1.

The following statements refer to situation occurring in Process Q of an organisation which

operates a series of consecutive processes:
(i) Direct labour is working at below the agreed productivity level
(ii) A machine breakdown has occurred
(iii) Direct labour is waiting for work to be completed in a previous process
Which of these situations could give rise to idle time?

2. Which of the following costing methods is most likely to be used by a manufacturer of customized
premium furniture?
A. Batch costing C. Job costing
B. Service costing D. Process costing

3. A company uses process costing to value output. During the last month following information was
recorded:
Output: 2800kg valued at $7.50/kg
Normal loss: 300kg which has a scrap value of $3/kg
Actual loss: 200kg
What was the value of the input?
A. $22,650 C. $21,600
B. $21,900 D. $21,150

4. Data for finishing department last quarter are as follows:

Budgeted cost centre overhead $320,000
Actual cost centre overhead $311,250
Budgeted direct labour hours 40,000
Actual direct labour hours 41,500
The accounting entries to record the under or over absorbed overhead for the quarter would be:
A. Debit Production Overhead Account $20,750, Credit Statement of Profit or Loss $20,750
B. Debit Production Overhead Account $8,750, Credit Statement of Profit or Loss $8,750
C. Debit Statement of Profit or Loss $20,750, Credit Production Overhead Account $20,750
D. Debit Statement of Profit or Loss $8,750, Credit Production Overhead Account $8,750

5. A company makes one product, which passes through a single process. The details of the process
for period 1 were as follows:
There were 400 units of opening work in progress, valued as follows:
Material $49,000
Labour $23,000
Production Overheads $3,800

No losses are expected in the process. During the period, 900 units were added to the process, and
the following costs occurred:
Material $198,000 (900 units)
Labour $139,500
Production Overheads $79,200

There were 500 units of closing work in progress, which were 100 per cent complete for material, 90
per cent complete for labour and 40% complete for overhead. No losses were incurred in the
process. The company uses weighted average costing.

How many equivalent units are used when calculating the cost per unit in relation to labour?
A. 450 B. 850 C. 1250 D. 1300
6. A company which operates a process costing system had work-in-progress at the start of the last
month of 400 units (valued at $3,000) which were 40% complete in respect of all costs. Last month
1,500 units were completed and transferred to the finished goods warehouse. The cost per
equivalent unit for output produced last month was $20. The company uses the FIFO method of cost
allocation.

What is the total cost of the 1,500 units transferred to the finished goods warehouse last month?
(Fill in the blank)

7. 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 turnover ratio will be:
A. 29.41%
B. 31.25%
C. 33.33%
D. 18.75%

8. Manufacturing process costs total $179,070 for a period. 9000kg of raw materials were processed
with the following result:
Completed good output 8,100kg
Normal loss 1,200kg
Abnormal gain 300kg
What was the cost per kg (to two decimal places)?
A. $19.90
B. $21.32
C. $22.11
D. $22.96

9. A process operates with a normal loss of 5% of input. All losses have a realisable value of $38 per
litre. Last month 10,000 litres were input to the process and good production was 9,200 litres.
Process costs arising last month were $456,000. There was no work-in-progress.
What was the credit entry in the process account for abnormal loss last month?
Answer to zero decimal points.

10. Which of the following are relevant in the calculation of the maximum inventory control level?
1. Maximum lead time
2. Minimum usage
3. Reorder level
4. Reorder quantity

11. Calculate the standard deviation, if a percentage of wood at least 75cm long is 62.55%, if the
wood is normally distributed with a mean length of 80cm.
A. 15.6
B. -0.32
C. 12.3
D. 4.3
12. Bryan has just completed his first year of trading. The following information has been collected
from the accounting records: -
Variable cost per unit:
Manufacturing $6.00
Selling and administration $1.20

Fixed costs:
Manufacturing $80,000
Selling and administration $22,000

Production was 80,000 units and sales were 85,000 units. The selling price was $10 per unit
throughout the year. Calculate the net profit for the year using absorption costing.

