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All 50 questions are compulsory and MUST be attempted Each question is worth 2 marks. The following information relates to questions 1 to 2. The inventory record for component BXY for the month of January showed: Receipts Opening inventory 4 January 11 January 18 January 19 January 25 January 31 January 500 1,000 1,600 1,200 Value $ 1,250 2,750 4,480 3,480 Issues 2,100 1,500 4,350 1,800 1 Using the FIFO method of pricing issues, the cost of issues during the month was: A B C D $11,250 $10,800 $10,850 $11,300 2. Using the AVCO method of pricing, at what price would the issues on 31 January be made? (Calculate to two decimal places.) A B C D $3.00 $2.95 $2.90 $2.83 MA1 Mock Exam Septermber 11 1 The following spreadsheet is for question 3, 4, 5 3. In the spreadsheet, what is the formula in F13? A B C D =SUM(B15:E15) =COUNT(B15:E15) =TOTAL(F10:F12) =TOTAL(B15:E15) 4. In the spreadsheet, which of the following correctly give the value in D6? i. =D5*$B$18 ii. =D5*B18 iii. =$127,700 A B C D i, iii i, ii ii, iii All three 5. In the spreadsheet, which of the following correctly give the value in E8? i. =E6 – E7 ii. =191,549 – 119,718 A B C D i ii i, ii NONE MA1 Mock Exam Septermber 11 2 6. Which of the following would be classified as an overhead? A B C D Overtime premium when the overtime was worked at the customer’s request Overtime premium when the overtime worked was because of a machine breakdown Payments to staff on a piece-work scheme The basic pay relating to overtime hours 7. Payments to suppliers are entered into an integrated computerised accounting system. Which of the following does not happen when these payments are entered into the computerised system? A B C D The supplier's individual account is updated in the purchase ledger/payables ledger. The creditors control account in the nominal ledger (main ledger) is debited. The bank account in the nominal ledger is credited. The debtors control account in the nominal ledger is credited. 8 What is the term associated with charging a specific item of overhead cost to one particular department? A B C D Absorption Allocation Apportionment Re-apportionment 9 You are presented with the following information about sales and costs for a business that makes and sells a range of products. £ Sales revenue 320,000 Direct costs (100,000) Production overhead costs (150,000) 70,000 Other overhead costs 50,000 The business uses absorption costing. There were no opening or closing stocks of the product. Budgeted production overhead costs were £80,000. Actual production overheads were £78,000 and absorbed production overheads were £75,000. What profit would be reported for the period, using absorption costing? A B C D £15,000 £17,000 £20,000 £23,000 MA1 Mock Exam Septermber 11 3 10. Management has asked for a report showing the annual sales and profits for its three products for the year just ended. The report could be presented in either an absorption costing or a marginal costing format. Which of the following statements is incorrect? A The total profit would be the same, regardless of whether absorption costing or marginal costing is used. B A report using absorption costing would indicate whether each product appears to be making enough profits. C A report using marginal costing would indicate whether each product was making enough contribution towards covering fixed overheads and making a profit. D A report using marginal costing would show the total contribution, from which fixed overheads would be deducted to arrive at the profit figure. 11. Total contribution is calculated by which formula? A B C D Total revenue less total cost Total revenue less variable cost Total revenue less fixed cost Total revenue less production cost 12. What are conversion costs? A B C D Variable cost only indirect cost only Production cost excluding direct materials Both direct and indirect labour costs 13. A company has calculated that its capacity ratio is 103.5% and that its efficiency ratio is 90%. Therefore its capacity ratio will be: A. B. C. D. 86.96% 93.15% 115.00% 193.50% MA1 Mock Exam Septermber 11 4 14. A business has a seasonal sales pattern. Management reports are produced each month showing. Which of the following comparisons would be suitable for control purposes? 