28; fost Accounting Technlques ong 135, Which of the following statements ar (Each job consumes different materials. labour resources and indirect facities to an extent which is dissimilar to the other jobs (Each job maintains its separate identty throughout the procuction process (il) Batch costing is sutable for industries producing homogeneous products and whe continuous flow (iv) slob costing is used where services are rendered and articles are not produced. A (and (i) B tiyane (a) © (iljand (vy D Allofthe above production isin 136. Consider the following statements: (Under absorption costing, both varia valuation. (i) Under marginal costing, variable costs are treated as period casts for the purpose of inventory valuation. 1nd fixed costs are considered for product costing and inventory Is each statement TRUE or FALSE? Staternert (i) Statement (i) A False Faise B Fase True © Tue True D Te Foise 137.4 Company values stocks usng the weighted average value ater each purchase. The following receipts, ‘and issues have been made with regards to materia's for the last month: Date Receipts Tssues Units | $iunit | Valuation ($) | Unit Brought forward | 100 | 5.00 ‘500 4m 1s0| 550 925 ten 100 ath 100 | 600 600 2st 78 ‘What is the value of the closing stock using this weighted A $1012.50 B $976.50 © $962.50 D $925.00 138.A business currently orders 1.000 units of product X at a time. It has decided that I may be better fo use the Economic Order Quantity method to establish an optimal reorder quantity. Information regarding stocks is gven below: Purchase price Fixed cost per order 8% of the purchase pnce per 12,000 units Holding cost Annual demand ‘Current annual total stock costs are $183,000, being the fotal of the purchasing, ordering and holding costs of product x ‘The Economie Order Quantity isae Question Bank: 29 138. The stock records for one specific stores item for last month show the following information: Teaues Date_| Receipts units | _ unit “ath 150 13h 600 15th 200 22nd 250. ‘The stock at the beginning of last month consisted of 200 units valued at $5,200. The receipts last month ‘cost $32.50 per unit Using the FIFO methed of valuation, what was the total cost af last manth’s issues? ‘A. $18,200 B $18,300 $18,525, DB $19,500 1140. The demand for a product is 12,500 urits fora three month period. Each unit of product has a purchase price of $15 and ordering costs are $20 per order placed. The annual holding cost of one unt of product is 10% of its purchase price. What is the Economie Order Quantity (to the parest unit}? 141.A company determines its order quantity or @ raw material by using the Economic Order Quantity (EO) ‘model What would be the affects on the EOQ and the total annual halding cast of a decrease in the cost of ordering raw material? E00 Total annual helding cost A ‘Higher 5 Highe ¢ Lower Higher D Lower Lower @ following lasses Is the difference between the input quantity af raw m: None of the above ‘The following data rolates to questions 143 and 144 ‘Average daily usage Maximum daily usage Minimum daily usage Lead time for replenishment of stock Reorder quantity “400 units 20 units 480 units 10 t0 15 days 8.000 units 4143, What is the recréor level which avoids stock outs? 144, What is the minimum inventory level?30; fost Accounting Tecnnlques ou Consider the folowing data for questions 145 and 146 The following data forthe current year relates to a sterile pack purchased by the Good heart Haspital ‘Annual demand "90.000 units ‘Annual holding cost per unit $8 Cost of placing an order 825 From the star of next year the cost of placing an oxder will ise by $11 but all the other data wi same. ‘The hospital bases its purchasing deasions on the Economic Order Quantity (OQ) model 145. The £00 for the current year Is year, if cost of placing an order Is expectad to rise by $11 next year, i 147.Jane Pic purchases its requirements for component RB at a price of $80 per unit. lis annual usage of ‘component RB is 8,760 units. The annual holding cost of one unit of component RB is 5% of its purchase price and the cast of placing an order is $12.50, ‘Assuming that usage of component RB is constant throughout the year (365 days) and that the lead time from placing an order to ts receipts 21 days, ‘What willbe the stock level at which an order should be placed? 