Question 5

The following details were extracted from the cost records of Adams Ltd:

Machining Assembly Maintenance Administration

Floor Area (Square/metre) 2,500 3,000 1,000 3,500

No. of employees 12 26 4 6

If it cost 7,000 to insure the buildings, using the correct basis of apportionment, calculate the amount of the insurance cost that would be apportioned to the Assembly department.

Question 6

Mohammad, a trainee management accountant believes that the variable cost per unit of producing a product or service decreases when the level of activity decreases. Indicate whether Mohammad is right or wrong.

Question 7

State any two methods that are used to value inventory.

Question 8

It is a legal requirement for managers to ensure that management accounts are independently, audited by external auditors. Indicate whether this is true or false.