SECTION - A actual output is lower than budgeted output, which of the following costs would you expect to be lower than the original budget? Total variable costs Total fixed costs Variable costs per unit D Fixed costs per unit 2. Which ONE of the following costs could NOT be classified as a production overhead costina food processing company? A The cost of renting the factory building The salary of the factory manager C The depreciation of equipment located in the materials store D The cost of ingredients 3. The following data relate to two output levels of a department: Machine hours 17,000 18,500 Overheads $246,500 $251,750 The variable overhead rate per hour is $3.50. The amount of fixed overheads is: A $5250 B $59,500 C $187,000 D $246,500 4. Prime cost is: all costs incurred in manufacturing a product B the total of direct costs the material cost of a product the cost of operating a department 5. Which of the following would be classed as indirect labour? assembly workers in a company manufacturing television a stores assistant in a factory store plasterers in a construction company an audit clerk in a firm of auditors 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 42 hours, the overtime premium paid to the operator would be: A $25.20 B $35.70 C $71.40 D $107.10 7. Which one of the following sentences does not explain the distinction between financial accounts and management accounts? Financial accounts are primarily for external users and management accounts are primarily for internal users Financial accounts are normally produced annually and management accounts are normally produced monthly Financial accounts are more accurate than management accounts Financial accounts are audited by an external auditor and management accounts do not normally have external audit 8. The following relate to procedures for materials: check the goods received note Raise a stores requisition note 3 Update the stores ledger account for the purchase Raise a purchase order Which would be the correct order of the above when in the process of purchasing and using materials 4,2,1,3 2,1,3,4 C 4,1,3,2 D 1 ,4,3,2 9. The effect of using the LIFO method of stock valuation rather than FIFO in a period of sing prices is: A to report lower profits and a lower value of closing stock B to report higher profits and a higher value of closing stock to report lower profits and a higher value of closing stock to report higher profits and a lower value of closing stock 10. Using the FIFO system for pricing stock issues means that when prices are rising product costs are overstated and profits understated product costs are kept in line with price changes C product costs are understated and profits understated D product costs are understated and profits are overstated Eld's stock purchases during a recent week were as follows: Day Price per unit ($) Unit Purchased 1.45 55 2 1.60 3 1.75 120 1.80 1.90 130 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 75 11. Using a FIFO method of costing stock issues, the value of closing stock would be B $58 $70 $72 $76 12. W plc uses the EOQ as part of its materials control policy. The objective of the EOQ is to ensure that: the company never runs out of stock except in exceptional circumstances B the cost of being out of stock is minimized c the combined cost of ordering and holding stock is minimized D stock 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? 153 units 170 units 485 units 509 units A domestic appliance retailer with a Autocrip 2000, for which the following Average sales Maximum sales Minimum sales Lead time Re-order quantity 14. Based on the data above, at what level of stocks would Ce retailer with multiple outlets stocks a popular toaster known as the for which the following information is available: 75 per day 95 per day 50 per day 12 - 18 days 1750 above, at what level of stocks would a replenishment order be issued B c 1050 1330 1710 1750 D 15. Based on the above data, what is the maximum level of stocks possible? B 1750 2860 3460 5210 D 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: A Under-absorbed by $2152 B Over-absorbed by $4058 C Under-absorbed by S4058 Over-absorbed by $2152 The following data are to be used for sub-questions: Budgeted labour hours 8500 Budgeted Overheads $148750 Actual Labour hours 7928 Actual overheads $146,200 17. Based on the data given above, what is the labour hour overhead absorption rate? $17.50 per hour B $17.20 per hour $18.44 per hour $18.76 per hour 18. Based on the data given above, what is the amo $2550 under-absorbed $2529 over-absorbed $2550 over-absorbed $7460 under-absorbed e, what is the amount of overhead under-over-absorbed? 