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5. Which of the following would be classed as indirect labour? Aassembly workers in a company manufacturing television Ba stores assistant in a factory store
5. Which of the following would be classed as indirect labour?
Aassembly workers in a company manufacturing television
Ba stores assistant in a factory store
Cplasterers in a construction company
Dan audit clerk in a firm of auditors
6. A machine operator is paid $10.20 per hour and has a normal working week of 35hours. Overtime is paid at the basic rate plus 50%. If in week7, the machine operator worked 42hours, the overtime premium paid to the operator would be:
A$25.20
B$35.70
C$71.40
D$107.10
7. Which one of the following sentences does not explain the distinction between financial accounts and management accounts?
AFinancial accounts are primarily for external users and management accounts are primarily for internal users
BFinancial accounts are normally produced annually and management accounts are normally produced monthly
CFinancial accounts are more accurate than management accounts
DFinancial accounts are audited by an external auditor and management accounts do not normally have external audit
8. The following relate to procedures for materials:
1check the goods received note
2Raise a stores requisition note
3Update the stores ledger account for the purchase
4Raise a purchase order
Which would be the correct order of the above when in the process of purchasing and using materials
A4,2,1,3
B2,1,3,4
C4,1,3,2
D1,4,3,2
9. The effect of using the LIFO method of stock valuation rather than FIFO in a period of rising prices is:
Ato report lower profits and a lower value of closing stock
Bto report higher profits and a higher value of closing stock
Cto report lower profits and a higher value of closing stock
Dto report higher profits and a lower value of closing stock
10. Using the FIFO system for pricing stock issues means that when prices are rising:
Aproduct costs are overstated and profits understated
Bproduct costs are kept in line with price changes
Cproduct costs are understated and profits understated
Dproduct costs are understated and profits are overstated.
E Ltd's stock purchases during a recent week were as follows:
DayPrice per unit ($)Unit Purchased
11.4555
21.6080
31.75120
41.8075
51.90130
There was no stock at the beginning of the week. 420 units were issued to production during the week. The company updates its stock records after every transaction.
11. Using a FIFO method of costing stock issues, the value of closing stock would be:
A$58
B$70
C$72
D$76
12. W plc uses the EOQ as part of its materials control policy. The objective of the EOQ is to ensure that:
Athe company never runs out of stock except in exceptional circumstances
Bthe cost of being out of stock is minimized
Cthe combined cost of ordering and holding stock is minimized
Dstock is purchased from suppliers are the cheapest price.
13. EOQ formula to establish its optimal reorder quantity for its single raw material. The following data relates to the stock cost:
Purchase price:$15 per item
Carriage costs:$50 per order
Ordering costs:$5 per order
Storage costs:10% of purchase price plus $0.20 per unit per annum
Annual demand is 4000 units.
What is the EOQ to the nearest whole unit?
A153 units
B170 units
C485 units
D509 units
A domestic appliance retailer with multiple outlets stocks a popular toaster known as the Autocrip 2000, for which the following information is available:
Average sales 75 per day
Maximum sales95 per day
Minimum sales50 per day
Lead time12 - 18 days
Re-order quantity1750
14. Based on the data above, at what level of stocks would a replenishment order be issued?
A1050
B1330
C1710
D1750
15. Based on the above data , what is the maximum level of stocks possible?
A1750
B2860
C3460
D5210
16. A company absorbs overheads on machine hours which were budgeted at 11,250 with overheads of $258,750. Actual results were 10,980 hours with overheads of $254692.
Overheads were:
AUnder-absorbed by $2152
BOver-absorbed by $4058
CUnder-absorbed by $4058
DOver-absorbed by $2152
The following data are to be used for sub-questions :
Budgeted labour hours8500
Budgeted Overheads $148750
Actual Labour hours7928
Actual overheads$146,200
17. Based on the data given above, what is the labour hour overhead absorption rate?
A$17.50 per hour
B$17.20 per hour
C$18.44 per hour
D$18.76 per hour
18. Based on the data given above, what is the amount of overhead under-over-absorbed?
A$2550 under-absorbed
B$2529 over-absorbed
C$2550 over-absorbed
D$7460 under-absorbed
19. A company which uses marginal costing has a profit of $37,500 for a period. Opening stock was 100 units and closing stock was 350 units. The fixed production overhead absorption rate is $4 per unit. What is the profit under absorption costing?
A$35,700
B$36,500
C$38,500
D$39,300
20. A company produces and sells a single product whose variable cost is $6 per unit. Fixed costs have been absorbed over the normal level of activity of 200,000. The current selling price is $10 per unit. How much profit is made under marginal costing if the company sells 250,000 units?
A$500,000
B$600,000
C$900,000
D$1,000,000
20 MARKS
SECTION - B (SHORT ANSWERS):
21. A) Your Company has been experiencing high labour turnover for some period, as HR expert outline four reasons of high labour turnover and suggest remedies for each of such menace.
Five points in each case.(4 Marks)
B) In a simplified Flow Chart, illustrate the elements of Decision-Making, Planning and Control process.(5 Marks)
C) Define the term 'Cost Object' and give two example of cost object. (2Mark)
D) Distinguish between direct and indirect cost (1Marks)
E) Distinguish between Sunk cost and opportunity cost (2Marks)
F) Explain the term cost allocation (1Mark)
(15 Marks)
SECTION C
Question One.
Nyameye Ent. Manufactures rubber at Kumasi. The following details relate to the movement of materials in February 2010.
February:
1Beginning balance: 800 units @ $6 per unit.
5Received 200 units @ $7 per unit
11Received 200 units @ $8 per unit
16Issued 800 units
22Received 400 units @ $8 per unit
23Issued 500 units
28Received 600 units @ $9 per unit
Required:
a.) Prepare a store ledger card using Last In First (LIFO) Price Method in
determining the value of the closing inventory.
(10Marks)
b.) Calculate maximum stock level from the information below:
Normal usage100 units per day
Maximum usage130 units per day
Minimum usage70 units per day
Re-order period25 to 30 days
EOQ5,000 units.
(5Marks)
Question Two
ASEM ABA Company Manufactures two products, X and Y. The product X is a low volume and its sales are only 5,000 p.a. Product Y is high volume and labour intensive, its sales p.a is also 25,000.
Product X takes 6 labour hours to make one unit but Y requires 8 labour hours per unit.
Details of Costs for materials and labour for each product are as follows:
Product -X Product -Y
$ $
Direct Materials 200 100
Direct Labour @$10 per hour6080
TOTAL260180
The Company works 100,000 direct labour hour per annun. Total manufacturing overhead costs are $1,750,000 per annun. Overheads are allocated and absorbed on Labour hours.
The usage of activities is as follows:
Cost poolTotal $ Details of Product Product
Overheads ActivityXY
$(cost driver)
Machine Set up450,000 10,0006,0004,000
Quality Inspection300,000 15,000 10,000 5,000
Production Order 180,000 600 200 400
Machine Hours625,000 50,000 12,000 38,000
Material Receipts 195,000 1,500 300 1,200
Total Overheads $1,750,000
Required: To compute per unit total cost of each product using;
1) Direct labour hour rate method for absorption overhead costs (10 Marks)
2) Activity Based Costing method for absorption of overhead costs- (15 Marks)
1
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