148.8 company uses 9,000 units of a component per annum. The component has purchase price of $40 per ‘nit and the cost of placing an order is $160. The annual holding cost of one component is equal to 8% ofits purchase price. ‘What is the Economie Order Quantity to the nearest unit) af the component? 149.8 company determines its ord ‘model. ‘What would be the effects on the EOQ snd the total annual ordering cost of an increase in the annual cost of halding ane unit of the component in stack? ‘quantity for a component using the Economic Order Quanity (EOQ) er) A Lower 8 Higher ¢ Lower D Higher 150.An crganisaticn folows a atferent ‘according to the following schedule time rate system for payment to workers. The payment is made Efficiency level rringihaur ($) Up t0 75% of pormal output ° More than 75% up to 100% of rormal output 10 Above 100% up to 130% of normal output 1" ‘The normal oulput is 160 units per week. The week consists of 40 working hours, Garfield produces 126 Units in the week oniae Question Bank: 31 151. The wage rate applicable to Peticia changes with the number of units produced by her. ‘The system of wage payment applicable to Patriela is the: ‘A. Ditferentia pece rate system B Differential time rate system Straight piece rate system D_ Straght time rate system 152. The wage rate applicable in he company is as faliows: Basic daily guaranteed tme rate per hour oS 30% of basic time rate for adaltional units onus rate f output exceeds the standard produced Normat standard output 85 units ‘Waekiy working hours Ad hours ‘Output pracuced by Timba 108 units, The weekly wage earnings of Timba, an employee, wil 183.Rumba Pre operates a differental piece rate system of payment, The different piece rates applicable for ‘iffrent slabs of output produced are: ‘50 to 100 units ‘$0.50 per unit 100 to 150 units $0.70 per unit 150 to 200 units {$0.90 pre unit ‘The higher rates per unit are applicable for the entr ‘additional units produced. Units on which rework is required are paid at the rate of $0.20 only number of units produced and not only for the Sarah produces 160 units in the week out of which 10 units require rework. What will, ss 154. The statistics for two years for a furiture manufacturing company are given below. toner? 20x8 | 20x9 Furniture pieces produced (per week) ‘300 | 7-200 Tabour hours (per week) 180 | 120 ‘Adgitional information > Inthe year 20%, ten workers ware working on the project. In the year 20XS, five workers were working on the project. Moreover, a machine was also used during the same year, for 80 hours per week By how many units has the labour productivity increased due to the installation of the machine? 155. The number of employees on the payroll at the beginning of the year was 150 and at the end of the year ‘was 170. 30 employees were replaced during the year. The labour turnov ‘atie for the year will be 29.41% 31.25% 33.3% 19.75% vamp32; Cost Accounting Techniques ong 1156. Alpha team is one of the teams in the assembly department. The company has a policy fo give a bonus of '$100 for every 15% increase in the output. The bonus is shared equally by each member of the group. ‘Standard output 1.500 units [Rawaroutput————SC*dSCS*S~S OLS [Number ofwarkers =i 70 ‘The bonus share for each worker will be A $1667 B $2222 © S75 D $88.87 4187. The non-monetary benefits provided by the employer may indude (0) Commission paid on the bass of perlarmance as an aden to the monthly salary. {i} Comfortable working conditions with round the clock canteen facility forall shite, (i) Flexible werking hours end subsiised mecical facies From the above which ofthe following statements ate true? A (and Gi) B (iyand (i) © Gi) ond(y D (i). (i) and {itty The folowng informaton relates to questions 158 anc 159 ‘The data for the budgeted and actual output and hours worked are given below. Budgeted hours 720.000 Budgeted unts 15.000 ‘Actual units produced 18.500 Actual hours workes Standard hours 158. The labour capacity ratio