COMPILED BY SIR EMMY

Department _______________ Course Code: ACC 220

Name ________________________________________________ Time allowed: 1 Hour

1. The following extract of information is available concerning the four cost centres of AGE Limited.
Production cost centres Service cost
centre
Machinery Finishing Packing Canteen
Number of direct employees 7 6 2 -
Number of indirect employees 3 2 1 4
Overhead allocated and appo1iioned N28,500 N18,300 N8,960 N8,400
The overhead cost of the canteen is to be re-apportioned to the production cost centres on the basis of the
number of employees in each production cost centre. After the reapportionment the, the total overhead
cost of the packing department, to the nearest N, will be A. N1,200 B. N9,968 C. N10,080 D.
N10,160 E. N10,500
The following information relates to quests 2 and 3
Budgeted information relating to two department in ADEMOLA Ltd. for the next period is as follows:
Production Direct Direct Direct Machine
Department overhead material cost labour cost labour hours hours
N N N
1 27,000 67,500 13,500 2,700 45,000
2 18,000 36,000 100,000 25,000 300
Individual direct labour employees within each department earn differing rates of pay, according to
their skills, grade and experience.
2. What is the most appropriate production overhead absorption rate for department1? A. 40% of direct
material cost B. 200% of direct labour cost C. N0.72 per direct labour hour D. N0.60 per machine
hour E. N6.00 per machine hour
3. What is the most appropriate production overhead absorption for department 2? A. 50% of direct
material cost B. 18% of direct labour cost C. N0.72 per direct labour hour D. N60 per machine hour
E. Non of the above.
4. Which of the following statements about predetermined overhead absorption rates are true? (i)
Using predetermined absorption rate avoids fluctuations in unit costs caused by abnormally higher low
overhead expenditure or activity levels. (ii) Using a predetermined absorption rate offers the
administrative convenience of being able to record full production costs source. (iii) using a
predetermined absorption rate avoids problems of under/over absorption of overheads because a
constant overhead rate is available.
A. (i) and (ii) only B. (i) and (iii) only C. (ii) and (iii) only D. All of them E. None of them
5. Over-absorbed overheads occur when (a) Absorbed overheads exceed actual overheads B. Absorbed
overheads exceed budgeted overheads C. Actual overheads exceed budgeted overheads D. Absorbed
overheads equals actual overheads E. Production in units is greater than sales unit.
The following information relates to questions 6 and 7
A company has the following actual and budgeted data for year 4.
Budgeted Actual
Production 8,000 units 9,000 units
Variable production overhead per unit N3 N3
Fixed production overheads N360,000 N432,000
Sales 6,000 units 8,000 units
Overheads are absorbed using a rate per unit, based on budgeted output and expenditure.
6. The production overhead absorbed during year 4 was
A. N384,000 B. N405,000 C. N430,000 D. N459,000 E. N432,000
7. Production overhead was: A. under absorbed by N27,000 B. under absorbed by N72,000 C. under
absorbed by N75,000 D. over absorbed by N27,000 E. over absorbed by N72,000
8. Which of the following would be the most appropriate basis for apportioning machinery insurance costs
to cost centres within a factory? A. The number of machines in each cost centre B. The floor area
occupied by the machinery in each cost centre C. The value of the machinery in each cost centre
D. The operating hours of the machinery in each cost centre E. Repair and maintenance hours
9. Factory overheads can be absorbed by which of the following methods? (i) Direct labour hours (ii)
Machine hours (iii) As a percentage of prime cost (iv) Nx per unit
A. (i), (ii), (iii) and (iv) B. (i) and ii) only C. (i), (ii) and (iii) only D. (ii), (iii) and (iv) only E. (iii) and (iv)
only
SHORT ANSWER QUESTIONS
10. The process whereby whole cost items are charged direct to a cost unit or cost centre is known as
……………………………
11. Name of three stages in charging overheads to units of output ………………………..
12. A direct labour hour basis is most appropriate in which environment? ………………………
13. ________________ means that the overheads charged to the cost of sales are greater than the overheads
actually incurred.
14. _______________ means that insufficient overheads have been included in the cost of sales.
15. An absorption rate used throughout a factory and for all jobs and units of output irrespective of the
department in which they were produced is known as ……………………………………
16. Overhead absorption is sometimes called ………………………………..
17. The results of the reciprocal method of apportionment may also be obtained using ………. and
……………….
18. Another name for reciprocal method of apportionment is ……………………
19. _____________ is a procedure whereby indirect costs are spread fairly between cost centres.
20. ______________ is a method for sharing overheads between different products on a fair basis.
21. Overheads is actually the totality of …………………, ………………… and ……………………….
22. At EOQ level, total ordering cost is equal to……………………………………………………………………………
23. One of these is not a method of material pricing. (A) First In First Out (B) Weighted Average (C) Last In
Last Out (D) Last In First Out
24. BUSINESS EDU Ventures incurred ₦40,000 to ship 19,000 pounds and ₦34,000 to ship 16,000 pounds.
If the company ships 18,000 pounds, its expected shipping expense is closest to: (A) ₦38,000 (B) ₦37,895
(C) ₦38,500 (D) ₦38,250
25. Techniques for separation of mixed costs include the following EXCEPT (A) Elimination method (B)
Engineering method (C) Account analysis method (D) Scatter graph method
