MA1
MANAGEMENT
INFORMATION
PRACTICE QUESTIONS
FOUNDATIONS IN
ACCOUNTANCY (FIA)
MA1 MANAGEMENT INFORMATION
MA1 MANAGEMENT INFORMATION
TABLE OF CONTENTS
QUESTIONS
PAGE NUMBER 2
ANSWERS
PAGE NUMBER 126
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QUESTIONS
Cost Classification by Nature
DAILY QUIZ 1
1.)Which of the following is most likely to be treated as an indirect cost by a
house builder?
A.)Nails and screws
B.)Windows
C.)Bricks
D.)Electricity cables
2.)Which of the following is a direct expense?
A.)Materials used on production
B.)Special tools for Job 721
C.)Power
D.)Depreciation
3.)Which costs are included within a prime cost?
A.)All variable costs
B.)Direct labour and material only
C.)Direct labour, direct material and direct expense
D.)Direct labour, direct material and production overheads
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4.)A company manufactures and sells toys and incurs the following costs
1.Rental of the finished goods warehouse
2.Depreciation of its own fleet of delivery vehicles
3.Commission paid to sales staff
Which of these are classified as distribution costs?
A.)1 and 2 only
B.)2 and 3 only
C.)2 only
D.)All of them
5.)Which of the following defines cost classification?
A.)The grouping of costs according to their common characteristics
B.)The allotment of items of cost to cost centres
C.)The sum of all costs incurred
D.)The use by several companies of the same costing methods
ASSIGNMENT 1
1.)A small engineering company that makes generators specifically to customer’s
own designs has had to purchase some special tools for a particular job. The tools
will have no further use after the work has been completed and will be scrapped.
How should the cost of these tools be treated?
A.)Variable production overheads
B.)Fixed production overheads
C.)Indirect expenses
D.)Direct expenses
2.)Which of the following statements best describes a direct cost?
A.)A cost which cannot be influenced by its budget holder
B.)Expenditure which can be economically identified with a specific cost unit
C.)A cost which needs to be apportioned to a cost centre
D.)The highest proportion of the total cost of a product
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3.)Which costs are included within production overheads?
A.)Variable overheads only
B.)Indirect labour, indirect material and indirect expenses related to production
activity
C.)Indirect expenses only
D.)Indirect labour and material related to the production activity
4.)Which ONE of the following would be classified as direct labour?
A.)Personnel manager in a company servicing cars
B.)Bricklayer in a construction company
C.)General manager in a DIY shop
D.)Maintenance manager in a company producing cameras
5.)What is the full production cost per unit of a manufactured product?
A.)Direct material cost plus direct labour cost per unit
B.)Prime cost plus production overhead cost per unit
C.)Prime cost plus variable production overhead per unit
D.)Production overhead cost per unit
Cost Classification by Behaviour
DAILY QUIZ 2
1.)Which of the following describes the term ‘cost unit’?
A.)A basis for cost classification
B.)A production or service department
C.)A unit of product or service
D.)The cost of a unit of output
2.)Which of the costs listed below is NOT a fixed cost?
A.)Insurance
B.)Business rates
C.)Depreciation – based on straight-line method
D.)Materials used in production
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3.)The following charts demonstrate various costs in relation to activity:
Which of the above charts represents variable cost per unit?
A.)Chart 1
B.)Chart 2
C.)Chart 3
D.)Chart 4
4.)Which of the following statements best describes a semi-variable cost?
A.)A cost that increase in direct proportion to output
B.)A cost that remains constant irrespective of the level of output
C.)A cost that contains an element of both fixed and variable cost
D.)A cost that increases throughout the year
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5.)The following costs are recorded for different levels of production:
Costs
Units of production
Period 1
$1,400
200
Period 2
$1,600
300
Period 3
$1,600
400
How can the cost above be classified as?
A.)fixed
B.)variable
C.)semi-variable
D.)stepped
ASSIGNMENT 2
1.)A company produces electronic circuit boards. Each circuit board has a raw
material input of $60 and labour input that costs $20. The company intends to
produce 1,000 circuit boards per week. The company must also pay the rent of the
factory totaling $20,000 per annum, business rates of $4,000 per annum and the
production director’s salary of $24,000 per annum.
What is the fixed cost of the business?
A.)$20,000
B.)$24,000
C.)$48,000
D.)$80,000
2.)A sales representative earns a basic salary of $10,000 per annum, a guaranteed
end-of-year bonus of $5,000 and 5% commission on the value of sales.
What cost classification is appropriate for the sales representative’s salary?
A.)Direct cost
B.)Product cost
C.)Semi-fixed cost
D.)Prime cost
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MA1 MANAGEMENT INFORMATION
3.)The annual costs of supervision in a department are estimated to be $40,000 if
hours worked in the department are less than 32,000 each year, $65,000 if hours
worked are between 32,000 and 50,000 and $80,000 if hours worked are over
50,000 in the year. These costs are an example of:
A.)a semi-fixed cost
B.)a fixed cost
C.)a stepped cost
D.)a variable cost
4.)Which of the following costs would be most likely to be illustrated by the
diagram given below?
A.)Total materials cost
B.)Factory rent
C.)Total wages cost
D.)Telephone expense
5.)What is a cost unit?
A.)The cost per hour of operating a machine
B.)The cost per unit of electricity consumed
C.)A unit of product or service in relation to which costs are ascertained
D.)A measure of work output in a standard hour
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Semi-variable + High Low Method
DAILY QUIZ 3
1.)Which of the following is the best description of a stepped-fixed cost?
A.)A cost with both a fixed element and a variable element
B.)A cost which increases as the level of activity increases
C.)A cost which is fixed no matter what the level of activity
D.)A cost which is fixed for a certain level of activity and then increases
2.)The following is an extract from a list of data concerning production overheads
in a factory.
Output (units)
Management cost ($)
Utilities cost ($)
35,000
75,000
31,000
40,000
80,000
34,000
45,000
80,000
37,000
50,000
85,000
40,000
What types of cost behaviour are indicated by the data above?
Management
A.)Fixed
B.)Fixed
C.)Stepped-fixed
D.)Stepped-fixed
Utilities
Semi-variable
Variable
Semi-variable
Variable
3.)The following data relate to two output levels of a department:
Machine hours
Overheads
17,000
$246,500
18,500
$251,750
What is the amount of fixed overheads?
A.)$5,250
B.)$59,500
C.)$187,000
D.)$246,500
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4.)Which of the following is usually classed as a step cost?
A.)Supervisor’s wages
B.)Raw materials
C.)Rates
D.)Telephone
5.)Direct operatives in a factory are paid on a time rate basis for a 35-hour week.
