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CARIBBEAN EXAMINATIONS CO:UNC TT'
LU

ADVAN CED PROFICIENCY EXAMINITiON

ACCOIJNTING
' llnit 2 - Paper 01
' 90 minutes

04 JUNE 2010 (a.m-)

READ THE FOLLO\\ING INSTRUCTIONS CAREFULLY.

l. This test consists of 54 items. You will have 90 minrrtes to answer tbem.

2. In addition to this test bookle! you should have an answer sheet.

.I

3. Do notbe concer,ned that the answer sheet proVides spaces for more answers than there are iterns
inthis test.
I

A
t- Eachiteminthistesthasfoursuggestedenswersl'ettered(A),CB),(C),(D). Readeachitemyou
are about to rnsryer and choose the correct answer.

5. On your a '' swer shee! find the number which corresponds to your item anil shade the space haviog
tle same letteras the answeryou have chosen- Look at 41s 5arnple itembelow. -+
:

Samoleltem
xV)
Prime cost is cal.bulated by H
F
SampleAswer
ld
(A) adding {irect factory expenses to cost of materials used
o@@@
Eqt

(B) adding ifrdirect factory expenses to cost of materials nsed

(C) subEacting direct factory expenses to cost of materials r.rsed +
(D) subtractiFg indirect factory expenses to cost of materials used
l

The best aoswer tb this itcm is "adding direct factory expenses to cost ofmaterials used", so answetr
space (A) has bQep shaded.
'

6. If you want to cbiange yotu answer, erase it comFletely before you fi.ll in your new choice.
7. Wheu you are told to begin, hrm the page and work as quickly and as carefully as you can. Lfyou
crnn ot answer an item, omit it and go on to the next one. You can come back to the omitted one
later. Your score will be the total number ofcorrect aaswers.
8. You may do any rough work in this booklet.

9. You may use a silent non.programmable calculator to 'ns\yer guestions.

DO NOT TURN TTIIS PAGE TJ'NTIL YOU ARE TOLD TO DO SO.

Con vri ph t Cl 7 009 Ca ri hhea n F.x ami n atr ons Coun c i l.@
 r' - ztl-
1. The Webster Company requires 140 000 units Items 5 - 6 refer to following inventory
of product XYZ for the year. The cost of details of Kareen Alzere Inc.
placing an order is $80. Its carrying cost is
S15 perunit. The dconomic order quantity Beginninginventory I 200 barrels at $9.00 each
(EOQ roundedto thenearestwhole unit is hrrchases Augr:st 5 I 900 barrels at $9.50 each
PurchasesAugust 15 400 barrels at $9.70-each
(A) 22e
Endinginve,ntory i t20 baneis
(B) 374
(c) 864
Assuming that issues were made after
(ol r2z2 5.
August 15, the value assigned to he ending
inventory ifKareenAlzere Inc uses L.I.F.O
2. 'In comparing financial and management
b
accounting, which of the following is the
MORE accurate description of management
acconnting information'l
(A) $ 8 e6o
(B) Sr0080
(A)
I

Budgeted,informdtive,adapthbie
(c) $10720
(B) Required, estimated internal
(D) $10864
(C) .:
Hiitorical, precise, useful
(D) Compar,able,verifiable,motretary
6. The'rahre assigned to fre ending iaventory if
KareenAlzere Incuses F.I.F.O is
3. Rampaul Inc. applies overhead to jobs on
the basis of direct labour at the rate of 80 per
(A) $ 8 e60
cent ofdirecr labour oost. Rampaul s recortls
(B) S10080
revealed the foUowing data for 2005 :
(c) $10720
(D) $10854
$
Directlabour 1lr600
Dircctmaterial 84 200 7. If the cost o{goods manlfactrred is I"ESS
Actual overhcad 98 700
thanthe costofgoods sold, then
The anount of over- or under-applied
overhead for tbe ycar is
(A) fi4,ished goods inventory has
dec dudng the period
.reased

(A) over-appliedby$12 900

(B) total maaufacturing costs exceed
cost of goods manufacn:red
(B) under-appliedby$I2900
(C)
(C) r:nder-.appliedby$9420
finisheil goods iuventory bas
idiieased during the petiod
(D) over-appliedby$9a20
(D) work-in-prdgfess inventory b.as
.
ddctcased dr,ring the Period