19. A company which uses marginal costing has a profit of $37.500 for a period. Openis 100 units and closing stock was 350 units. The fived nraduction overhead absorption rate per unit. What is the profit under absorption costing? $35,700 B $38,500 D $36,500 $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 $600,000 $900,000 $1,000,000 20 MARKS 21. A) Your Company has been experiencing high labour turnover for some period, as HR expert outline some of the reasons of high labour turnover and suggest remedies for such menace, Five points in each case. (5 Marks) B) In a simplified Flow Chart, illustrate the elements of Decision-Making, Planning and Control process. (5 Marks) SECTION B Question One. Nyameye Ent. Manufactures rubber at Kumasi. The following details relate to the movement of materials in February 2010 February Burchase issue 2 200 7 (400 16 1 Beginning balance: 800 units @ $6 per unit. 5 Received 200 units @ $7 per unit 1 11 Received 200 units @ $8 per unit Issued 800 units 22 Received 400 units @ $8 per unit 23 Issued 500 units 28 Received 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) h msta reade- le + reorder que - (minimum b.) Calculate maximum stock level from the information below: Normal usage 100 units per day Maximum usage 130 units per day Minimum usage 70 units per day coorde-level-1 Re-order period 25 to 30 days EOQ 5,000 units. msl= 3900ts reorder quantity of monimin perodymo woge = 130x80 3900 (5Marks) - 79 Question Two Ltd makes 2 products X and Y. $12 for X and $24 for Y. Information relating to annual production and sales are as follows 24.000 24.000 Sales & Production units) Selling Price ($ per unit) Direct cost ($ per unit) Direct Labour hours/unit Special Parts per unit 23 Overheads are allocated and absorbed on Labour hours. Total overheads is $432,000. The above overheads could be pre-analysed into cost Cost pool Cost $ Cost Driver Set up Cost Set ups Special Parts Special Parts Order handling Customer orders Material handling 63,000 Batches of Materials Direct labour services 216.000 Direct Labour hrs rust Pool Caft driver Quantity 732 73,200 60,000 19,800 120.000 150 252 120,000 The following estimates had been given for the budgeted period 240 Number of set-ups 12 720 Customer Orders - 10 140 Material handling Orders Required: Calculate the profit for each product using; 1) Absorption Costing - (10 Marks) 2) Activity Based Costing - (15 Marks) INDIVIDUAL ASSIGNMENT - TO BE SUBMITTED NEXT WEEK ASEM ABA Company manulactures two products, X and Y. The product X is a low volume and and its sales are only 5,000 p.a. Product is high volume and tabour intensive, its sales per annun Is 25,000. Product X Takes 5 labour hours to make one unit but requires & hours per unit Details of costs for materials and labour for each product are as follows: PRODUCT - PARTICULARS PRODUCT - Y 200 100 Direct Materials - rates Direct Labour @10 - rates per hour 6080 TOTAL 260 180 The company works 100,000 direct labour per annun. Total manufacturing overhead costs are GHC1,750,000 per annun. The usage of activities is as follows: Total Overheads Details of Activity PRODUCT PARTICULARS PRODUCT Machine Set up 450,000 6,000 4,000 10,000 15,000 Quality inspection 300,000 10,000 5,000 Production order 180,000 500 50,000 200 12,000 400 38,000 Machine hours 625,000 Material receipts 195,000 1,500 300 1,200 TOTAL OVERHEADS 1,750,000 You are required to compute per unit cost of each product using a) Direct labour hour rate method for absorption of overhead costs and b) Activity Based Costing technique for absorption of overhead costs. NG: In both methods show Summary of the Total Cost under traditional cost accounting and Activity Based Costing. Question Two Lid makes 2 products X and Y. $12 for X and $24 for Y. Information relating to annual production and sales are as follows Sales & Production(units) 24.000 24.000 Selling Price ($ per unit) 30 45 Direct cost ( per unit) - 12 24 Direct Labour hours/unit- Special Parts per unit Overheads are allocated and absorbed on Labour hours. Total overheads is $432,000. The above overheads could be pre-analysed into cost Cost pool Cost $ Cost Driver Set up Cost 73,200 Set ups Special Parts 60,000 Special Parts Order handling 19,800 Customer orders Material handling 63,000 Batches of Materials Direct labour services 216,000 Direct Labour hrs Quantity 732 120,000 150 252 120,000 The following estimates had been given for the budgeted period. Number of set-ups 720 Customer Orders 10 140 Material handling Orders 240 Required: Calculate the profit for each product using: 1) Absorption Costing 2) Activity Based Costing