1.6 Which of the following is NOT a feasible value for the correlation coefficient? A. +1.4 B. +0.7 C. O D. -0.7 1.7 A sunk cost is A. A cost committed to be spent in the current period B. A cost which is irrelevant for decision-making C. A cost to be incurred in the future D. A cost unaffected by fluctuations in the level of activity 1.8 The following data relate to two activity levels of the out-patient' department at CBU Clinic: Number of consultations by patients 4,500 5,750 Overheads K269,750 K289,125 Fixed overheads are not affected by the number of consultations per period. The variable cost per consultation is A. K15.50 B. K44.44 C. K59.94 D. Cannot be calculated 2 1.9 Which of the following would be classified as indirect labour? A. Assembly workers in a company manufacturing television sets B. A stores assistant in a factory store C. Plasterers in a construction company D. An audit clerk in a firm of auditors 1.10 When comparing the profitability of different branches, a firm charges rent as an expense in all the branch operating statements even when the particular branch premises are owned and not rented. In this case, rent is A. An avoidable cost B. A relevant cost C. A notional cost D. A fixed cost 1.11 The following assertions relate to financial accounting and to cost accounting: (i) The main users of financial accounting information are external to an organisation. (ii) Cost accounting is that part of financial accounting which records the cash received and payments made by an organisation. Which of the following statements are true? A. Assertions (i) and (ii) are both correct. B. Only assertion (i) is correct. C. Only assertion (ii) is correct. D. None of the above. 1.12 A company uses an overhead absorption rate of K3.50 per machine hour, based on 32,000 budgeted machine hours for the period. During the same period the actual total overhead expenditure amounted to K108,875 and 30,000 machine hours were recorded on actual production. By how much was the total overhead under- or over-absorbed for the period? A. Under absorbed by K3,875 B. Under absorbed by K7,000 C. Over absorbed by K3,875 D. Over absorbed by K7,000 1.13 In a process account, abnormal losses are valued at A. their scrap value B. the same value as good production C. the cost of raw materials D. the value of good production less scrap value 1.14 Assam Limited has fixed costs of K60,000 per annum. It manufactures a single product which it sells for K20 per unit. Its contribution to sales ratio is 40%. Assam Limited's breakeven point in units is: A. 1,200 B. 1,800 C. 5,000 D. 7,500