4. facory maintemnce personnel

The. wages of
wouldusually be considered o be

Indirect Manufacnrring
labour overhead

(A) No Yes
(B) Yes No
(c) Yes Y_es
 ''

Keystone Ltd produces a product under a
licence from Xango Ltd. At the end of each
year Keystone Ltd has to pay Xango Ltd the
licence fee as follows:
Forthe first 60 000 lites Keystone Ltdpays
S30 000 and for every litre thereafter the
companypays $0.30.
11. Susan Ince is paid I 0 per cent ofgross sales
of her department as her compenbation per
month. Susan received $ I 5 000 each month
' for the last three montbs. Which of the
following methods BEST describes how
Sr-r.sanispaid?
(A) Commissiononsales
(B) Fixedsalary i

How is the licence fee classified? (C) flourly rate

(D) Piece rate
(A) Fixed
(B) Variable
(C) Step L2. Cqnversion cost consisds of which of the
(D) Semi-mixed following?

(A) Diiectlabourcost l

9. In March 2008, the beginning baiance oftbe (B) Manufacturingoverheadcost

raw materials inwentory accor:nt for Kyla Inc (C) Direct materials and direct laboiu
was $46 O00. The gading inventory balauce cost
for July was $47 000. Raw rqaterial.s used (D) Direct labour and manufacturing
drnii.g fte mosth toaUed $ t27 IZO- The cost
. overheadcost
ofraw materials purcbased drrring themonth
was
13. The indirect costs of converting raw materials
(A) Sl25 320
into finished goods are called
(B) Sr26L20
(c) $128120
(A) period costs.
(D) $r74120
(B) prime costs
(C) conversion@sts
10. Gibson Manufactr:ring used mechine hours (D) overheadcqsts
to allocate manufhcUrring overhead toALL
jobs The budgeted manufacuuing overhead
cost is $30 000 and the budgeted labor:r hours 14. A machinist normaliy works a 4{l-hor:r week
andmachine hours were 60 000 and 100 000 and is paid $50,00 per honr- The machinist
respectively. The predetermined overhead was idle for 5 hor.rs of a given work week
rate is due to breakdowns. The direct labow cost
to be allocated for that week is
(A) $0.30permachinehour
(B) $0.50permachinehour (A)$o
(C) $0.60permachinehour (B) Sl7so
(D) $3.33permachiuehour (c) $2ooo
(D) 822s0
 -4

Items 15 - 16 refer to the followine ItemS -17 - 18 refer to the following

information. information.

Trincity Co manufactures wooden file Gladston 'Ltd operates the followins

cabinets. The following infonoation is differential piece work scheme.
available for June 2008:
0 - 100 units $5.00 perr:nit
Bgginnine Endins 101-200units $5.50perunit
Raw material
inventory $6000 $7500 The employees below have produced the
Work-in-process followingunits:
inventory $17 300 Sll 700
Larry 140-units
Direct labour is $9.60 perhour and bverhead James 165 units
for the month is $9 600. The company uses Roland '155 units
I 500 direct labour hours and purchases Clyde 180 udts
S2l 000 of raw material.
17. Larry earned
15. The total manufachrring costs for June are
(A) $sp
(A) s43 100 (B) Sr20
(B) s43 500 (c) $770
(c) $46 500 (D) $1270
(D) s58 500

18. James and Clyde together eamed

16. The prime costs for June are
(A) $1 000
(A) $33 900 (B) sr247.50
TB) $35-4()0 (c) $1797.50
(c) $45 000 (D) $1 897.s0
(D) $s0 000

19. Mary worked thorus on Job ABX. Her

regularrate is $7 pcrhor:r. JobABXreqrired
7 hor-us ofregtr$rtime and2 hor:rs ovef,time
at the premium of 50 per cent above the
regular rate. What was the cost of labor.rr
appliedtoJobABX?

