OBJECTIVES

Answer all questions in this section

1. Overhead incurred in directing, controlling and managing a business to achieve it's aims are

A. Administration overhead. B. Distribution overhead

C. Production overhead. D. Selling overhead

2. Items of cost equipment, location or person in respect of which costs are ascertain for control
purpose is

A. Cost unit. B. Unit cost

C. Cost apportionment. D. Cost centre

3. The grouping of cost under a common characteristics is cost

A. Allocation. B. Absorption

C. Classification. D. Apportionment

4. Which of the following is not a selling cost?

A. Cost of advertising. B. Packaging cost

C. Showroom expenses. D. Cost of samples

5. Which of the following is a reason for premium bonus schemes?

A. To increase motivation

B. To ensure quality of work

C. To reduce pressure on workers to increase production

D. To ensure proper time keeping system

Use the following information to answer questions 6 to 8

All workers at Apam ltd work a 40 hour week. Overtime is calculated at a time and half. Below are
the hours worked by Richard and Collins

Total hours worked. Rate per hour

Richard 57. ghc10

Collins. 59. ghc 7

6. What is the gross pay for Richard?

A. Ghc 655. B. Ghc 570. C. Ghc 400. D. Ghc 255

7. What is the gross pay for Collins?

A. Ghc 479.50. B. Ghc 413.00. C. Ghc 280.00. D. Ghc 199.50

8. What is the overtime pay for Richard?

A. Ghc 570. B. Ghc 285. C. Ghc 255. D. Ghc 170

9. Which of the following is the most appropriate basis for apportioning canteen expenses?

A. Direct wages paid. B. Floor area

C. Number of employees. D. Value of machinery

10. Cost apportionment is done so that

A. Common costs are shared among cost centres

B. Costs are controlled

C. Each cost unit incurs overheads as it passes through a cost centre

D. Whole items of cost are charged to cost centres

11. A remuneration system which links the level of payment to quantity of output is

A. Overtime. B. Salary. C. Bonus. D. Piecework

12. Which of the following are the methods of labour remuneration?

I day rate. II piecework. III premium bonus

A. I only. B. I and II only. C. II and III only. D. I, II and III only

13. The base used when apportioning rents and rates is

A. Number of employees. B. Capital employed

C. Floor area occupied. D. Production hours

Use the following information to answer questions 14 to 16

Lemonade enterprise had the following bonus schemes for it's workers.

Time allowed. 40 hours per week

 Rate per hour. Ghc 50

Bonus. 1/2 of time saved

Samuel, a labourer worked for 32 hours in a week

14. What is Samuel's basic pay?

A. Ghc 1,600. B. Ghc 1,800. C. Ghc 2,000. D. Ghc 2,400

15. Calculate Samuel's bonus pay

A. Ghc 100. B. Ghc 200. C. Ghc 400. D. Ghc 800

16. What is Samuel's total pay for the week?

A. Ghc 1600. B. Ghc 1800. C. Ghc 2,000. D. Ghc 2,200

17. Which of the following is not production overhead?

A. Electricity expenses. B. Salary of administrative manager

C. Salary of factory watchman. D. Salary of production foreman

18. Cost accounting involves

A. Ensuring the approval of expenditure

B. The techniques and processes of ascertaining costs

C. Preparing financial statement for management

D. Distribution of profits earned by an employee

19. Which of the following is a direct cost?

A. Carriage inwards. B. Salary of foreman

C. Depreciation of plant. D. Electricity charges

20. The method of remuneration used where the rate of production is outside the control of the
employee is

A. Incentive scheme. B. Piece rate

C. Premium bonus. D. Time rate

Use the following information to answer questions 21 to 23

 A proprietor pays ghc50.00 per unit of output subject to a guarantee minimum wage of ghc2500 per
month

21. If a labour produces 80 units, how much will he receive?

A. Ghc7,500. B. Ghc4,000. C. Ghc2,500. D. Ghc800

22. How much is payable to a worker who produces 30 units?

A. Ghc 7,500. B. Ghc2,500. C. Ghc1,500. D. Ghc300

23. If a worker produces 50 units how much will he be receive?

A. Ghc7,500. B. Ghc5,000. C. Ghc2,500. D. Ghc500

24. Costs can be classified according to all the following except by

A. Nature. B. Magnitude. C. Function. D. Behaviour

25. A copy of the purchase order is sent to the following except the

A. Supplier. B. Stores

C. Sales department. D. Accounting department

26. Cost accounting information helps to determine

A. Salaries of employees. B. Selling price of goods and services

C. Tax liability. D. The profit and loss of a business

27. Which of the following is true of indirect materials?

I. It cannot be traced as part of a product

II. it includes consumables

III. It is charged to a particular cost account

IV. It comprises small items of material used in production.

A. I and II only. B. I, II and III only

C. I, II and IV only. D. II and IV only

28. Total cost comprises of

A. Direct costs and overheads. B. Indirect expenses and materials

C. Indirect costs and expenses. D. Indirect costs and overheads

29. The work of a cleaner in a manufacturing firm is classified as

A. Direct expenses. B. Direct labour

C. Indirect expenses. D. Indirect labour

30. The basis of apportionment that is most suitable for factory power is

A. Floor area. B. Maintenance hour

C. Number of employees. D. Kilowatt hour

31. The document used to record attendance time of individual workers is

A. Clock card. B. Job card. C. Time sheet. D. Wage card

32. A document received by an employee at the end of every pay period including his earnings is

A. Clock card. B. Pay- in slip

C. Pay slip D. Pay voucher

33. The method of remuneration which is used where a specialized kind of work is carried out is

A. A differential piece rate. B. Premium bonus

C. Straight piece rate. D. Time rate

34. Which of the following remuneration methods is used where wage is paid at a standard rate for
completing a unit output?

