental benefits?
a. Incremental budget
b. Rolling budget
c. Zero base budget
d. Flexible budget
13. Selling price per unit 10 Riel; Variable cost 8 Riel per unit; Fixed cost 20,000 Riel; Break-even production in units is
a. 10,000.
b. 16,300.
c. 2,000.
d. 2,500.
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