If productivity can be improved what will happen to direct labour costs per
unit of output?
A.)Decrease
B.)Increase
C.)No change
D.)Not possible to determine from the information provided
ASSIGNMENT 3
1.)A telephone bill has been received with a line rental of $25 per month, and a
charge per cell of 5c.
Which is the best description of this telephone cost?
A.)A fixed cost
B.)A variable cost
C.)A stepped-fixed cost
D.)A mixed cost
2.)Costs have been recorded at three output levels:
Production output 100,000 units
Total costs
$207,000
105,000 units
$213,000
110,000 units
$218,200
Using the high-low method, what is the variable cost per unit (to two decimal
places of $)?
A.)$0.89
B.)$1.04
C.)$1.12
D.)$1.20
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3.)Marlows manufactures one product- jeans. As management accountant at
Marlows you have determined the following information:
$
Direct materials
10
Direct Labour
29
Direct expenses
3
Factory expenses
-variable
7
-fixed
5
Non-manufacturing costs -variable
2
-fixed
4
60
Profit is 33% of total cost
What is the variable cost?
A.)$54 per unit
B.)$42 per unit
C.)$51 per unit
D.)$49 per unit
4.)A bakery recorded the following information:
Number of loaves produced
6,000
8,000
10,000
Total production costs ($)
9,800
11,800
13,800
All loaves baked were identical and there was no wastage.
What cost behaviour pattern describes the bakery's total production cost?
A.)Semi-variable
B.)Variable
C.)Fixed
D.)Step fixed
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5.)A mail order company distributes sales items by post. All other
communication is by email or the internet. Are postage costs likely to be:
A.)Fixed
B.)Variable
C.)Semi-variable
D.)Stepped fixed
RESPONSIBILITY ACCOUNTING
DAILY QUIZ 4
1.)In a garage, costs are associated with each car that comes in for repair.
Cars are therefore:
A.)Cost centres
B.)Cost units
C.)Profit centres
D.)Investment units
2.)For which of the following would an information system use cost centres,
rather than revenue centres, in order to provide useful information?
A.)A manager of a shop in a retail chain
B.)One of three departmental managers for a trading company
C.)The personnel manager of a manufacturing company
D.)The manager of a company’s service decision provided after sales service
3.)Which of the following statements best describes as cost centre?
A.)A unit of product or service for which costs are calculated
B.)An amount of profit attributable to an activity
C.)A function or location within an organization for which costs are accumulated
D.)A section of the organization for which budgets are prepared and control is
exercised
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4.)A manager has responsibility for both costs incurred and revenues earned by his
area of the business
Which of the following is the manager responsible for?
A.)A cost centre
B.)A revenue centre
C.)A profit centre
D.)An investment centre
5.)Which of the following best describes a profit centre?
A.)Part of a business where management makes investment decisions
B.)Part of a business that provides a service to other parts of the business
C.)Part of a business where finished products are manufactured
D.)Part of a business where management is responsible for revenues and costs
ASSIGNMENT 4
1.)Which is the best description of responsibility accounting?
A.)Employees will be held responsible for all decisions they make
B.)Managers delegate responsibility for performance to employees
C.)Directors delegate responsibility for performance to managers
D.)Managers bear responsibility for the revenues and costs of their area of the
business
2.)A manager has responsibility for costs incurred, revenues earned and investment
in non-current assets in one area of a business.
What is the manage responsible for?
A.)A cost centre
B.)A revenue centre
C.)A profit centre
D.)An investment centre
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3.)For which of the following types of business unit would residual income be
a suitable measure of performance?
A.)Cost centre
B.)Revenue centre
C.)Profit centre
D.)Investment centre
4.)Which of the following is a profit centre manager responsible for?
A.)Costs only
B.)Costs and revenues only
C.)Cost, revenues and investment
D.)None of the above
5.)Which activity is LEAST likely to be the responsibility of the accounting
function of a large organization?
A.)Calculation of wages
B.)Control of trade receivables
C.)Dispatch of customer orders
D.)Payment of trade payables
PERFORMANCE RATIOS
DAILY QUIZ 5
1.)If sales are $25,500, and cost of sales are $21,250, what is the gross profit
percentage?
A.)16.67%
B.)20.00%
C.)83.33%
D.)120.00%
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2.)A business has credit sales of $150,000 and cash sales of $50,000. The
production costs are $120,000 with selling costs of $35,000 and administration cost
of $25,000.
What is the operating profit margin (to the nearest one decimal place)?
A.)10.0%
B.)20.0%
C.)22.5%
D.)40.0%
3.)Which of the following is the best description of residual income?
A.)Profits after interest and tax but before depreciation
B.)Profit before interest, tax and depreciation
C.)Profit before tax less a notional interest charge
D.)Profits after tax, interest and depreciation
This data relates to questions 4 & 5:
Recent results of a division are:
Sales
Cost of sales
Gross Profit
Expenses
Net Profit
$
5,000,000
(3,000,000)
2,000,000
(1,500,000)
500,000
It had been budgeted to produce 100,000 units and these should have taken 5 hours
each. In fact, 120,000 units were produced in 580,000 hours.
The capital employed by the division is $4,000,000 and the interest rate is 7%
4.)Calculate “expenses to sales ratio”
5.)Calculate “RI”
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ASSIGNMENT 5
The following information relates to questions 1 & 2:
20X7
$
7,500
500,000
37,500
Profit
Sales
Capital employed
20X8
$
9,000
450,000
60,000
1.)Calculate the change in ROI from 20X7 to 20X8?
A.)Decrease from 20% to 15%
B.)Increase from 1.5% to 2%
C.)Increase from 7.5% to 13.3%
D.)Decrease from 100% to 90%
2.)What is the asset turnover for 20X8?
A.)0.075 times
B.)0.13 times
C.)7.5 times
D.)13.3 times
3.)A Business has the following results:
Sales
Cost of sales
Gross profit
Expenses
Net profit
$
100,000
(20,000)
80,000
(30,000)
50,000
What is the net profit margin for the Business?
A.)50%
B.)80%
C.)62·5%
D.)200%
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4.)The assumption behind a residual income calculation is that:
A.)Divisions have to borrow from banks to finance themselves so have to be
charged interest
B.)Head office must charge subsidiaries interest so that head office results are
comparable
C.)Before their performance can be judged, subsidiaries should bear a notional
charge for their use of capital
D.)RI is just another name for ROCE
5.)You are given the following information about a business.