A. Piece rate. B. Premium bonus. C. Overtime rate. D. Time rate

35. Overstocking of materials will lead to

A. High price of materials. B. High storage cost

C. High labour turnover. D. High distribution cost

36. Which of the following is a statutory deduction on payroll?

A. credit purchases. B. Loans

C. Social security fund. D. Staff welfare dues

Use the information to answer questions 37 and 38

Company M has two production department A and B which consumed electricity of 25 kilowatt-hour
and 15 kilowatt-hour respectively. The company paid D 20,000 for electric power
37. Calculate the apportioned electric bill for department A

A. D 33,300. B. D 12,500. C. D 7,500. D. D 2,400

38. How much electricity did department B consume?

A. D 33,300. B. D 12,500. C. D 7,500. D. D 2,400

39. The process of determining cost of product or service is

A. Cost apportionment. B. Cost ascertainment

C. Cost classification. D. Cost separation

40. Which of the following is a classification according to behaviour?

A. Fixed cost. B. Indirect cost. C. Factory cost. D. Production cost.

THEORY

Answer two(2) questions from this section

1. Explain the following terms in labour remuneration

A. Time allowed. B. Time saved

C. Time taken. D. Premium bonus

E. Overtime premium

2. State two(2) difference each between

i straight piece rate and differential piece rate

ii time rate and piecework

III. Halsey scheme and Halsey weir scheme

3a. Explain labour turnover

b. State four(4) causes of labour turnover

c. List four(4) preventive cost of labour turnover

4. Identify six (6) overheads and state the appropriate basis of appointment of each
 PRACTICALS

1. The following information related to the earnings of seven employees of a firm for the month of
December 2009.

Name of employees. No. of hours worked. Rate per hour

Eric. 300. 4.00

Sampson 350. 3.00

Robert. 150. 20.00

Ampadu. 125. 5.00

Samuel. 400. 10.00

Edward. 380. .. 20.00

Chris. 410. 5.00

Additional information

I. Rent allowance enjoyed by all employees is 10% of basic earnings

II. Income tax is 5% of all earnings above ghc1200 but not exceeding ghc1,400.

Earnings above ghc1,400 are taxes at 10%.

III. Social security contribution is 5% for all employed.

IV. Health insurance is ghc20.00 per employee

V. Samuel and Edward belong to the senior staff club and pay monthly dues of ghc10.00 each.

You are required to prepare a payroll showing

A. Basic earnings. B. Gross earnings

C. Taxable earnings. D. Total deductions. E. Net earnings

2. A factory has four production departments and two service departments. Overhead incurred in the
first two week of October 1999 were
 Production department. Service department. Total

A. B. C. D. I. II. Ghc

Ghc. Ghc. Ghc. Ghc. Ghc. Ghc

Indirect labour. 60,000. 70,000. 120,000. 115,000. 25,000. 40,000. 430,000

Indirect material. 85,000. 65,000. 73,500. 28,200. 16,000. 28,000. 295,700

Depreciation. 35,000. 42,500. 38,500. 16,800. 15,500. 19,500. 167,800

Maintenance. 23,200. 18,500. 16,500. 23,000. 16,500. 14,,500. 112,200

Rent. 45,000

Electricity. 38,000

Canteen. 126,000

Health. 45,000

Repairs to building. 28,000

Cleaning of premises. 25,800

Total. 203,200. 196,000. 248,500. 183,000. 73,000. 102,000.=. 1,313,500

Further information provided as follows

Production department. Service department

A. B. C. D. I. II

Area occupied. 250. 150. 260. 180. 70. 90

Number of employees. 120. 80. 95. 84. 56. 65

Direct labour hours. 10,000. 8,000. 9,000. 12,000. _. _

Stock of materials in

Units. 12,500. 6,500. 9,200. 45,800. _. _

Service department overhead are absorbed by the production department in the following proportion:

Production department. Service department I. Service department II

A. 30% 25%
 B. 40%. 35%

C. 20%. 15%

D. 10%. 25%

You are required to prepare an overhead analysis sheet showing the total overheads to be allotted to
each production department.

3. His Grace Co LTD is a manufacturing company with the following budgeted information for the year
ended 30th June, 2007.

Le

Direct materials cost. 200,000

Direct labour cost. 50,000

Production overheads. 150,000

Direct expenses. 10,000

The activity levels of operation were budgeted to include the following:

Production. 150,000 units

Machine hours. 12,500 units

Labour hours. 10,000 units

You are required to calculate the following overhead absorption rates:

A. Direct labour hour rate. B. Machine hour rate

C. Production units rate. D. Direct materials cost percentage rate

E. Prime cost percentage rate