1. Which TWO of the following are characteristics of overhead apportionment?

 It tries to share overheads in a way which reflects the benefit derived

 It calculates the amount of overhead to be charged to each cost unit
 It is used for overheads which can be identifies with just one cost centre
 It is used for overheads which cannot be identified with just one cost centre

2. A firm sells single product and is preparing the budget for the next period. The product
has contribution to sales ratio of 40% and fixed costs are $45,000. The break-even
point is at sales of 6,000 units and the margin of safety is 4,000 units at the
budgeted sales level.

What is the budgeted sales revenue for the period?

 $112,500
 $187,500
 $125,000
 $105,000

3. A joinery company uses cost plus pricing to price jobs. Costs for job 1954 are as
follows:

Direct materials 90 hours at $10 per hour

Direct labour 148 metres of wood at $5 per metre

Overhead is absorbed at $4 per direct labour hour.

The company requires a profit margin of 20% on job 1954.

What price should be charged for job 1954? $2500

4. In month 1 the input to a process was 1,000 units. Normal loss is 5% of input. Total
costs of production were $10,640 in the month. Actual output was 930units.

What was the cost per unit of expected output (rounded to one decimal place)?

$11.2
5. The break-even sales revenue for a company for a period is $750,000. Fixed costs total
$300,000 in the period.

What sales revenue is required in the period to achieved a profit of $60,000?

 $900,000
 $850,000
 $1,050,000
 $810,000

6. Are the following statements relating to absorption costing and marginal costing true or
false?

True False
The value of inventory is always higher under absorption costing than 
marginal costing
Reported profit is always higher under marginal costing than under 
absorption costing

7. Details of the movements and cost prices of raw material XX for period are:

Kilogrammes Cost price

(kg) ($ per kg)
Day 1 opening balance 1,100 8.60
Day 2 issue 200
Day 3 receipt 1,000 9.00
Day 4 receipt 400 9.20
Day 5 issue 600
Day 6 issue 500
Day 7 receipt 1,200 9.30
Day 8 receipt 400 9.30
Day 9 issue 1,500
8. The cost of raw material is charged to the work-in progress (WIP) account immediately
after each issue occurs. The company uses the weighted average method to establish the
cost price of material issue (to two decimal places).

How many different weighted average cost prices will be used during the period for
charging the issues of material XX to WIP account?

 4
 3
 2
 5

9. The following details are available for the month of January 20X7:

Budgeted output 24,500 units

Actual output 27,500 units

The budgeted material cost was $4 per unit. The total material cost actually incurred
for the period was $107,250.

What is the total direct material cost variance comparing the actual against the FIXED
budget?

 $2,750 Favourable
 $2,750 Adverse
 $9,250 Adverse
 $9,250 Favourable

10. Cobon co manufactures and sells two products. Alpha and Beta which uses the same
material and labour resources.

In year 2, the material budget is set at $60,000, and the labour budget is set at
$100,000. Materials are budgeted to cost $3 per kg and labour is budgeted to cost $7
per hour.

Information relating to products Alpha and Beta is as follows:

Alpha Beta
 Sales demand (units) 5,000 3,500
Material usage per unit 1.5 kg 1 kg
Labour usage per unit 2 hours 1.5
hours

Identify whether each of the following is a limiting factor for Cobon co in year 2?

Limiting factor Not a limiting

factor
Material 
Labour 

11. What will be the effect on the cost of material issued if FIFO is used instead of LIFO
in a period when prices have consistently risen?
 It will be higher
 Cannot be predicted from the given information
 It will be the same
 It will be lower

12. A company manufacture a product, which it sells for $30 per unit. Production in a
period was 80,000 units, which was the normal level of activity. Sales were 60,000
units. Actual costs were the sme as budgeted, which were:

Variable Fixed
Direct costs $10 per unit produced -
Factory overhead $2 per unit produced $240,000
Selling expenses $5 per unit sold $120,000

The company uses absorption costing.

What is the profit for the period?