Gross profit margin
Gross Profit
Operating expenses
30%
$240,000
$106,000
What is the operating profit margin (to two decimal places)?
A.)14.72%
B.)16.75%
C.)33.97%
D.)55.83%
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MATERIAL INTRODUCTION-1
DAILY QUIZ 6
1.)Are each of the following statements, about documents used in the
materials control cycle, true or false?
(1) A materials requisition will be completed when materials are needed from
stores by a production department
(2) A purchase order is sent to the purchasing department to request that materials
be ordered from a supplier
(3) A goods received note is sent to the supplier to confirm that goods have been
received
A.)
B.)
C.)
D.)
True
(1) and (2)
(2) and (3)
(1)
(1) and (3)
False
(3)
(1)
(2) and (3)
(2)
2.)A goods received note (GRN) provides:
 A.)Information used to update inventory records
 B.)Information to check that the correct price has been recorded on the
supplier’s invoice
 C.)Information to check that the correct quantity of goods has been recorded
on the supplier’s invoice
 D.)Information to record any unused materials which are returned to stores
3.)What is the main purpose of prime entry records?
A.)To calculate the cash received and spent by a business
B.)To prevent a large volume of unnecessary detail in the ledgers
C.)To provide a monthly check on the double-entry bookkeeping
D.)To separate the taxable and exempt sales tax transactions
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4.)When a purchase invoice is received from a supplier which documents
should it be checked to?
A.)Purchase requisition and delivery note
B.)Purchase order and goods received note
C.)Advice note and delivery note
D.)Purchase requisition and goods received note
5.)When ABC Co returns goods to DEF Co (a credit supplier), which of the
following documents should ABC expect to receive?
A.)Invoice
B.)Credit note
C.)Receipt
D.)Remittance advice
ASSIGNMENT 5
1.)Which of the following is NOT an example of internal information for the
accounts department?
A.)Goods received note
B.)Time sheets for employees
C.)Materials requisitions from the factory
D.)Purchase invoices from suppliers
2.)What document shows the amount due to a supplier for goods bought?
A.)Purchase invoice
B.)Purchase requisition
C.)Goods received note
D.)Purchase order
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3.)Which of the following would NOT appear as an addition or deduction on
the face of a purchase invoice received from a supplier?
A.)Cash discount
B.)Trade discount
C.)Net cost of goods
D.)Sales tax
4.)Which of the following documents in the purchases cycle would be
generated by the supplier?
A.)Purchase order
B.)Credit note
C.)Purchase requisition
D.)Goods received note
5.)The following documents are used in the process of purchasing and using
materials.
1.Purchase order
2.Goods received note
3.Purchase requisition
4.Materials requisition
5.Delivery note
Which of the documents would be used to update the stores ledger accounts?
A.)2, 3 and 5
B.)1 and 2
C.)2 and 4
D.)3,4 and 5
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MATERIAL INTRODUCTION-2
DAILY QUIZ 7
1.)Failure to record inventory returned to stores will result in which of the
following if a physical stocktake were not undertaken?
Inventory quantity
A.)Higher than shown on record card
B.)Lower than shown on record card
C.)Lower than shown on record card
D.)Higher than shown on record card
Production costs
Higher than it should be
Higher than it should be
Lower than it should be
Lower than it should be
2.)Which of the following is a materials requisition NOT used for?
A.)Updating the bin card in stores
B.)Charging the job, overhead or department that is using the materials
C.)Recording employee time
D.)Updating the stores ledger account in the costing department
3.)Bin-card is maintained by:
A.)Production department
B.)Store
C.)Purchase department
D.)Accounting department
4.)Which member of staff is most likely to raise a goods received note?
A.)Delivery note
B.)Finance director
C.)Sales ledger clerk
D.)Warehouse clerk
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5.)Which one of the following is least likely to be carried out by the accounts
department?
A.)Collecting money receivables from credit customers
B.)Receiving goods from suppliers into store
C.)Processing expenses claims
D.)Arranging payments of tax to the tax authorities
ASSIGNMENT 7
1.)Who is most likely to record deliveries into stores?
A.)Stores clerk
B.)Sales clerk
C.)Accounts clerk
D.)Personnel assistant
2.)Which of the following describes a purchase order?
A.)Issued by the purchasing department, sent to the supplier requesting materials
B.)Issued by the stores department, sent to the purchasing department requesting
materials
C.)Received together with the materials and compared to the materials received
D.)Issued by the production department, sent to the stores department requesting
materials
3.)Which of the following is in the correct chronological sequence for sales
documents?
A.)Enquiry-Order-Invoice-Payment
B.)Order-Enquiry-Invoice-Payment
C.)Enquiry-Order-Payment-Invoice
D.)Enquiry-Invoice-Order-Payment
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4.)Which of the following statements are TRUE?
1.A bin card record the quantity of inventory on hand whereas a store ledger
account records the monetary value as well as the quantity of the inventory on
hand.
2.A perpetual inventory system is one where each receipt or issue of material is
recorded as it takes place.
A.)Both statements are correct
B.)Both statements are incorrect
C.)Statement 1 is correct but statement 2 is incorrect
D.)Statement 1 is incorrect but statement 2 is correct
5.)Which of the following documents is NOT part of the purchasing system?
A.)Purchase requisition
B.)Goods received note
C.)Delivery note
D.)Purchase invoice
VALUATION METHODS: FIFO, LIFO
DAILY QUIZ 8
1.)If a company is using the FIFO method for material issues at a time when
material prices are rising, this will mean which of the following?
(1)Profits will be higher than if LIFO was used
(2)Profits will be higher than if weighted average pricing was used
(3)The closing inventory valuation will be lower than if LIFO is used
A.)All of the statements are true
B.)Statements 1 and 2 are true, statement 3 is false
C.)Statements 2 and 3 are true, statement 1 is false
D.)All of the statements are false
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2.)The following data relates to a raw material:
Date
1 Jan
3 Mar
4 Jun
6 Jun
9 Sep
Balance b/f
Issue
Receipt
Receipt
Issue
Units
100
40
50
50
70
Unit Price $
5.00
Value $
500.00
5.50
6.00
275.00
300.00
If the LIFO method of pricing is used, what is the value of the issue on 9
September?
A.)$350
B.)$395
C.)$410
D.)$420
3.)Which of the following is TRUE about the effect of different methods of
pricing raw materials from inventory in a period of consistently rising prices?
(1)Production costs will be higher using FIFO rather than LIFO
(2)Closing inventory values will be lower using periodic weighted average rather
than cumulative weighted average
A.)1 only
B.)2 only
C.)Both statements
D.)Neither statement
4.)A firm has a high level of inventory turnover and uses the FIFO (First IN First
Out) issue pricing system.