(A) $56.00
(B) $63.00
(c) $70.00
(D) $94.50
 -5
7
za
r

Which of the following distinguishes activity- 23. Costs that would be included in product costs
based costing fr om traditional costing? under both absorpdon costiog and variable
costing are , ,

(A) Each ddpartment is a different

activity in activity based costing. (A) .supervisor'ssalaries
(B) A singie cost &iver is utilized in every (B) machinerydeP.reciation
department in activitY-based (C) variablesellingexPenses
costing. (D) variablemanufactuingcosts
(c) Overhead application rates can be
based on directlabour in traditional
costingsysterns-'- 7,4. Which of the following BEST defnes the cost
(D) Multiple utilized
cost drivers may be
per servicer:nit?
within a departm€nt in activitY-
based costing.
Tod P* Poiod
"*b
(A) ffiperperiod
21. Which of the'following statements about
activity-based costing is FALSE?
Number of s'ervice r:nis Per Period
@)
(A) It promotes cost ccntrol-
CB) lndirect cost allocation bases are
likely to be cost drivers.
(c) It provides more accutate Product (c) Number of manufactrred units
costs.
(D) Itprovides less infomatios than
cost systems r-r.s.ed before Totd costs per Periqd
(D) Avcragc numbcr of servicc
\ / units pergriod
7'' Peter wauts to identify the total cost for
computing'the personal taxre[lmheprepared
for his client. Latrour is the only direct cost 25. Which gpe of costing system will LIKELY
at $ 150 per hour. lndirect costs are $80 per be used by a bakery producing wedding
labor:r hor:r. What is the total direct cost, cakes?
indirect cost, and job cost respectively, if 8
hours are spent preparing the ta:r rehrrn? (A) Batch
'Job (B) Process
Direct Indifuct (c) Jst'
Cost Cost Cost (D) Acc:ual
(A) $ ffo s1200 $1 840
@) $l 100 $ 900 s2 000
(c) $1200 $ 640 $l 840
(D) $l?40_ $l 200 $2 480
 -.6 -

26. Ashley Company uses a job order costing 29. GuyCo Disk Company has beginning work-
system. Overheads are applied to jobs on in-process of 1 00 000 units that is 9O per cent
the basis ofdirect labour hours at a rate of complete 3,s to conversion costs' The
520.00 per direct labour hour.
comf any started production of 300 000 unib
during the current perio{ and completed and
JobNo. 101: transiprred out 350 000 units. Theending
work-in-process inventory consistedof 50 000
DirectMaterials cost 54 000 units whichwere 65 per cent complete as to
Direct hbour cost I 5 0 hrs at $ I 2 -00 per hour conversion costs- The equivalent units of
production for conversion cost using the
What is the value of the ending'work in F.I.F-O. method are
progress?
(A) 292 500units
(A) s4 800 (B) ' 300'000uits
(B) $5 000 (C) 350 000units
(c) s7 ooo CD) 401 500 units
(D) $8 800

Ttems 2? - 28 refer to {he following 30. Yor:ng CorPor:ationhas the following costs
associated with the manufrch:re of one of its
information
pro&rca:
Wright Inc manufactures telephones using a
Variable manufacudng
weighted-average process costing system.
The equival"ql rrnits produced inApril were
. cost 7.30Perunit
Fixedmanufactr-riug
I 000 with respect bo direct materials and 900
with respect to conversion costs-
overhead 4.0OParusit
Variableselling
The beginning woik-in-process inventory
expenses 0-25 Perunit

consisted of direct materials $180 000 and

FixedSG&AexPense $7500oPerYear
conversion costs $270 000- The costs added
During 2OO6,Young manufacttued 50 000
during April consis,ted of $ I 000 000 in direct
units and sold 48 000- Under absorption
materials and Sl 000 000 in conversiou costs'
costing, the staudardprodrrction costper unit
for2006 was
77. What is the direct materials cost per
equivalent unil during APril
(A) $ 7.'30
(B) sll3o
(A) $ r80.00 (c) s11.55
(B) $1 000.00 (D) $13.0s
(c) $1 180.00
p) $2 450.00

28. What is the conversion costper equivalent

nnitinApril?