13. A job cost estimate includes 630 productive labour hours. In addition, it is anticipated that idle
time will be 10% of the total hours paid for the job. The wage rate is $12 per hour.
What is the total estimated labour cost for the job?
A. $6,804
B. $7,560
C. $8,316
D. $8,400

14. During the time rising prices, which statement is consistent with a first in, first out (FIFO) system
of stock control?
A. Product costs are overstated and profits understated
B. Product costs are overstated and profits overstated
C. Product costs are understated and profits understated
D. Product costs are understated and profits overstated

15. Which of the following statement is true?

A. The principal budget factor is the person who is responsible for controlling and coordinating
the budget process.
B. A business must always produce its sales budget first, before any other budgets can be
decided on.
C. The budget committee consists of managers with final responsibility for agreeing the budget
D. Preparation of budget manual often carry out after complete of master budget

16. Consider the following statements:

Statement 1: Continuous stocktaking is the process of checking the balance of every item of
inventory on the same date, usually at the end of the accounting period.
Statement 2: The objective of holding buffer inventory is to take advantage of quantity discounts
Which of the following is correct?
A. Statement 1 is true but Statement 2 is false
B. Statement 1 is false but Statement 2 is true
C. Both statement are true
D. Both statement are false
17. The following information is available for a process for the month of January
WIP (1 January) 12,000 (40% completed),
Material Cost $33,600,
Conversion Cost $22,980
Materials added 48,000 units at a cost of $144,000
Conversion Cost $307,500
WIP (31 December) 15,000 units (60% converted)

All material is input at the start of the process whereas conversion occurs evenly through the
process.

What is the value of finished production in January, using the FIFO method of valuation?
Answer in zero decimal point.

18. A particular cost is classified as ‘semi-variable’. What effect would a 15% reduction in activity
have on the unit cost?
A. Increase by less than 15%
B. Increase by 15%
C. Reduce by less than 15%
D. Remain constant

19. Anfield company has completed the initial allocation and apportionment of its overhead costs to
cost centres as follows:
Cost Centre Initial Allocation
Machining 190,000
Finishing 175,000
Stores 30,000
Maintenance 25,000

The stores and maintenance costs must now be reapportioned taking account of the service they
provide to each other as follows:
Machining Finishing Stores Maintenance
Stores to be 60% 30% - 10%
apportioned
Maintenance to 75% 25% 5% -
be apportioned

After the apportionment of the service department costs, the total overhead cost of the machining
department will be ……….?

(Note: Answer must be to the nearest $000 and zero decimal points.) Example is 100000.

20. You would like to select a sample for the preference of football teams in the Premier League. The
process would start by dividing the country into areas and a random sample of areas is taken. Next
divide the country into cities and towns and a sample is taken again. Then, a sample of streets and a
random sample of houses are then chosen. The following is an example of which type of sampling:
A. Simple C. Cluster
B. Random D. Multi Stage
21. Dariah operates a job costing system. Job number 605 requires $300 of direct materials and $400
of direct labour. Direct labour is paid at the rate of $8 per hour.
Production overhead are absorbed at a rate of $26 per direct labour hour and non-production
overheads are absorbed at a rate of 120% of prime cost.

What is the total cost of job number 605? (Answer in zero decimal points)

22. Are the following statements, which refer to documents used in the material procurement
procedures of a company, true or false?

1. All purchase requisitions are prepared in the purchasing department and are then sent out
to suppliers.
2. All goods received notes are prepared in the goods inwards department.

A. Both statements are false

B. Both statements are true
C. Statement 1 is true whilst Statement 2 is false.
D. Statement 1 is false whilst Statement 2 is true.

23. The following is an extract from the list of accounts of a motor vehicle manufacturer:
Cost Codes
Direct materials 1000 - 1999
Indirect materials 2000 - 2999
Direct labour 3000 - 3999
Indirect labour 4000 – 4999

Which of the following is coded INCORRECTLY?

A. 4262 Wages of materials stores personnel
B. 4131 Wages of canteen supervisor
C. 1008 Metal of vehicle body
D. 1361 Cleaning materials

24. The following data relate to a manufacturing company. At the beginning of August there was no
inventory. During August 2,000 units of product X were produced, but only 1,750 units were sold.
The financial data for product X for August were as follow:

$
Materials 40,000
Labour 12,600
Variable production overheads 9,400
Fixed production overheads 22,500
Variable selling costs 6,000
Fixed selling costs 19,300
Total costs for X for August 109,800

The value of inventory of X at 31 August using a marginal costing approach is:

Answer in zero decimal points.

25. Two joint products A and B are produced in a process. Data for the process for the last period are
as follows:

Product A B
Tonnes Tonnes
Sales 480 320
Production 600 400

Common production costs in the period were $12,000. There was no opening inventory. Both
products had a gross profit margin of 40%. Common production costs were apportioned on a
physical basis.

What was the gross profit for product A in the period?

Answer to zero decimal points.

26. A company prices it’s product by using a mark-up of 80% on variable production cost. Fixed
production overhead is absorbed at 50% of variable production cost and the product has a price of
$15 per unit.