In a period of rising purchase prices, the closing inventory valuation is which
of the following?
A.)Close to current purchase prices
B.)Based on the prices of the first items received
C.)Much lower than current purchase price
D.)The average of all goods purchased in the period
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5.)G Co makes the following purchases and sales.
1 January
31 January
15 February
28 February
14 March
Purchases
Purchases
Sales
Purchases
Sales
4,000 units for $10,000
1,000 units for $2,000
3,000 units for $13,000
1,500 units for $3,750
500 units for $1,200
At 31 March which of the following closing inventory valuations using FIFO is
correct?
A.)$8,000
B.)$7,500
C.)$7,000
D.)$6,500
ASSIGNMENT 8
1.)G Co makes the following purchases and sales.
1 January
31 January
15 February
28 February
14 March
Purchases
Purchases
Sales
Purchases
Sales
4,000 units for $10,000
1,000 units for $2,000
3,000 units for $13,000
1,500 units for $3,750
500 units for $1,200
At 31 March which of the following closing inventory valuation using LIFO is
correct?
A.)$6,500
B.)$7,000
C.)$7,500
D.)$8,000
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2.)A company uses the FIFO method to price issues of raw material to production
and to value its closing inventory.
Which of the following statements best describes the FIFO method?
A.)The last materials received will be the first issued to production
B.)The first materials issued will be priced at the cost of the most recently received
materials
C.)The last materials issued will be those that were most recently received
D.)The first materials issued will be priced at the cost of the earliest goods still in
inventory
The following information relates to questions 3 & 4.
The inventory record for component BXY for the month of January showed:
Receipts
Value
Issues
$
Opening Inventory
500
1,250
4 January
1,000
2,750
11 January
1,600
4,480
18 January
1,200
3,480
19 January
2,100
25 January
1,500
4,350
31 January
1,800
3.)Using the FIFO method of pricing, what was the cost of issues during the
month?
A.)$11,250
B.)$10,800
C.)$10,850
D.)$11,300
4.)Using the LIFO method of pricing issues, what is the value of inventory at
31 January?
A.)$4,100
B.)$3,720
C.)$5,120
D.)$3,950
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5.)The purchase price of raw materials is increasing. The company uses the LIFO
method of valuing inventory.
Which of the following statements about the value of closing inventory is
correct?
A.)Close to current purchase prices
B.)Higher than current purchase prices
C.)Based on the prices of the latest items received
D.)Based on the prices of the earliest items received
VALUATION METHOD: WEIGHTED AVERAGE
DAILY QUIZ 9
1.)The following transactions relate to Material MM3 for a period:
Day
1
5
8
15
Transaction
Balance
Issue
Purchase
Issue
Quantity (kgs) Price ($ per kg)
276
6.20
181
630
5.80
215
What is the value of the issues for the period (to the nearest $) using the
periodic weighted average pricing method?
A.)$2,297
B.)$2,380
C.)$2,376
D.)$2,345
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2.)Are the following statements, about weighted average methods of raw
materials pricing, true or false?
1.The periodic weighted average method requires the recalculation of the issue
price after each issue is made
2.Fluctuations in issue price are reduced if the cumulative, rather than the periodic,
weighted average method is used
Statement 1
A.) True
B.) True
C.) False
D.) False
Statement 2
True
False
True
False
3.)The following purchases and issues from inventory occurred in September.
1 September
3 September
9 September
14 September
26 September
Opening Inventory
Receipts
Issue
Receipts
Issue
500 units
150 units
325 units
204 units
175 units
$5.10
$5.60
$5.25
What is the value of closing inventory under the periodic weighted average
method?
A.)$1,805
B.)$1,848
C.)$1,911
D.)$1,982
4.)If a company wanted to ensure that its cost of production included the most
recent cost for material, it would use:
A.)standard cost
B.)first-in, first-out (FIFO)
C.)weighted average cost
D.)last-in, first-out (LIFO)
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5.)The data relating to a specific inventory item for the month of June is as
follows:
Data
1 June
3 June
5 June
12 June
24 June
Opening Inventory
Receipts
Issues
Receipts
Issues
Receipts
Units price per unit ($) Value ($)
100
5.00
500
300
4.80
1,440
Units
220
170
5.20
884
300
Using the cumulative weighted average price method of inventory valuation,
what is the cost of the materials issued on 5 June?
A.)$1,056
B.)$1,067
C.)$1,078
D.)$1,100
ASSIGNMENT 9
1.)The following purchases and issues from inventory occurred in September.
1 September
3 September
9 September
14 September
26 September
Opening Inventory
Receipts
Issue
Receipts
Issue
500 units
150 units
325 units
204 units
175 units
$5.10
$5.60
$5.25
What is the value of the closing inventory under the periodic weighted
average method?
A.)$1,805
B.)$1,848
C.)$1,911
D.)$1,982
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2.)The following purchases and issues from inventory occurred in July.
1 July
5 July
9 July
14 July
26 July
Opening inventory
Purchase
Issue
Purchase
Issue
250 units
100 units
50 units
100 units
200 units
$3.00
$3.05
$3.08
What is the value of the closing inventory under the cumulative weighted
average method?
A.)$600
B.)$606
C.)$609
D.)$610
3.)The inventory record for Component C2 for a month shows:
Day
1
12
14
18
Movement
Balance
Receipt
Issue
Receipt
kg
86
200
174
200
$ per kg
11.20
11.90
12.00
The periodic weighted average method is used to price the issue of materials. Each
average price is rounded to the nearest $0.01.
What is the cost of the issue in the month?
A.)$2,070.60
B.)$2,034.06
C.)$2,056.68
D.)$2,079.30
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MA1 MANAGEMENT INFORMATION
4.)A company values stocks using the weighted average value after each purchase.
The following materials receipts and issues were made last month:
Date
Brought
forward
4th
16th
20th
21st
Units
100
Receipts
$/unit
$5.00
Valuation
$500
150
$5.50
$825
Issues
Units
100
100
$6.00
$600
75
What is the value of the closing stock using the weighted average method?
A.)$1,012.50
B.)$976.50
C.)$962.50
D.)$925.00
5.)Turner has the following inventory record:
Date
1 March
3 March
8 March
15 March
17 March
21 March
23 March
27 March
Opening Inventory
Receipt
Issue
Receipt
Receipt
Issue
Receipt
Issue
Number of units
100 units
200 units
250 units
300 units
200 units
500 units
450 units
350 units
Cost
at $3.00/unit
at $3.50/unit
at $3.20/unit
at $3.30/unit
at $3.10/unit
What is the valuation of issues using the weighted average method of
inventory valuation at each issue?