(A) $ 300.00
(B) $l l11.ll
(c) $l 4I1.i 1

rD) s2722.22
 -1
Items'31 - 33 refer to the following Items 34 - 36 refer to the following
information-
information
Castries Inc. uses an activity-based costing
Panday IaJrrses a job order costing system
system. The company's purchasing
and the followiog information is available
Deparfrrent incurs costs ofS550 000 per year.
from its records. The company has the
Information relating to the TTIREE m4ior
followingjobs inprocess: Numben 5, 8 and
activities are as follows:
12- The raw materials used cost S I 20 000,
dircct labour cosb $8.50 per hor:r, and factory
Allocation Total ovelhead is applied at a rate of S10.20 per
Activity Measuiri Cmt direct labour hour. Direct labourhours per
Issuing purchase Numberof job are 2 500, 3 100, and 4 200, respectively-
orders s r50 000
Purchasg orders
34. What ig the total amount of overhead applied
Reviewing receiving Number of to Job Nurnber 8?
reports receiviag reports $ 175 000
(A) Sl82s0
Number of (B)
Ma-king phone calls s225 000 5263s0
phone.calls
(c) $30000
During the year in the deparhent, 50 000
(D) $31620
phoae calls were made; 15 000 purcbase
orders were issued, aud l0 000 shipments
35. The direct material was requisitioned for each
were received. Product A required 2 000
job (Numbers 5, 8 and 12) at 30 pet cen! 25
phone calls, I 500 receiving rq)orts, and 500
per cenl and 25 per cen! respectively. The
pwchase orders.
balance ofthe requisitions were considered.
indirect. What is the value of the work in
31. The total cost forpurchase orders allocated
process?
toproductAis

(A) (A) $183 260

cB)
$1000
(B) 527e26tr-

(c)
$5 000
$6000
(c) $303260
(D) $444000
tD) $e000

a) The cost of reoeivirig reports allocated to 36. Atthe endofthe accormtingpenod, the actral
productAis overheard ibsts total $93 000. The a'nount
of over-or-trrder applied overhead is
(A) $ 26 250
(B) $ 61250 (A) $6960under-applied
(c) $ 70 000 (B) $6 960 orrer-applied
(D) $l7s 000 (C) $63960over-applied
(D) $6396ounder-applied
The total cost assigned to productAis

(A) $ 40 250
(B) $ e5 7s0
(c) $ 136 000
(D) $22s 00o
 8-
3t- The Net Present Value method of evaluating 40. An investment project with an initial
proposed investmenlq investnent of $I0 000 will produce cash flows
as follows: 55 100 inYear 1, S3 600 inYear
(A) measures aproject's intemal rate of 2, $1 300 in Year 3, and $2 800 in Year 4.
retum What is thepaybackperibd for this project?
(B) ignores cash flows beyond the
paybackperiod (A) I year
(C) applies only to mutually exclusive (B) 2 years
inveshrentproposals (C) 3 years
(D) discounts cashflows ataminimum
(D) 4years
desired rate ofreturn

Items 38 - 39 refer to the following 41 A primary purpose of using a dtandard-cost

information. systemis to

Nash Sports Ltd sells football kits. Ten per

(A) make things easier for managers in
the producti on facility
cent ofthe sales are cash transactions and
the remainder is on one month's credit. Nash
(B) provide a distinct measure of cost
Sports Ltd receives one month's credit on all
contol
purchases made. Sales and purchases are (C) minimize the cost per unit of
as follows: production
(D) provide more information to
managers
Sales Purchases .
$$
Dec.2007 3Q 000 16 000
1an.2008 25000 14000 42. The net present value and the internal rate of
Feb.2008 18000 20000 retum arc MORE eftective methods ofcapital
budgeting than the payback method because
38. How much was paid to suppliers during the they
monthofFebruary2008?
(A) are easierto implement
(A) s14000 (B) consider the time value of money
(B) $16000 (c) requireleps input
(c) s20000 (D) reflect the effects of depreciation
@) s25 000 and taxes

€
39. How much cash was collected from credit 43. James purchases tyres at $300 each and selis
sales in the month ofFebruary, 2008? them for $400 each" His fixed costs are
58 000. How rnany tyres will Jarrres need to
(A) $16200 sell in orderto break'even?
(B) s22 500
(c) s24 000 (A) 40
(D) s27 000 (B) 60
(c) 80
(D) i00
 I

ltem 44 refers,to the following diagrams. Items 45 - 46 refer to the followins

information.
G) $
T.cost Red(Co uses a standard cost system and
applies qverhead basied on direct labourhours
@LfD. The following information is available
forAugust when Redd produced 4 500 units:

$indard:
DLHperunit 2.50
Units
Variable overhead per DLH s i.75
Budgeted variable overhead szr875
GD 't Actuali
r.cost
Direct labour hours 10000
i
Variable overhead s26250
t
45. What is the variable overhead spending
variance?