 $420,000
 $480,000
 $540,000
  $380,000

13. What is the rationale for the apportionment of joint production costs between joint
products?
 To determine which products are by-products
 To enable the calculation of a value for the inventory of each product
 To facilitate cost control
 To support decision making for continuance (or not) of each product

14. A trainee accountant works in a large manufacturing business.

Which of the following tasks would the trainee accountant MOST likely be given?

(1) Allocating warehouse space

(2) Preparing the final year end accounts
(3) Making capital investment decisions
 3 only
 Neither 1, 2 or 3
 1 and 2 only
 1, 2 and 3 only

15. Chemical X and Y are manufactured in a single joint process. Information for a typical
period is as follows:

Production costs $7,000

Output:
Chemical X 1,200 litres sold for
$5.00per litre
Chemical Y 400 litres sold for $20.00
per litre

Using the volume of output method of cost apportionment, what is the joint process
costs charged to Chemical X? $5250
16. Which TWO of the following statements about service cost centre overhead
reapportionment relate to the step-down method?
 Inter-service cost centre work is recongnised
 All costs are reapportioned straight to production cost centres
 A different apportionment basis may be applied for each service cost centre
 It enables overhead to be absorbed directly from service cost centres into
product costs

17. A car repair garage paid the following wages in period 1:

$
Basic hours: 200 hours 4,000
Overtime payments: 20 600
hours
Idle time: 50 hours 1,000
Total mechanic’s wages 5,600

Idle time occurred because of late delivery of parts by suppliers. Overtime was worked
because of a shortage of mechanics. The basic wage rate is $20 per hour. Overtime is
paid at time and a half.

What is the direct labour cost for mechanics in period 1?

$3400

18. Which of the following could cause an adverse material price variance as compared to
budget?
 The material purchase is of higher quality than the budgeted quality
 The supplier agreeing to provide bulk quantity discounts that were not budgeted
 Actual material price unit is lower than the budgeted material price per unit
 The wastage in productions is more than the budgeted wastage

19. A firm manufactures a single product. The budget for the next period is:

Sales (units) 3,000

 Selling price per unit $20
Variable cost per unit $12
Total fixed costs $18,000

What is the margin of safety for the next period?

 25.0%
 70.0%
 33.3%
 50.0%
20. The following labour hours ratios have been calculated for the same production period:

Capacity ratio 90%

Production volume (activity) ratio 120%

Which of the following are correct?

(1) The actual hours worked were less than the budgeted hours
(2) The standard hours for production were greater than budgeted hours
(3) The standard hours for production were than the actual hours worked

 1 and 2 only
 2and 3 only
 1, 2 and 3
 1 and 3 only

21. The following is the incomplete spreadsheet forecast sales. It shows the trend in units
sold and the seasonal variations. The units are sold for $13 each. 30% of payment are
expected to be received in the month of sale, and 70% in the month following.

A F G H I
1 Jan Feb Mar Apr
2 Trends in units 7,000 7,200 7,400 7,600
3 Seasonal variation (in units) 300 -200 -250 450
 4 Forecast sales units
5 Total revenue (in$)
6 Received in the month of sale (30%)

7 Received in the month following (70%)

What is the total forecast cash for February?

. $93730

22. The following data relates to department D for May 20X5:

Budgeted labour cost 2,400 hours at $7/hour

Actual labour cost 2,300 hours were worked costing
$17,200

What was the total labour cost variance for May 20X5?

 $700 adverse
 $400 adverse
 $700 favourable
 $400 favourable

23. The following data is given by Holiday Motors Co for the number of cars rented for
three locations for the first quarter:

Malaga Harare Bangkok

Jan Feb Mar Jan Feb Mar Jan Feb Mar
124 89 96 114 126 135 86 79 103

Which of the following statement is correct?

 Car rentals at Malaga were the highest of the three location for the quarter
 Car rentals in January were the highest at all three locations
  Car rentals at Bangkok were the lowest of the three locations for the
first two months
 Car rentals at Harare were the highest of the three locations in each of the
three months

24. A company has the following data available for the forthcoming period:

Product P1 P2
Demand (units) 5,000 6,000
Material X (kg per unit) 4 2
Material Y (kg per unit) 2 3
Labour hours (per unit) 4 6
Machine hours(per unit) 5 4

Available resources for the forthcoming period:

Material X (kg) 40,000

Material Y (kg) 40,000
Labour hours 50,000
Machine hours 50,000

Which resource is limiting factor for the forthcoming period?

