‘Cost and-Management Accounting is 4, different from, Financial Accounting in “ALL of the following ways EXCEPT that (A) it-does not follow generally : ‘accepted accounting principles © @)___ the information provided is used inside the organizatioa (© __itprovides detailed analytical data for users it provides usefvl information for users Mary worked 9 hours on job ABX. The 5. regular rate is $7 per hour. Job ABX required 7 hours of regular time and 2 hours overtime at a rate of 50 per cent above the regular rate, What was the cost of labour applied to Job ABX? $56 363 $70 $94.50 the cost that will produce maxi- ‘mum profit a target cost for the period ahead 6, the average cost of production in the cost period alias greaier than active cost Each question is worth ONE mark. James intends to sell tyres at a special rate. He is able to purchase tyres at $300 each and intends to sell them at $400 each. His fixed costs include $8 000 for advertising. He will be reimbursed for any tyre not sold due to damage. How many tyres will James need to sell in order to break even? (A) 40 ®) 60 «80 (D) 100 Which of the following is the MAIN advantage of activity-based costing over conventional methods? (A) Product costs more accurately reflect those activities which influence the level of support 3 overheads. (B) _Asingle cost driver can explain the cost behaviour of ALL items in its associated pool. (©) Some overheads may require arbitrary cost apportionment. (D) tis easier to operate than the other conventional methods. Controllable costs can BEST be defined as (A) processing costs before transfer to a department (B) costs incurred as a result of plant expansion (C) costs which are the responsibility ofa manager (D) costs which are the responsibil of employees GO ON TO THE NEXT PAGE2 2B. What is the BEST method of payment to employees that could be used by a firm when ourput 1s difficult to measure and where wages are not affected by the level of output? (A) Bonus (B) — Piece-rate (©) Fixed salary () Commission Which of the following BEST describes the type of costing often called “full costing’? (A) Standard costing (B) Variable costing (© Activity-based costing {D) Absorption costing a ‘The following information relates to items 14 and 1S. 14. “The Hilary Firm uses ajob-order costing systema. The frm uses machine hours asthe basis for overhead allocation in its cost centre No. 10. Cost data for a production period are as follows: Estimated Actual 8 s Overheads 85 000 82 605 Machine hours 7500 7210 Prime cost 125 000 126 000 ‘What is the predetermined overhead rate? (A) $11.33 per machine hour (B) $11.45 per machine hour (©) _ $28.00 per machine hour (D) $29.00 per machine hour ‘What is the amount of over- OR under absorbed overhead? (A) $ 619 under-absorption (@) $ 916 over-absorption (©) $ 916 under-absorption (D) $9 116 over-absorption GO ON TO THE NEXT PAGE26, 22. ‘The following information refers to items 20 and 21, John Mayor uses a standard costing system. For the month of May the budgeted production was 2,000 units with each unit requiring 8 kilograms of materials at a cost of $5 per kilogram. Actual production in May was 1 800 units and 16 200 kilograms of materials costing $72,900 were used in producing that number of uni ‘What was the material efficiency variance 21. for the month of May? (A) $1000 adverse (B) $7 100 adverse (©) $8 100 adverse (D) $9000 adverse ‘The net present value of a project is posi- 24. tive. However, the company did not accept this project. One can assume that for this project (A) the qualitative factors outweigh the benefit of the investment (B) a positive net present value is unacceptable © the net initial investment cannot be recovered (D) the return is greater than that required by the company ‘The Ramsaran Co. requires 70 000 units of product G for the year. ‘The units will be used evenly throughout the year. It costs $80 to place an order. Its carrying Gost is $15 per unit. What is the eonomic order quantity (EOQ) (rounded to the nearest whole unit)? (A) 600 B) 690 , (C800 (D) 864 What was the material price variance for the month of May? (AY $7 100 adverse (B) $7200 favourable (C) $8 100 adverse (D) $8 100 favourable The income statement of Black River Factory showed the following: 8 Direct labour cost $55 000 Indiect raw materials $70 000 Factory rent and rates, $25 000 Factory light and heat $ 8000 Depreciation on plant 360 000 What was the total factory overhead cost? (A) $ 93.000 (By) $158.000 (©) $163.000 (D) $218 000 Berbice Co. applies overhteads to jobs at the rate of 40 per cent of direct labour cost. Direct materials of $1 250 and direct labour of $1400 were expended on Job AB -424 during June. At May 31, the balance of Job AB - 424 was $2 800. What was the June 30 balance ? (A) $3210 (B) $4760 (Cc) $5450 (D) $6010 GO ON TO THE NEXT PAGE29. Harold Inc. uses the weighted-average method in its process costing system. The Curing Department of Harold Ine. reported the following information for the month of March 2004. Conversion Units Percentage Complete Work-in-process, March, 1 10000 80 per cent Units started 28.000 Completed and transferred out 30.000 Work-in-process, March 31 8.000 30 per cent Costs for March: Materials Conversion Work-in-process, March 1 $ 34500 $ 48 600 ‘Added during the month $146 000 14.409 All materials are added at the beginning of the process. Required: (Compute the following items for the company’s monthily production report using the weighted: average method: (a) The equivalent units of production for materials [1 mark } (6) The equivalent units of production for conversion {mark} (©) The cost per equivalent units for conversion (mark } (@) The cost per equivalent units for materials (mark | (@) The cost of units completed and transferred out (2 marks] Total 6 marks GO ON TO THE NEXT PAGEt= ide | 231. Leto Medical Clinic has two service departments, namely (i) Building Services and (ii) 13 Energy. Ir also has three operating departments, namely (i) Paediatrics, (ii) Ear, Nose and 13 Throat (ENT), and (ii) Surgery. Central allocates the cost of ‘Building Services’ on the basis of t square footage and ‘Energy’ on the basis of patient days. No distinction is made beween variable and fixed costs. Budgeted operating data for the year just completed is shown below. Service Departments Operating Departments Building Services Eni Paediatrics ENT Surgery Budgeted costs 5 before allocation $20000 $1000 $9.000 60000 $100 000 ‘Square footage 1.000 4.000 6.000 18.000 12.000 Patient days, - - 3500 7700 8800 Prepare a schedule to allocate service department costs to operating departments by the direct method (round all dollar amounts to the nearest whole dollar), ‘Total 6 marks GO ON TO THEPerrine ‘Marla Inc. uses 15 000 pounds of wire each year in its production of Rema cratt items, The cost of placing an order is $10. The cost of holding ONE pound of plastic for one year is $0.30. ‘Marla uses an average of 60 pounds of plastic per day. It takes five days to place and receive an onder. Required: (@ Calculate the Economic Order Quantity (EOQ), {3 marks} (>) Calculate the annual ordering and carrying costs for the Economic Order Quantity (EOQ). [2 marks] [1 mark } Total 6 marks END OF TEST e711 APE