(A) $4 375.00 U
(B) s4 375.00 F
(c) $6 562.50 U
(D) $8 750.00 u

46. What is the Variable overhead efficiency

variance?

(A) $2 187.50 U
tB) $2 187.50F
Units
(c) $2 937.s0F
(D) $9 937.s0 F

s-
47. The margin of safety is a key concept of CW
analysis. The margin of safety is the

(A) contribution margin rate

(B) difference between budgeted
contribution margin and actual
Units contributiou margrn
(c) difference between budgeted
44. Which of the diagrams above iadicate fixed contribution margin and break-
costs at different levels ofproduction? even contribution
(D) difference between budgeted sales
(A) I and iI only and break-eved, sales
(B) I and tV only'
(C) II aqd III onty
(D) II aud [V only
 IO

48. The ABC Company makes collections on 51. The net present value of
a project is positive.
credit sales according to the following Horvever, the company did not accept thrs
schedule: 25 per cent in the rnonth ofthe sale; projeot. One can assume that
70 per cent in the month following the sale; 4
per cent in secondmonthfollowing the sale (A) the quaiitative factors outweighthe
i
and 1 percentuncollectible. Ifthe company benefi t of the invesfrnent
makes sales inApril, May and June of $100 (B) a positive net present value is I
I
000, $ I 20 000 and$ 110 0Q0 respectively, then unacceptable I

the cash collections in June would be (C) the net initial investment cannot be I

recovered
(A) s110000 (D) the return is greaterthanthatrequired
(B) 5111000 Ot*"company
(c) sli3 400 ,
(D) sl1s s00
52. A service costing system can BE-ST be
defi-ned as a method of estabiishing the costs
Items 49 - 50 refer to the foilowing of
information from Amos Vale Company, for
the month ofAugwt: (A) production and services rendered
@) productionperunit
Standards: (C) manufacti:ring products and services
Material 6.0 feet per unit at $2. i 0 per (D) services rendered
foot
ActuaI:
Production 2 750 units produced during
the month
Material 17 400 feetused;l8 000 feet
purchased at $2.25 per foot

49. The material price variance (calculated at

point ofpurchase) is

(A) $2 700F
@) s2 700u
(c) s2 610F
(D) $2 61Q U

50. The material quantity variance is

(A) $l 0s0F
(B) sl 890u
(c) $3 101F
(D) $3 105U
 - t1-

Item 53 refers to the foilowing annual projected costs anc

revenues associated with three products A, B and C.

A B c
Iv{aximum demand (unit s) 5 000 12 000 10 000

Unit C.M RR s6 $5
Total Fixed Costs s80 000

53. Assuming thafthe cornpanycan attainmaximum demand" what

will be its net income for the forthcomin gyear?

(A) s 54 000
(B) s 82 000
(c) $134 000
(D) s162 000

Item 54 refers to the following data on a proposed investrnent

project:

Iaitialinvestrnent $l4l 550

Annualcashinflows $30000
Life ofthe investrnents 8 years
Required rate of rehrrn 12 per cent

The present value interest factor (P\IIFA) of annuiry of $ I for 8

years is given as follows:

Per cent 10.0 1?.0 12.5 13.0 13.s 14.0 t4.4

PVIFA 5.335 4.968 4.882 4.i99 4.7t8 4.639 4.562

54. The internal percentage rate of retum, to the

nearest tenth of a per cent will be

(A) 10.0
(B) rz.s
(c) 13.5
(D) 14.s

IT'YOU FIMSH BEFORE TIME IS CAILED, CHECI(YOIIRWORK ON TTtrS TEST.