26. A firm bought 300 units of materials in January 2023 at ₦100 per unit, 200 units in February at ₦250
per unit and 400 units in April at ₦300 per unit. If the firm sold 500 units at ₦450 per unit in May, the
cost of goods sold using the LIFO method is ………………………
27. On the 1st of January, the books of Hope Ltd. reveal 1,875 units of certain material valued at ₦175 per
unit. On the 20th of January and15th of February, the company bought 1,250 units and 1,875 units of
the same material at ₦185 and ₦198 per unit respectively. Only 3,500 units were issued to production
during the period. Using the FIFO method, what is the cost of 3,500 units issued in the period? (A)
₦668,125 (B) ₦636,325 (C) ₦633,625 (D) ₦636,625
28. The EOQ of JCIL Ltd. is 400 units and cost per order is ₦20. If the cost of holding one inventory is ₦2,
the annual demand is………….…
29. A cost per unit that remains unchanged irrespective of changes in activity level is known
as……………………………………………
30. A detailed document used to record both the quantity of material received and the price value is known
as……………………………
31. A place, department, location, or unit where cost is collected, accumulated and further analysed is known
as……………………….
32. The re-order level of TRUE SCHOLAR is 600 units, EOQ is 2,000 units, and re-order period is 3 to 5
weeks. If its average usage is 100 units, the minimum stock level for TRUE SCHOLAR would
be………………….……………………………………………
33. The EOQ of GOOD-PEOPLE Enterprise is 1,000 units, re-order level is 400 units, and re-order period is
4 – 6 days. If its maximum usage is 300 units and minimum usage is 150 units, the maximum stock
level for GOOD-PEOPLE would be …………………………
34. FAITHFUL STUDENTS Ltd. purchased 300 units of materials for ₦60 per unit on the 10th of May. The
firm made another purchase of 200 units for ₦80 per unit on the 19th of May. On May 24th the firm issued
150 units to production department. If the firm operates the weighted average (WA) method, the total
cost of material issued to production department would be………………………………….
35. One of these is not a method of overhead apportionment. (A) One-step apportionment (B) Cross allotment
(C) Double step apportionment (D) Sequential apportionment
36. Cost accounting information is governed by rules and standards, while financial accounting information
is multidimensional and does not need rules and standards, True or False? ………….
37. The difference between time booked as per time card and time booked as per job card is known
as………………………………
38. The benefit from one decision that is sacrificed for an alternative decision is known as ……………………
39. ECONOMICS Manufacturing buys 20,000 units of material in a year. The annual holding cost per naira
of stock is 40 kobo. If ordering cost per order is ₦16 and unit purchase price is ₦10, the total material
cost for the year is? (A) ₦216,400 (B) ₦204,600 (C) ₦201,600 (D) ₦261,400
40. The centre where costs are collected and revenues are generated is known as. ………………………………
41. INSURANCE Ltd. pays its workers ₦5,000 per hour in an 8-hour working day. If the firm pays for overtime
hours at a time and a half, the overtime premium rate would be ……………………………………..
42. If an idle time is caused by time intervals between jobs, the idle time wage would be treated
as………………………………
43. The normal working day in a factory is 8 hours and workers are paid ₦48,000 per hour worked. If the
standard time allowed to produce 2 units of its product is 5 minutes and Okechukwu produced 180 units
in 6 hours, what is the time saved by Okechukwu? (A) 2 hours (B) 1 hours (C) 0.5 hour (D) 1.5 hour
44. The premium wage of overtime hours worked as a result of labour shortage would be treated
as…………………………
45. An idle time wage which is caused by machine breakdown would be treated as……………………………..
46. BUSINESS-EDU Ventures pays its workers ₦12,000 per hour in an 8-hour working day and a worker is
expected to produce five units of its products in 10 minutes. If Yemi produced 700 units, his wage under
the piece rate method would be……………………………
47. The budgeted overhead of ACTUARIAL SCIENCE Ltd. is ₦80,000 and its budgeted activity is 40,000 direct
labour hours. If the actual overhead during the period is ₦84,000 and 45,000 direct labour hours are
worked, the over/under absorption of overhead would be? (A) ₦6,000 over absorption (B) ₦10,000
under absorption (C) ₦6,000 under absorption (D) ₦10,000 over absorption
48. ER & HRM Enterprise has the following details: Budgeted overhead cost is ₦615,000; Actual consulting
hours are 32,150 hours; Actual overhead cost is ₦694,075. If overheads were over-recovered by ₦35,000,
the budgeted overhead absorption rate per hour is……………
49. ACCOUNTING LIMITED manufactures Baby Sandals in a hired facility, paying rent. The company has
three departments: A, B and C occupying 250 square feet, 450 square feet and 300 square feet
respectively. Dept. B’s share of the annual rent is ₦5,400,000. How much is the annual rent? (A)
₦12,000,000 (B) ₦4,800,000 (C) ₦3,000,000 (D) ₦3,600,000
50. INSURANCE Enterprise has two service departments and two production departments. The information
for each department for 2023 is as follows:
Service department Production department
Admin. Maintenance Molding Assembly
₦ ₦ ₦ ₦
Budget overheads 20,000 16,000 6,000 4,000
Direct labour hours 50 100 300 300
Machine hours 20 30 200 200
Number of employees 400 500 300 1000
If the administration costs are allocated based on machine hours and maintenance costs are allocated
based on direct labour hours, the total overhead cost for Molding department using the direct method
(One-step apportionment) would be? (A) ₦22,000 (B) ₦24,500 (C) ₦24,000 (D) ₦22,500

51. Discuss the effect of over-absorption and under-absorption on profit.