1 Comparison with sales in the corresponding month last year 2 Budgeted sales for the month 3 Comparison with previous month's sales in the current year A B C D 1 and 2 only 2 only 2 and 3 only 1, 2 and 3 15 A product uses 6 kilograms of raw material and takes two direct labour hours to make. Raw materials cost £2.50 per kilogram and direct labour is paid £4 per hour. Variable production overheads are 25% of labour costs. The budgeted fixed production costs for the year were £120,000 and budgeted direct labour hours were 20,000 hours. Fixed overheads are recovered on a direct labour hour basis. The full production cost per unit of product is: A B C D £25 £31 £35 £37 16 Which of the following businesses would operate a batch costing system? A B C D Brewery Food canning Coal mine Bakery 17 Which of the following is a direct expense? A B C D Materials used on production The hire of special tools for Job 721 Power Depreciation MA1 Mock Exam Septermber 11 5 18 A company currently uses absorption costing. The following information relates to Product X for Month 1: Opening stock Production Sales Nil 900 units 100 units If the company had used marginal costing, which of the following combinations would be true? A B C D Profit would be higher would be higher would be lower would be lower Stock would be higher would be lower would be higher would be lower 19 Variable costs are conventionally deemed to A B C D vary per unit of output as production volume changes be constant in total as production volume changes vary, in total, from period to period when production is constant be constant per unit of output 20 Which of the following statements concerning the difference between management accounts and financial accounts is incorrect? A Management accounts are only concerned with costs, not profits B There is a legal requirement for financial accounts C Management accounts are more forward looking than financial accounts D Financial accounts are for external purposes whereas management accounts are for internal purposes 21 Which of the following is NOT correct? A. B. C. D. Limited companies, by law, are required to prepare financial accounts The format of financial accounts and cost accounts are usually differ Financial accounts and cost accounts will contain, at least, some common data The value of stocks in the financial accounts can differ from the value in cost accounts MA1 Mock Exam Septermber 11 6 22. If actual output is lower than budgeted output, which of the following costs would you expect to be lower than the original budget? A. B. C. D. Total variable costs Total fixed costs Variable costs per unit Fixed costs per unit 23. A company has to pay loyalties of £1.50 per unit of production. The agreement stated that loyalties are payable monthly based on the month’s production. How would the loyalties be classified in the cost accounts? A. B. C. D. As a variable cost As a semi-variable cost As a fixed cost As a stepped cost 24 XX Ltd absorbs overheads based on units produced. In one period, 23,000 units were produced, actual overheads were £276,000 and there was £46,000 under absorption of overheads. The budgeted overhead absorption rate per unit was: A B C D £10 £12 £13 £14 25 Job costing will normally be used where: A B C D a given number of similar products are produced production is continuous production of the product takes an extensive period of time production relates to a single special order 26 Which ONE of the following would be classified as direct labour? A B C D Personnel manager in a company servicing cars. Bricklayer in a construction company. General manager in a DIY shop. Maintenance manager in a company producing cameras. MA1 Mock Exam Septermber 11 7 27 A service department charges a mark-up on services performed for other departments. Goods or services will be charged at a transfer price. Which is the following best to describe this service department? A B C D A cost centre A profit centre An investment centre An expenditure centre 28 A company operates a piecework scheme to pay its staff. The staff receives £0.20 for each unit produced. However the company guarantees that every member of staff will receive at least £15 per day. Show below is the number of units produced by operator A during a recent week: Day Unit produced Monday Tuesday Wednesday 90 70 75 Thursday Friday 60 90 What are operator A’s earnings for the week? A B C D £75.00 £77.00 £81.00 £152.00 29 Which is not a recognised method of overhead absorption? A B C D Recovery rate per direct labour hour Recovery rate per machine hour As a percentage of sales value As a percentage of prime cost 30 Production supervisory salaries are classed as production overhead. Which is the most appropriate basis of apportioning this cost to cost centres? A B C D Number of employees (both full-time and part-time) Machine hours Direct labour hours Number of machines MA1 Mock Exam Septermber 11 8 31 Which of the following items might be a cost center within a management accounting systems of a university of further education. i ii iii iv Business study department A student An university building The university itself A. B. C. D. All four i and ii i, ii and iv i and iii 32 In which one of the following situations is real-time transaction processing absolutely essential for efficient operation? A B C D Payroll transaction entries in a retail shop Suppliers invoices in a manufacturing company Cheque transactions in a bank Ticket reservations in a theatre 33 Which of the following techniques would be useful for controlling costs? i. variance analysis ii comparing actual results with a flexed budget iii analysis of the trend in cost A B C D i and ii i and iii ii and iii i, ii and iii 34 Which of the following are acceptable bases for absorbing production overheads? 