A.)$3,248
B.)$3,548
C.)$3,715
D.)$4,015
30
MA1 MANAGEMENT INFORMATION
MATERIAL USAGE AND PURCHASE BUDGET
DAILY QUIZ 10
1.)Product P3 requires 0.4 litres of material M5 per unit. Inventories are planned to
change during period 6 as follows: Product P3: decrease of 200 units Material M5:
increase of 150 litres.
6,000 units of product P3 are planned to be produced in period 6.
What is the planned usage of material M5 in the production of product P3 in
period 6?
A.)2,400 litres
B.)2,550 litres
C.)2,250 litres
D.)2,320 litres
2.)260 kilograms (kg) of Material M are required to produce 1,000 units of Product
P. Budgets for the next period include:
Sales of Product P
Inventory of Product P:
Opening
Closing
Inventory of Material M:
Opening
Closing
6,400 units
2,600 units
3,000 units
540 kg
480 kg
What is the budgeted usage of Material M in the next period?
A.)1,768 kg
B.)1,560 kg
C.)1,828 kg
D.)1,708 kg
31
MA1 MANAGEMENT INFORMATION
3.)A company manufactures a finished product from one raw material. 5 kg of the
raw material are required per unit of output. Opening inventory at start of a period
was 1,250 kg. During the period 3,000 units were produced and closing inventory
of the raw material was 1,500 kg.
How much material was purchased in the period?
A.)3,250 kg
B.)14,750 kg
C.)15,000 kg
D.)15,250 kg
4.)There is to be an increase next year in the rent from $12000 to $14000 for a
warehouse used to store finished goods ready for sale.
What will be the impact of this increase on the value of inventory
manufactured and held in the warehouse?
A.)an increase of $14,000
B.)a decrease of $14,000
C.)no change
D.)an increase of $2,000
5.)Each finished unit of Product X contains 1.4 litres of Material Y. 10% of
material Y used is lost in processing. Sales and production of Product X in a period
were 21,000 and 20,200 units respectively.
What was the usage of Material Y in the period?
A.)31,108 litres
B.)31,422 litres
C.)32,667 litres
D.)28,280 litres
32
MA1 MANAGEMENT INFORMATION
ASSIGNMENT 10
1.)A company produced 6,200 units of a product in a period. The product uses
0.8kg of material per unit of output. The inventory of the material fell by 380kg in
the period.
How much of the material was purchased in the period?
A.)4,580kg
B.)4,960kg
C.)5,340kg
D.)7,370kg
2.)Product X requires 1·8 kg of a raw material per finished unit. The material has a
weight loss of 10% in preparation for manufacture. Inventory of the material is
currently 420 kg but needs to be increased to 500 kg. 2,000 units of Product X are
to be manufactured.
How many kg of the raw material need to be purchased to satisfy the above
requirements?
A.)3,880
B.)3,920
C.)4,040
D.)4,080
3.)Each finished unit of Product X contains 1.4 litres of material Y. 10% of
material Y used is lost in processing. Sales and production of Product X in a period
were 21,000 and 20,300 units respectively.
What was the usage of Material Y in the period?
A.)31,108litres
B.)31,422litres
C.)32,667litres
D.)28,280litres
33
MA1 MANAGEMENT INFORMATION
4.)A manufacturing company has budgeted sales next year of 5,000 units of
product T. Each unit of product T uses 3 units of a component X. The company
plans to increase inventory levels of finished goods by 200 units by the end of the
year, and to increase inventory levels of component X by 400 units.
What will be the budgeted purchase quantities of component X for the year?
A.)15,200 units
B.)15,400 units
C.)15,600 units
D.)16,000 units
5.)A company manufactures a finished product from one raw material. 5kg of the
raw material are recorded per unit of output. Opening inventory at the start of a
period was 1,250kg. During the period 3,000 units were produced and closing
inventory of the raw material was 1,500kg.
How much material was purchased in the period?
A.)3,250kg
B.)14,750kg
C.)15,000kg
D.)15,250kg
FREE INVENTORY AND MATERIAL LEDGER
DAILY QUIZ 11
1.)There are currently 120 units of an item in inventory. There are material
requisitions amounting to 40 units that have not yet been acted on and there are 90
units on order.
What is the free inventory?
A.)70
B.)170
C.)120
D.)250
34
MA1 MANAGEMENT INFORMATION
2.)What is the double entry for materials returned to a supplier which had
been purchased on credit?
A.)
B.)
C.)
D.)
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Payables
Materials control
Receivables
Materials control
Materials control
Payables
Materials control
Receivables
3.)When materials are purchased on credit and an interlocking costing system
is in use what is the double entry for the purchase?
A.)
B.)
C.)
D.)
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Materials control
Payables
Materials control
Cost ledger control
Payables
Materials control
Cost ledger control
Materials control
4.)Material M is used by a manufacturer. Inventory of Material M at 1 May was
valued at a cost of $3,302 (260 kg at $12.70 per kg). 500 kg were purchased on 7
May for $6,500. 410 kg of Material M were used in production during the month.
The LIFO method is applied at the end of each month.
What is the cost accounting entry for the issues of Material M during the
month?
Debit
A.)Material Inventory
B.)Work-in-progress
C.)Material Inventory
D.)Work-in-progress
$5,252
$5,252
$5,330
$5,330
Credit
Work-in-progress $5,252
Material Inventory $5,252
Work-in-progress $5,330
Material Inventory $5,330
35
MA1 MANAGEMENT INFORMATION
5.)Which of the following defines free inventory?
A.)Inventory on hand + inventory on order – inventory scheduled for use
B.)Inventory on hand – inventory on order – inventory scheduled for use
C)Inventory on hand + inventory on order + inventory scheduled for use
D.)Inventory on hand – inventory on order + inventory scheduled for use
ASSIGNMENT 11
1.)A company has 7,500 kgs of a raw material in inventory. 1,250 kgs has been
committed for future use and a further 3,000 kgs have been ordered.
What is the free inventory?
A.)7,500kgs
B.)10,500kgs
C.)5,750kgs
D.)9,250kgs
2.)A company operates an integrated accounting system.
What would the accounting entries for the issue to production of indirect
materials from inventory be?
Debit
A.)Work in progress account
B.)Stores control account
C.)Overhead control account
D.)Cost of sales account
Credit
Stores control account
Overhead control account
Stores control account
Stores control account
3.)In an interlocking accounting system what would be the correct double
entry for the issue of direct materials from a warehouse?