 Material X
 Labour hours
 Machine hours
 Material Y

25. Which of the following are not preventative costs of labour turnover?
(1) Cost of welfare services and sports facilities
(2) Post-retirement benefits like pension
(3) Loss of output due to delay in recruiting new labour
(4) Inefficiency of new labour
  2 and 3 only
 1, 2 and 3
 3 and 4
 1 and 2 only
26. A company whose production process mainly uses labour skills had the following data
for the month of January:

Labour hours Machine hours

Budgeted 7500 10000
Actual 7000 8500

The budgeted overheads for the month were $120,000 and the actual overheads were
$118,000.

What was the total under absorption of production overheads?

. $6000
27. Motty co aims to maximize profit and manufactures four components, all of which
require same skilled labour resource.

Information relating to the four components is as follows:

L M N O
Variable production cost per components ($) 120 150 110 190
Cost to buy-in from external supplier ($) 170 180 145 230
Number of skilled labour hours required per component 5 6 5 10

There are not enough skilled labour hours available in quarter 1 to make of all
components required and Motty co has decided to buy-in two of the components.

Which TWO components should Motty co buy0in from external suppliers?

 Component O
 Component M
 Component N
 Component L
28. The managing director is preparing to make a presentation to the board. The
accountant has made the following three statements:
(1) Diagrams in presentations can aid understanding
(2) Over-complicated displays can cause confusion
(3) Many computer packages will produce graphics relating to statistical data

Which of the above statements are correct?

 1, 2 and 3
 1 and 2 only
 2 and 3 only
 2 and 3 only
 1 and 3 only

29. Which TWO of the following would be listed in cash budget?

 Payments by customers
 Discount allowed by a supplier
 Profit on sale machine
 Dividend from investment

30. Which of the following is an example of a cost unit for a passenger transport
business?
 Number of litres of fuel
 Per passenger kilometer
 Distance travelled
 Number of passengers travelled

31. A comparison is made of the actual sales of product in two successive four-week periods.

Which of the following is a potential DISADVANTAGE of using this comparison to assess

whether a trend exists in the sales?

 There may be seasonal variations in the sales

 The sales in each period may be the same
 Sales forecasts are subject to error
  The overall demand for the product may have changed

32. The following data refers to a particular product:

Sales volume (units) 1,000

Sales revenue $25,000
Total fixed costs $5,000
Total cost per unit $16

What is the contribution to sales percentage?

 80%
 56%
 44%
 36%

33. The following are the estimated trend figures and seasonal variations for a
company’s sales for the next four quarters:

A B C D E
1 Quarter 1 Quarter 2 Quarter 3 Quarter 4
2 20X9 sales trend $560,000 $580,000 $605,000 $632,000
in $
3 Seasonal +15% -5% +23% -33%
variations

What is the forecast value of total sales for 20X9?

 $2,362,590
 $2,837,770
 $2,391,410
 $2,376,986
34. Raw material X is used in several products manufactured by a business. There is limited
availability of raw material in a period. This will prevent the business from meeting its
sales demand. The business objective is to maximize profit in the period.

What measures should be used to determine the allocation of the available raw
material?

 Net profit per unit of product

 Product contribution per unit the raw material
 Product contribution of $ per sales
 Cost of the raw material per unit of product

35. Which TWO of the following are description of a by-product?

 A product which has an insignificant value compared to the main product
 A product which is an identical product arising from a process
 A product which is a major product coming from a process
 A product a significant value compared to the main product

36. Usage of an item is, on average, 100 units per week. Every order $5.78 to place,
and each unit costs $8.00 to buy. Holding costs are 1% of purchase price per annum
and a 50-week year is worked.

Using the formula provided below, what is the economic order quantity (EOQ)?

. $850

37. A firm has the following sales budget:

Sales January February March

$ $ $
Cash sales 1,000 1,500 1,300
Credit sales 15,000 14,000 17,000

Payments received from credit sales are:

 (1) 20% in the month of sale
(2) 80% in the month following sale

What is the budgeted cash receipt in March from sales?