1. 2. 3. 4. A B C D direct labour hours machine hours as a percentage of prime cost per unit 1 and 2 only 3 and 4 only 1, 2, 3 or 4 1, 2 or 3 only MA1 Mock Exam Septermber 11 9 35 RT Ltd uses marginal costing for internal reporting purposes and absorption costing for its published accounts. The company produces a single product which has a unit selling price of £20, a unit variable cost of £8 and a unit fixed production cost of £7.20. Period 2 data: Opening stock Production Sales nil 1,200 units 1,000 units The marginal costing profit and loss account showed a loss of £200 for Period 2. The absorption costing profit and loss account will show: A B C D Loss of £1,646 Loss of £200 Profit of £400 Profit of £1,240 36 Which of the following statements is correct about costs in a manufacturing business? A B C D The fixed cost per unit is the same at all levels of output. The fixed cost per unit falls as output increases, at a constant rate The fixed cost per unit falls as output increases, at a declining rate The fixed cost per unit falls as output increases, at an increasing rate 37 The data of a sales activity recorded as follow. Budgeted sales 200 units Actual sales 180 units Budgeted selling price £100 Actual selling price £110 Budgeted variable cost £50/unit Budgeted fixed cost £15/unit What is the sales volume variance assuming a marginal costing system? A B C D £1,000 Adverse £1,000 Favourable £1,200 Adverse £1,200 Favourable MA1 Mock Exam Septermber 11 10 38 Which of the following costs would likely to be apportioned over a number of cost centers when absorption costing is adopted? A B C D Factory rent and direct materials Heat and light and direct materials Factory rent and direct labour Factory rent and heat and light 39 Western Limited makes three products, which are shown below. Contribution per unit Material X (per kg) Labour hour rate per unit Red £30 2kg £6 Blue £40 5kg £3 Green £18 4kg £3 Which of the following priority of production in order to maximize the profit? A B C D Red, Blue, Green Red, Green, Blue Green, Blue, Red Blue, Green, Red 40 A flexible budget is: A B C D a budget showing variable production costs only a budget showing actual costs and revenues in the budget period a budget which shows the costs and revenues at different levels of activity a budget that is changed monthly 41 What would be the following form part of purchasing system? 1 purchase invoice 2 purchase requisition 3 good receive notes A B C D 1 and 2 2 and 3 2 only 1, 2 and 3 MA1 Mock Exam Septermber 11 11 42. A B C D The following graph represents which type of cost? Fixed cost Variable cost Semi-variable cost Stepped cost 43 Which of the following statements relating to coding is incorrect? A B C D Coding enables companies to record and retrieve information quickly and easily Coding ensures that no errors are ever made Coding enables companies to file large amounts of information in a small space Information which has been coded can be sorted in a variety of different ways 44 A product has a budgeted direct materials cost of £12 per unit. Production volume for the period was: Actual Budget 6,750 units 6,500 units Actual direct materials cost for the period were £79,840. What was the direct material cost variance? A B C D £1,160 Favourable £1,160 Adverse £1,840 Favourable £1,840 Adverse MA1 Mock Exam Septermber 11 12 45 Which of the following factors should be the least likely to affect a decision about whether or not to investigate a variance reported during a particular month in the middle of the financial year? A B C D Size of the variance Whether it is favourable or adverse Whether it is likely to be controllable The trend in the monthly variance over the year to date 46 What is the principle of reporting by exception with variance analysis? A B C D Report variances only occasionally Report only those variances that exceed a certain limit Report only to the most senior management Report only adverse variances 47 Job costing will normally be used where: A B C D a given number of similar products are produced production is continuous production of the product takes an extensive period of time production relates to a single special order 48 The following information relates to Product 123. £ £ Sales price 12 Prime cost 4 Fixed overhead 5 Total cost 9 Profit 3 Fixed costs each month are £63,000. What is the breakeven volume of sales each month? A B C D 7,875 units 9,000 units 12,600 units 21,000 units MA1 Mock Exam Septermber 11 13 50 Which of the following is NOT included in the prime cost? A B C D Overtime work at a customer’s request Special packaging for a particular product Supervised training for a new employee Loyalties MA1 Mock Exam Septermber 11 14