A.)Dr Raw material inventory
B.)Dr Raw material inventory
C.)Dr Work in progress
D.)Dr Production overhead
Cr
Cr
Cr
Cr
Work in progress
Production overhead
Raw material inventory
Raw material inventory
36
MA1 MANAGEMENT INFORMATION
4.)What is the double-entry, in an interlocking system, for the purchase of raw
materials on credit?
Debit
A.)Raw materials inventory
B.)Trade Payables
C.)Raw materials inventory
D.)Cost ledger control
Credit
Trade Payables
Raw materials inventory
Cost ledger control
Raw materials inventory
5.)There are 275 units of material BX in stock. An order for 650 units is expected
and a material requisition for 300 units has not yet been issued to the production
cost centre.
What is the free inventory?
A.)275 units
B.)625 units
C.)650 units
D.)675 units
REMUNERATION METHODS
DAILY QUIZ 12
1.)An organization operates a piecework system of remuneration, but also
guarantees its employees 80% of a time-based ate of pay which is based on $20 per
hour for an eight hour working day. Three minutes is the standard time allowed per
unit of output. Piecework is paid at the rate of $18 per standard hour.
If an employee produces 200 units in eight hours on a particular day, what is
the employee’s gross pay for that day?
A.)$128
B.)$144
C.)$160
D.)$180
37
MA1 MANAGEMENT INFORMATION
2.) A company operates a piecework payment scheme. Workers receive $0.60 for
each unit produced. However company guarantees that each worker will receive at
least $45 per day.
Shown below is the number of units produced by worker A during a recent week:
Day
Units produced
Monday
90
Tuesday
70
Wednesday Thursday Friday
75
60
90
What are worker A’s earnings for the week?
A.)$225
B.)$243
C.)$231
D.)$456
3.)Number of Computers sold by each sales person are:
Sales Person
Ahmad
Bilal
Ahsan
Usman
S1
13
12
14
15
M1
15
20
20
15
S2
25
15
20
15
Z1
10
15
20
15
The sales price for each type of computer is $1,000.
Commission is paid on computer sales as follows:
S1
M1
S2
Z1
8% x the selling price
12% x the selling price
16% x the selling price
24% x the selling price
How much commission will Usman earn for selling S1 and Z1?
A.)$7200
B.)$1200
C.)$3600
D.)$4800
38
MA1 MANAGEMENT INFORMATION
4.)Which of the following methods of remuneration is NOT an incentive-based
scheme?
A.)Straight piecework
B.)High day rate
C.)Group bonus
D.)Differential piecework
5.)A differential piecework scheme has a basic rate of $0.50 per unit. Output in
addition to 500 units is paid at higher rates. The premiums over and above the
basic rate, which apply only to additional units over the previous threshold, are:
Output (units)
501-600
Above 600
Premium (per unit)
$0.05
$0.10
What is the total amount paid if output is 620 units?
A.)$317
B.)$318
C.)$322
D.)$372
ASSIGNMENT 12
1.)In a factory, a team of six maintenance staff are paid a guaranteed salary.
Which of the following is the most appropriate cost classification for their
labour cost?
A.)Direct labour cost
B.)Indirect labour cost
C.)Semi-variable cost
D.)Variable overhead cost
39
MA1 MANAGEMENT INFORMATION
2.)An employee is paid on a piecework basis as follows.
Up to 100 units per week
101 to 120 units per week
121 units or more per week
$2.40 per unit
$2.70 per unit
$3.00 per unit
Only the additional unit qualify for the higher rate and rejected units do not qualify
for payment
In a week when the employee produced 133 units of which 11 were rejected
what would be the employee’s gross pay for the week?
A.)$297
B.)$300
C.)$333
D.)$366
3.)An employee is paid on a piecework basis. The basis of the piecework scheme is
as follows:
1 to 100 units - $0.40 per unit
101 to 200 units - $0.50 per unit
201 to 299 units - $0.60 per unit
with only the additional units qualifying for the higher rates. Rejected units do not
qualify for payment,
During a particular day the employee produced 240 units of which 8 were rejected
as faulty.
What did the employee earn for the day’s work?
A.)$109.20
B.)$114.00
C.)$139.20
D.)$144.00
40
MA1 MANAGEMENT INFORMATION
4.)A company operates a piecework scheme to pay its staff. The staff receive $0.20
for each unit produced. However the company guarantees that every member of
staff receive at least $15 per day.
Shown below is the number of units produced by Operator A during a recent week:
Day
Units produced
Monday
90
Tuesday
70
Wednesday Thursday Friday
75
60
90
What are Operator A’s earnings for the week?
A.)$75.00
B.)$77.00
C.)$81.00
D.)$152.00
5.)Hassan packs goods on assembly line. He is paid a different amount each
week, depending on his output of assembled goods. By what method of
remuneration is Hassan paid?
A.)Piecework
B.)Commission
C.)Hourly paid
D.)Salaried
DIRECT AND INDIRECT LABOUR
DAILY QUIZ 13
1.)Jane is a direct worker. She works 40 hours per week and is paid $5 per hour.
Overtime is paid at time and a half. She worked for 45 hours in a week.
Calculate Direct and Indirect Labour cost?
Direct Labour
$
Indirect Labour
$
41
MA1 MANAGEMENT INFORMATION
2.)John is a carpenter. He works 45 hours per week and paid at a rate of $5 per
hour. He worked for 50 hours on a specific request of customer. Overtime is paid
at time and one third.
Calculate Direct and Indirect Labour cost?
Direct Labour
$
Indirect Labour
$
3.)Catherine is a supervisor. She works 40 hours per week and paid at a rate of $5
per hour. In a week she worked for 50 hours in a specific request of a customer.
Overtime is paid at 100% of basic rate.
Calculate Direct and Indirect Labour cost?
Direct Labour
$
Indirect Labour
$
4.)Peter is a store-keeper. He worked for 50 hours for a 48 hours week and paid at
a rate of $5 per hour. Overtime is paid at 50% of basic rate.
Calculate Direct and Indirect Labour cost?
Direct Labour
$
Indirect Labour
$
42
MA1 MANAGEMENT INFORMATION
5.)Labour costs for a period in production cost centre P1 include:
Gross wages of direct operatives:
Normal hours
$76,200
Overtime hours (at a premium of 50% over the normal rate)
$9,600
Gross wages of indirect operatives:
Normal hours
$14,300
Overtime hours (at a premium of 50% over the normal rate)
$1,650
Overtime is worked, as necessary to satisfy seasonal sales demand.