What is the product’s full production cost per unit?

27. Using the information below, restate the 2018 revenues to 2020 prices:

Year Revenue ($) Index

2016 1,150 100
2017 1,250 115
2018 1,200 130
2019 1,250 115
2020 1,300 140
A. 1,610
B. 1,522
C. 1,400
D. 1,292

28. A company uses a multiplicative time series model to forecast sales. The trend in sales is linear
and is described by the following equation:

Trend = 400 + 10T where T = 1 denotes the first quarter of 2020, T = 2 denotes the second quarter of
2020 etc.

The average seasonal variations are as follows:

Quarter 1 2 3 4
% Variation -30 +40 +10 -20

What is the sales forecast for the third quarter of 2021?

A. 423 units
B. 480 units
C. 517 units
D. 3,157 units
29. Kong Ltd currently uses marginal costing to calculate profit. There were 10,000 units of opening
inventory and 12,000 units of closing inventory for the period.

If absorption costing principals had been used and the fixed overhead absorption rate was $15 per
unit, the marginal costing profit for the period compared to the absorption costing profit would have
been:
A. 30,000 lower
B. 30,000 higher
C. 60,000 lower
D. 60,000 higher

30. Juergen uses the economic order quantity (EOQ) model to establish the reorder quantity for raw
material B. He holds no buffer inventory. Information relating to raw material B is as follows:

Annual usage: 48,000 units

Purchase price: $80 per unit
Ordering costs: $120 per order
Annual holding costs: 10% of purchase price

The supplier has offered Jurgen a discount of 1% on the purchase price if each order placed is for
2,000 units. The total annual saving to Jurgen of accepting this offer is: (Answer in zero decimal
points)

31. ‘Material Stores’ is one of the service cost centre in a factory.

What would be the most appropriate basis for the reapportionment of the overheads of Materials
Stores to the cost centres it serves.
A. Number of materials requisitions
B. Number of purchase requisitions
C. Reorder level of each material
D. Value of materials inventory

32. Consider the following statements:

1. The difference between the profit reported by absorption costing and that reported by
marginal costing is due to over or under absorption of overhead
2. Absorption costing profit will be higher than marginal costing profit if sales units exceed
production units
Are the above statements true or false?
Statement 1 Statement 2
A. True True
B. True False
C. False False
D. False True
33. The following table shows the sales of various branches of a company at shopping malls in
Malaysia:-

Shopping Malls Sales ($)

Mid Valley 50,000
KLCC 75,000
Sunway Pyramid 88,000
Subang Parade 30,000

The best diagram to highlight the differences of the sales amongst the shopping malls is:
A. A multiple bar chart
B. A simple bar chart
C. A pie diagram
D. A percentage component bar chart

34. The following classifications may be applied to costs:

(i) direct
(ii) fixed
(iii) period
(iv) production
Which of the above classifications could be applied to the cost of raw materials used by a company
in the manufacture of its range of products?

35. A company recovers overheads on the basis of chargeable labour hours. Budgeted overheads for
the latest period were $28,800 and the actual chargeable labour hours worked were 400. The actual
overheads of $26,700 were over-absorbed by $2,280. The budgeted overhead absorption rate per
chargeable hour was:
A. $72.00
B. $66.75
C. $61.05
D. $72.45

36. Summary results for Y limited for March are shown below.
$000 Units
Sales revenue 820
Variable production costs 300
Variable selling costs 105
Fixed production costs 180
Fixed selling costs 110
Production in March 1,000
Opening inventory 0
Closing inventory 150
What is the profit for March, using marginal costing method?
Answer in zero decimal points.
37. In a period, a manufacturing process incurred raw materials costs of $26,950 and conversion
costs of $17,260.

There were no process losses. Completed output from the process in the period was 1,600 units and
400 units remained unfinished, complete for materials and with 60% of the conversion cost applied.
There was no opening work-in-progress.

What was the production cost per unit in the period (to two decimal places of $)
A. $22.11
B. $22.86
C. $23.28
D. $24.03

38. The following data relates to production activity in a cost centre for a period:
Budget Actual
Output (units) 9,600 9,400
Labour (hours) 2,400 2,320
What was he efficiency ratio in the period (to one decimal place)?
A. 96.97%
B. 97.9%
C. 98.7%
D. 101.3%

39. A company makes a component. It uses an average of 5,000 of these throughout the year. The
production rate for these components is 500 per week and the cost of holding one item for the year
is $1.50. The factory is open for 50 weeks per year. The company has calculated the economic batch
quantity as 2000 units. What is the production setup cost per batch?