. $15900

38. A building company needs 3,000 damp proof bricks (DPBs) to complete job X. a
supplier has quoted a price of $4 per DPBs. The company has 2,000 DPBs left over
from another job. These had cost $3 per DPB. The company has no other alternative
use for these DPBs apart from using them on other job as substitute for ordinary
bricks. Ordinary bricks costs $1 each.

What is the relevant cost of the DPBs for job X?

 $12,000
 $3,000
 $10,000
 $6,000
39. The following information is given for a hotel for a month:

Payroll $23,500
Laundry costs $1,200
Cleaning supplies $140

The number of room bookings in the month was 345 and each of booking was for an
average of two days. There are enough number of rooms to satisfy all bookings.

What is the cost per occupied room night for the month?

. $36

40. A cash budget is being prepared covering the next three months. The following data are
available:

Budgeted sales

Month 1 $165,000
 Month 2 $290,000
Month 3 $220,000

10% of sales are cash sales with the remainder paid one month after sale.

Irrecoverable debt of 1% of credit sales are expected.

What are the budgeted receipts from customers in Month 3?

 $280,100
 $283,000
 $280,390
 $287,100

41. Company Y sells cars. Managers wish to identify if the current month’s budget has been
achieved.

Which base of comparison is MOST appropriate?

 Current month results with results for corresponding month last year
 Current month actual results with budgeted results
 Current month results with the results for previous month
 Current month’s budget with last year’s actual results

42. A company has a single product with a contribution to sales ratio of 40%. In each
month, total sales are $200,000 and initial fixed cost are $70,000. The company has a
target monthly profit of $16,000.

What sales revenue is required to achieved the target monthly profit?

 $320,000
 $240,000
 $215,000
 $206,000

43. The following information relates to a private hospital:

 $
Hourly fee – surgeons 560
Hourly fee – junior doctors 300
Overhead absorption rate per hour – applied to all hours 200

The hospital adds 45% to total cost to arrive at the amount to charges to the
patients.

Operation 8763 took one hour of a surgeon’s time and four hours of a junior doctor’s
time.

What is the amount to be charged to the patient for the operation?

 $3,552
 $2,552
 $2,842
 $4,002

44. Bonne Co makes and sells a single product. Unit cost information relating to this is as
follows:

$
Direct material 50
Direct labour 16
Production 4
overheads
Total cost 70

Direct material cost $10 per kg and labour costs $8 per hour.

In the period, material resources are limited to 80,000 kg and labour is limited to
40,000 hours.

Sales demand for the next period is budgeted to be 15,000 units.

What Bonne Co’s limiting factor for the next period?

 Material and labour

  Material only
 Labour only
 No limiting factors

45. Which of the following would be classified as an indirect production cost?

 Wages of workers engaged in rectifying substandard products
 Production cost centre supervisor’s salary
 Hire of tools for a particular job
 Primary packaging material such as cartons and boxes

46. What is a memorandum?

 A role made as an aide to an individual’s memory
 A fact which is remembered by association
 A manual specifying an operational procedure
 A written communication with an organization
47. Which of the following are reasons for using the absorption costing method?
(1) Valuing method
(2) Setting selling prices
(3) Assessing product contribution
(4) Assessing long-term product profitability

 3 only
 1, 2 and 3
 1 and 4 only
 1, 2 and 4
48. Which of the following events would increase cash inflows in the short-term?
(1) Selling an asset
(2) Reducing the time taken to pay suppliers
(3) Reducing time between invoicing customers and collections of cash

 1,2 and 3
  2 and 3 only
 1 and 2 only
 1 and 3 only

49. Which of the following statements about marginal costing is/are TRUE?
(1) It treats fixed costs as a period cost
(2) If production is greater than sales, it will show a lower profit than
absorption costing

 1 only
 Neither 1 nor 2
 Both 1 and 2
 2 only
50. Which of the following automated input methods is mainly applied in the following in
the banking industry on cheques and deposit slips?
 Optical mark reading (OMR)
 Optical character recognition (OCR)
 Electronic point of sale (EPOS)
 Magnetic ink character recognition (MICR)