What amount of the above labour costs would be charged to production
overhead?
A.)$19,150
B.)$15,950
C.)$25,550
D.)$15,400
ASSIGNMENT 13
1.)A manufacturing company has 20 employees, each paid a basic rate of $5 an
hour. A standard working week is 35 hours; overtime is paid at time and a quarter.
Last week all employees worked 37 hours, producing 3,000 units.
What is the total unit labour cost?
A.)$1.23/unit
B.)$1.25/unit
C.)$0.06/unit
D.)$1.54/unit
2.)A manufacturing organization has 24 employees who are paid a basic hourly
rate of $6.00 for a standard 38 hour week with any overtime hours being paid at a
rate of time and a half. In a typical week the employees all work 4 hours of
overtime and produce a total 2,500 units of the organisation’s product.
What is the total unit labour cost for the product?
A.)$2.19
B.)$2.30
C.)$2.42
D.)$2.53
43
MA1 MANAGEMENT INFORMATION
3.)Which of the following are indirect costs?
1.The depreciation of maintenance equipment.
2.The overtime premium incurred at the specific request of a customer.
3.The hire of a tool for a specific job.
A.)Item 1 only
B.)Items1 and 2 only
C.)Items 2 and 3 only
D.)All of them
4.)Which one of the following would be classified as direct labour?
A.)Personnel manager in a company servicing cars
B.)Bricklayer in a construction company
C.)General manager in a DIY shop
D.)Maintenance manager in a company producing cameras
5.)A manufacturer employs two grades of labour in its machining department,
grade A and grade B. Grade A employees are treated as direct labour employees
and grade B employees are treated as indirect labour employees. Grade A
employees are paid $8 per hour and grade B workers receive $6 per hour. The
basic working week is 40 hours. Overtime is paid at time + 50%, to all employees
in the department. There are 10 grade A employees and 6 grade B employees.
During a particular week, each grade A employee worked for 45 hours and each
grade B employee worked for 43 hours. The overtime was necessary due to staff
sickness.
What will be the charge to production overhead for the week?
A.)$54
B.)$254
C.)$1,602
D.)$1,802
44
MA1 MANAGEMENT INFORMATION
IDLE TIME
DAILY QUIZ 14
1.)Which of the following payments to direct workers in a factory would be
charged as indirect labour?
(1)Overtime premiums resulting from a general increase in sales demand
(2)Time spent training on the operation of new equipment
(3)Idle time caused by machine breakdown
A.)1 and 2 only
B.)1 and 3 only
C.)2 and 3 only
D.)1, 2 and 3
2.)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?
A.)$6,804
B.)$7,560
C.)$8,316
D.)$8,400
45
MA1 MANAGEMENT INFORMATION
3.)During the month of September 20X3 the following labour hours were worked.
Direct production workers – 2,300 basic hours plus 500 hours of overtime
Indirect workers – 640 hours including 120 hours of overtime
The direct workers are paid a basic rate of $7.20 per hour and the indirect workers
$6.20 per hour. Overtime hours are paid at time and a half. The overtime premium
for direct labour is classed as an indirect cost. Of the hours paid to the direct
production workers 100 of these were idle time hours.
What is the direct labour cost for the month?
A.)$16,560
B.)$16,740
C.)$19,440
D.)$20,160
4.)Production labour costs incurred during a period included the following items:
(1)Salary of factory manager $2,400
(2)Training of direct workers $1,660
(3)Normal idle time $840
(4)Overtime premiums of direct workers $2,760
(5)Overtime hours of direct workers at basic rate $9,200
What total amount would usually be charged to production overhead for the
above items?
A.)$4,060
B.)$4,900
C.)$7,660
D.)$16,860
5.)Which of the following is normally treated as a direct labour cost?
A.)Controllable idle time
B.)Uncontrollable idle time
C.)Overtime premium due to a temporary backlog in production
D.)Overtime premium at the specific request of a customer
46
MA1 MANAGEMENT INFORMATION
ASSIGNMENT 14
1.)Henry is estimating the labour cost of a new product, PX. 100 units of PX would
be produced in the coming period and each unit of PX requires two labour hours,
however 20% of the total labour hours are expected to be idle. Labour would be
paid at $10 per hour.
What would be the total labour cost of producing 100 units of PX?
A.)$2,400
B.)$1,600
C.)$2,500
D.)$2,000
Data for questions 2 & 3
In week 23 the direct production workers of an organization worked for 740 hours
including 110 hours of overtime. The indirect workers worked for 200 hours which
included 40 hours of overtime. Included in the direct workers’ hours were 50 hours
of idle time. The direct production workers have a basic rate of $8.40 per hour and
the indirect workers have a basic rate of $6 per hour. All overtime is paid at time
plus one third. Overtime premiums are treated as indirect costs.
2.)What is the amount to be debited to the work in progress account?
A.)$2,008
B.)$5,796
C.)$6,216
D.)$6,524
3.)What is the amount to be debited to the production overhead control
account?
A.)$1,280
B.)$1,588
C.)$2,008
D.)$5,796
47
MA1 MANAGEMENT INFORMATION
4.)There is to be an increase next year in the rent from $12000 to $14000 for a
warehouse used to store finished goods ready for sale.
What will be the impact of this increase on the value of inventory
manufactured and held in the warehouse?
A.)an increase of $14,000
B.)a decrease of $14,000
C.)no change
D.)an increase of $2,000
5.)Which of the following is the correct treatment?
A.)Direct Labour: standard hours at basic rate
Indirect Labour: overtime hours at overtime rate
B.)Direct Labour: total hours worked at actual rates
Indirect Labour: idle hours at standard rate
C.)Direct Labour: standard and idle hours at basic rate
Indirect Labour: overtime hours at overtime premium
D.)Direct Labour: total hours worked at basic rate
Indirect Labour: overtime hours at overtime premium
BONUS
DAILY QUIZ 15
1.)Basic pay = $9/hour for a 40 hour week.
Normal production in that time = 120 units
Bonus = 50% of the time saved on production paid at time and a third
What will be the total wage in a week in which 150 units are made in 40
hours?
A.)502
B.)465
C.)470
D.)505
48
MA1 MANAGEMENT INFORMATION
2.)A company pays direct operatives a basic wage of $8.50 per hour plus a
productivity bonus. The bonus is calculated as:
[(Time allowed – Time taken) x (Basic rate per hour/3)]
The time allowed is 2.4 minutes per unit of output. An operative produced 1,065
units in a 371/2hour week.
What were the total earnings of the operative in the week?
