Which one of the following statements about cost isnotcorrect?

a.

Production cost comprises all direct costs plus production overheads.

b.

Prime cost is the total of all direct costs.

c.

Direct costs include materials, labour and production overhead costs.

d.

'Indirect costs' and 'overheads' mean the same thing.

Interview questions are asked to determine

Select one:

a.

the relative amount of time spent on each activity by individual workers.

b.

possible activity drivers for assigning costs to products.

c.

what activities are being performed.

d.

All of these.

e.

who performs the activities.

Sandell Watkins plc produces custom-built yachts for rich clients. Each yacht is individually commissioned and no two are alike. Which method of accumulating costs is most appropriate for use by this company?

a.

job costing

b.

product costing

c.

period costing

d.

batch costing

Nagri Machine Productions Limited produces a single product. The company's management accountant has budgeted the following totals in respect of the 20X7 financial year:

Direct materials

683 850

Direct labour

552 400

Direct expenses

92 000

Production overheads

888 700

Selling and administrative overheads

302 450

Machine hours for the year are estimated at 863 000.

What is the estimated overhead absorption rate for 20X7, based on machine hours (to the nearest penny)?

a.

1.49

b.

1.14

c.

1.03

d.

1.38

Which of the following factors is considered to have influenced the development of activity-based costing?

Select one:

a.

A very high proportion of high-volume products.

b.

All of these.

c.

Increase in direct costs as a proportion of total product costs.

d.

Increasing uniformity of products with sophisticated production technologies

e.

Increase in overhead costs as a proportion of total product costs.

Baseheart Williams Limited produces two products, the Cee and the Dee, which both use the same grade of specialist labour. Only 3600 specialist labour hours are estimated to be available for the 20X8 financial year because of skills shortages in the economy as a whole.

The directors must decide on a production plan for 20X8. They estimate that it would be possible to sell 400 units of Cee and 400 units of Dee but the actual amount that can be produced and sold is likely to be limited by the labour shortage.

The following information is available about the products:

Cee

Dee

Revenue per unit

600

666

Variable costs per unit

250

270

Contribution

450

396

Number of hours of specialist labour required per unit

7

6

What is the optimal production plan for 20X8 (to the nearest whole unit)?

a.

400 units of Dee and 200 units of Cee

b.

400 units of Cee and 133 units of Dee

c.

400 units of Dee and 171 units of Cee

d.

400 units of Cee and 114 units of Dee

Clear my choice