Note: Economic Batch Quantity =

A. $213
B. $240
C. $480
D. $960

40. Machine parts are assembled in a factory. One of the components used in assembling machine
part MP7 is component C6.
Which of the following is an example of a cost unit in the factory?
A. A unit of component C6
B. A unit of machine part MP7
C. The cost per unit of component C6
D. The cost per unit of machine part MP7

41. A company employs 100 direct workers in the factory, who are paid a basic rate of $5 per hour
for a 35 hour week. In addition to working their normal hours last month, each worker was asked to
work an additional 5 hours overtime per week to meet general production requirements. All
overtime hours are paid at a time and a half. As a result of some faulty material, 150 hours of direct
labour time were registered as idle. What is the indirect labour cost for last month, assuming a 4
week period? (Answer in zero decimal points)
42. The following information has been collected from the accounting records of a company:
Variable cost per unit: $
Manufacturing 6.00
Selling and administration 0.20

Fixed costs
Manufacturing 90,000
Selling and administration 22,500
Production was 75,000 units and sales were 70,000 units.
The selling price was $8 per unit throughout the year.
What is the difference in profit using marginal costing for inventory valuation, rather than absorption
costing?
Answer to zero decimal points.

43. The following statements relate to overhead absorption:

(i) Factory rents and rates are typically allocated to departments rather than apportioned
(ii) A single product firm does not need to apportion overheads to find a cost per unit
(iii) If departmental overhead recovery rates are similar it makes little difference if
overheads are applied on a departmental or business wide basis.

Which of these statements are correct?

44. See Qi produces and sells a single product whose variable cost is $6 per unit. Fixed costs have
been absorbed over the normal level of activity of 200,000 units and have been calculated as $2 per
unit. The current selling price is $10 per unit. How much profit is made under marginal costing if the
See Qi sells 250,000 units?

45. Cari Ltd is preparing the its budgets for the coming year and expects to be able to sell 50,000
units of its only product, Cooza, in January 20X2. Sales in February 20X2 is expected to be 20% lower
based on previous experience, followed by a raise of 10% every month until June 20X2.

Each unit of Cooza require 2.5kg of Material A and 3 hours of Grade A labor. Material A is available in
the market at the price of $3 per kg. Grade A labor is currently paid at $8.00 per hour but a one time
5% increment is expected to all hourly rate in Cari Ltd starting from January 20X2.

The company has inventory policy as follow:

- To hold finished goods inventory at the end of each month equal to 20% of the following
month’s sales.
- To hold raw material inventory of 35,000 kg at the end of each month
 1. Calculate the production budget (in units) for:
a. January 20X2
b. February 20X2
c. March 20X2
2. Calculate the raw materials purchases budget (in $) for:
d. January 20X2
e. February 20X2
f. March 20X2
3. Calculate the labour budget (in $) for:
g. January 20X2
h. February 20X2
i. March 20X2

46.An organisation operates a process that creates two joint products (J and K). Last month, joint
costs of $60,000 were incurred and the organisation apportions these to the joint products using the
sales value method. Data relating to last month were as follows:
Product Production Sales Selling price
Litres Litres per litre
J 10,000 9,000 $2
K 5,000 6,000 $1

What was the apportionment of joint costs to product K for last month? (Answer in zero decimal
point).
Answer
1. ii and iii
2. Job costing
3. 21,150
4. Dr POH 20,750 Cr Statement P&L 20,750
5. 1250
6. $29,800
7. 18.75%
8. $22.96
9. $13,800
10. 2,3,4
11. 15.6
12. $131,000
13. $8,400
14. Product costs are understated and profits overstated
15. The budget committee consists of managers with final responsibility for agreeing the budget
16. Both statement are false
17. $406,830
18. Increase by less than 15%
19. $230,000
20. Multi-stage
21. $2,840
22. Statement 1 is false whilst Statement 2 is true.
23. 1361 Cleaning materials
24. $7,750
25. $3,840
26. $12.50
27. 1,292
28. 517 units
29. $30,000 lower
30. $37,200
31. Number of materials requisitions
32. False, False
33. A simple bar chart
34. i and iv
35. $72.45
36. $170,000
37. $22.86
38. 101.3%
39. $480
40. A unit of machine part MP7
41. $5,750
42. $6,000
43. ii and iii only
44. $600,000
45. a. 48,000
b. 40,800
c. 44,800
d. 360,000
e. 306,000
f. 336,600
 g. 1,209,600
h. 1,028,160
i. 1,130,976
46. $12,000