is A 973% B 80% mm D 75% 158. The production volume ratio is A 106.4% B 106.8% © 133.33% D 94% 160. The incentive schemes for in t workers are essential because Indirect workers should have an equal chance to earn incentives Indirect workers are more productive at times than direct workers Indirect workers always resort to protests and strikes if incentives are not announced for them Direct workers’ productivity is totaly dependent upon the indirect workers’ performarice that is induced by incentives. com>ae Question Bank: 3 161.4 company has ovet-absorbed fixed production overheads for the period by $6,000. The fixed production ‘overhead absorption rate is $8 per unit and is based on the rormal level of activity of 5,000 units. Actual production was 4.500 units. What we the actual fixed production overheads incurred for the period? 162.A business operates with two production centres and three service centres. Costs hava been allocated and ‘apportioned to these centres as: Service Centres 1 2 a 8 c $2.00 $3,500 saco_| ssoo_| $700 Information regarding how the service centres work for each other and for the production centres is given below: Work done for Production Centres ‘Service Centres 1 2 a B c bya 45% 45% =| 1% | - eye. 50% 20% | 20% | - | 10% ByC 60% 40% - - = Information concerning producton requirements in the two production centres is as follows: Cente | Cente? Units produced 1,500 units | 2,000 units Machine hours 3,000 hours | 4.500 hours Labour hours 2.000 hours | _ 6.000 hours Required Using the reciprocal method calculate the amount of total overheads in production centres 1 and 2 after reapportonment ofthe service centre costs, Pa 2 ‘A $2,000 $3,500 B $2750 ‘$4,250, © $2135 $3635 DB $2906 $4,094 163.4 company uses an overhead absorption rate of $3°50 per machine hour, based on 32.000 budgeted ‘mactine hours for the period. During the same period, the actual total overhead expenditure amounted to '$108,87S and 30,000 machine hours were recorded for actual production. By how much was the total overhead under - or over - absorbed for the period? ‘A Under-absorbed by $3,875 B Under-absorbed by $7,000 © Over-absorbed by 3.875 D_ Over-absorbed by $7,00034; Cost Accounting Techniques ou 164.4 factory consists of two production cost centres (P and Q) and two service cost centres (X and Y), The tolal allocated and apportioned overheads for each are: a { _a '$95.000 ‘$82,000 Y i $30,000, $46. It has been estimated that each service cost centre does work for the other cost centres in the following proportion: e | a ]x]y¥ Percentage of service costcentrexXto | 40 | 40 | - | 20 Percentage of serve costcene Yto| 30 | 60 | 10 | After the reapportionment of service cost cenire costs has been carried out using the simultaneous equation ‘method, what will be the total overhead for production cost centre P? A $122,400 B $124.716 © $126,000 $127,000 165.4 company manufactures, folowing budgeted data is a products P1 and P2 In a factory divided into two cost centres, X and Y. The ‘able x ¥ ‘Allocated and apportioned ‘fixed overhead costs $88,000 $96,000 Direct labour hours per unit: Product PA 30 10 Product P2 25 20 Budgeted output is 8.000 units of each product, Fixed overhead costs are absorbed on a direct Iabour hour basis ‘What is the budgeted fixed overhead cost per unit for Product P27 a sto B sit © $12 D S13 166. manuacturing company uses a machine hour rate to absorb production overheads, which were budgeted ta be $130,500 for 9,000 machine hours, Actual overheads incurred were $128,480 and 8,800 machine hours were recorded ‘What was the total under-absorption of production overheads? A $880 B $300 © $2020 $2900 167.An organisation absorbs overheads on a machine hour basis, The planned level of activity for last month ‘was 30,000 machine hours with a total overhead cost of $247,500. Actual results showed that 28,000 machine hours were recorded with a total overhead cost of $238,000. ‘What was the total over ! under-abserption of overheads last month? '$7.000 under absorbed ‘$7.00 over absorbed $7,500 over absorbed '$91500 over absorbed vom»ae Question Bank: 35 168.Sanya Lid manufactures many different products in a factory that has two production cost centres (T and 'W) and several service cost centes. The total budgeted overhead costs (after the allocation, apportionment ard reappottionment of service cost centre costs), and other information for production cost centtes T and W are as follows: ‘Budgeted Basis of overhead Cost centre en acre Budgeted activity T $780,000 | Machine hours 16,250 machine hours w $173,400 | Direct labour hours | 14.450 direct labour hours ‘The prime cost of one of the product PP manufactured by Sanya Lid. is as follows: ‘Sper ‘unit Direct material 70 Direct labour Cost centre T 14 Gost centre 21 (One unit of product PP takes 36 minutes of machine time in cast centre T and 21 minutes in cost centre W. Calculate the total production cost for one unit of PP. 168.4 company manufactures two products, X and ¥. in a factory divided into two production cost centres, Primary and Finishing. The folowing budgeted data is avalable: Cost contre (beats and apportioned fixed overhead costs Primary Finishing 26.000 | $9500. Direct labour minutes per ur = Product X (_ Product ¥ [35 35 ‘Budgeted production is 6.000 units of product X and 7.500 units of product V. Fixed overhead costs are to be absorbed on a direct labour hour basis. ‘Wnat is the budgeted fixed overhead cost per unit for product 7 A sit B Si2 c $14 D S15 170. The folowing information relates to a manufacturing company for he next pariod ‘Units Production 14,000 Fixed production costs 63.000 Sales 12,000 Fixed galing costs 12,000 Using absorption costing the profit for next period has been calculated as $36,000. ‘What will bo the profit for the next period using marginal costing? 1171.Last month, when a company had an opening stock of 16,600 units and a dosing stock of 18,000 units, the _rofl using absorption costing was $40,000, The fixed production averhead rate was $10 per unit. ‘What would the profit for last month have been using marginal costing?36; fost Accounting Tecnnlques eae 172.4 company which uses marginal costing has @ profit of $37,500 for a period. Opening stock was 100 units ‘and closing stock was 350 units. The fixed praduction overhead absorption rate is $4 per unit. ‘What is the profit under absorption casting? 173.4 company has established a marginal costing profit of $72,900. Opening stock was 300 units and closing ‘stock is 750 units, The fixed production overhead absomplion rate has been calculated a6 $Slunit, What was the profit under absorption costing? 174.4 company produces and sells a single product whose variable cost is $6 per unit. Fixed costs have been ‘2bsorbed over the normal level of activity of 200,000 units and have been calculated as $2 per uri ‘The current seling price is $10 per unit. How much profit is made under marginal costing if the company sells 250,000 units? 1175.Haywards Ltd reported an annual proft of $47,500 for the year ended 31 March 20X8. The company uses ‘absorption costing. One product is manufactured, the Heath. which has the folowing standard cost per unit: $ Direct material (2kg at S5ikg) 10 Direct labour (4 hours at $6 SO/hour) 26 Vatiabie ovethaads (4 hours at St/hour) 4 Fixed overheads (4 hours al $3/hour) 12 52 ‘The normal eval of activity is 10,000 units although actual production was 11.500 units. Fixed costs were as budgeted. Stack levels on 1 April 20X7 were 400 units and atthe end of the year were 600 units. ‘What would be the profit under marginal costing? 176. The folowing is the budgeted data provided by Pinafore Lid, a boat manufacturing company: ‘Budgeted production quantity (for Aug 20X8) | 25,000 units ‘Actual production quantity 22,500 ‘Actual sales (for Aug 20X8) 18,500 Sales price «per unit) $55 Direct material (per unit) $12 Direct labour (per unit) $12 Vatiable production overheads $6 Fixed production costs $78,750 Flyed selling expenses $35,000, ‘Assuming that there is no clasing inventary in the menth af July 20X8, what should be the value of lasing inventory far Aug 20X8 under the marginal costing system as well as the absorption costing system? ‘A $96,000 and $120,000 $124,000 and $138,000 © $120,000 and $134,000 D_ $120,000 and $130,000