A.)$318.75
B.)$333.20
C.)$340.40
D.)$362.10
3.)In a factory there are four types of job:
(1)Machine operators
(2)Supervisors
(3)Maintenance engineers
(4)Quality control checkers
Which would be classified as direct and indirect labour?
A.)Direct 1 and 3; Indirect 3 and 4
B.)Direct 2 and 3; Indirect 1 and 4
C.)Direct 1 and 3; Indirect 2 and 4
D.)Direct 1 and 4; Indirect 2 and 3
4.)It is expected that a product will take 36 minutes to produce. In a period 180
hours are worked and 325 units of product are made. A bonus of half of the time
saved is paid to the employees. The wage rate is $8.00 per hour.
What is the total amount of bonus paid to the employees?
A.)$252
B.)$120
C.)$60
D.)None
49
MA1 MANAGEMENT INFORMATION
5.)In a payments by results scheme employees are paid a bonus based on hours
saved at the basic wage rate. The bonus payable to the employee is calculated as
the hours saved multiplied by the ratio of time saved to time allowed.
An employee produces 480 units in 72 hours. The time allowed for this number of
units is 108 hours. The employee’s basic rate of pay is $10 per hour.
What is the total amount payable to the employee for this job?
A.)$120
B.)$720
C.)$733
D.)$840
ASSIGNMENT 15
1.)Which of the following is the most relevant user of the clock card?
A.)To measure employee efficiency
B.)To facilitate payment for time spend on the work premises
C.)To allow labour time to be charged to individual job
D.)To allow calculation of bonus payment
2.)A direct labour employee works a standard 37 hour week and is paid a basic rate
of $15 per hour. Overtime is paid at time and a half. In a week when 40 hours were
worked and a bonus of $20 was paid.
What was the direct labour cost?
A.)$555
B.)$600
C.)$622.50
D.)$642.50
50
MA1 MANAGEMENT INFORMATION
3.)The following data relate to work in the finishing department of a certain factory
Normal working day
7 hours
Basic rate of pay per hour
$5
Standard time allowed to produce 1 unit 4 minutes
Premium bonus payable at the basic rate 60% of time saved
On a particular day, one employee finished 180 units. His gross pay for the
day will be?
A.)$35
B.)$50
C.)$56
D.)$60
4.)Under which of the following labour remuneration methods will direct
labour cost always be a variable cost?
A.)Day rate
B.)Piece rate
C.)Differential Piece rate
D.)Group bonus scheme
5.)Which of the following relates to the cost of replacing (rather than
retaining) labour due to high employee turnover?
A.)Improving working conditions
B.)Suffering the learning curve effect
C.)Provision of a pension
D.)Provision of welfare services
51
MA1 MANAGEMENT INFORMATION
GROSS AND NET PAY
DAILY QUIZ 16
1.)A production operative is paid $11·00 per hour for a basic 35-hour week.
Overtime is paid at 40% over the basic rate. The operative worked for 38 hours in
week 9. Income tax deducted was $76·40 and benefit contribution payments were:
Employer $40
Employee 10% of gross pay
What was the net pay of the operative in week 9?
A)$271·68
B)$311·68
C)$316·30
D)$319·29
Data for questions 2 and 3
An employee is paid an hourly rate of $6.80 for a 40-hour week with overtime paid
at a rate of time and a half. In one week the employee worked for 45 hours.
The income tax to be deducted for the week is $58, the employee’s benefit
contribution is $31 and the employer’s benefit contribution is $34.
2.)What is the employee’s net pay for the week?
A.)$183
B.)$200
C.)$234
D.)$323
3.)What is the wage cost to the employer for this employee’s work for the
week?
A.)$268
B.)$306
C.)$323
D.)$357
52
MA1 MANAGEMENT INFORMATION
4.)Aspects of payroll include:
1.Employer’s state benefit contribution (NI in the UK)
2.Employee’s state benefit contribution (NI in the UK)
3.Income tax (PAYE in the UK)
4.Salaries
Which of the above are costs to an employee?
A.)1 and 4 only
B.)2 and 4 only
C.)2,3 and 4 only
D.)1,2,3 and 4
5.)The payroll department has produced the following information for the month
about the pay for employees in department X.
Department X
$
Payment to employees
7,500
Income tax
2,500
Employee’s state benefit contributions (NI in the UK)
1,200
Employer’s state benefit contributions (NI in the UK)
2,000
What are the gross wages for the department for the month?
A.)$7,500
B.)$10,000
C.)$11,200
D.)$13,200
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ASSIGNMENT 16
Data for questions 1 & 2
These are all elements of payroll costs.
1.Gross pay
2.PAYE (income tax)
3.Employer’s benefit contributions
4.Employee’s benefit contributions
1.)Which of the above affect the employee’s net pay?
A.)1, 2 and 4 only
B.)1, 2 and 3 only
C.)1 and 2 only
D.)1, 2, 3 and 4
2.)Which of the above costs are costs to the employer?
A.)1 and 3 only
B.)1 and 4 only
C.)2, 3 and 4 only
D.)1, 2, 3 and 4
3.)The following data relates to a company’s payroll for the month just ended:
Paid to employees
Employee’s National Insurance contributions
Employer’s National Insurance contributions
Income tax
Employer’s contribution to employee’s pension fund
$
67,000
21,000
13,200
36,300
15,000
What is the total labour cost for the month?
A.)$152,500
B.)$139,300
C.)$137,500
D.)$124,300
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4.)Which of the following are elements of gross pay?
A.)Cash paid to employees
B.)Cash paid to employees plus income tax plus employer’s benefit contribution
C.)Cash paid to employees plus income tax plus employee’s benefit contribution
D.)Cash paid to employees plus income tax plus employee’s and employer’s
benefit contribution
5.)During the month of July 20X3 the gross pay of the direct production workers in
a manufacturing business was $32,000 with deductions for PAYE (income tax) and
benefit contribution of $10,600. Three quarters of the wages bill is for direct
production workers.
What is the amount to be debited to the work in progress account?
A.)$5,350
B.)$8,000
C.)$16,050
D.)$24,000
LABOUR DOCUMENTS AND LEDGER ENTRIES
DAILY QUIZ 17
1.)In an interlocking accounting system what would be the entry in the cost
accounts to record the charging of indirect production labour costs?
Debit
A.)Cost ledger control
B.)Production overhead
C.)Wages
D.)Work-in-progress
Credit
Production overhead
Wages
Financial ledger control
Wages
2.)Which of the following is NOT a use for a job card?
A.)Ensuring that time recorded is accurate
B.)Agreeing a labour rate
C.)Assisting the coding of employee time
D.)Authorisation of overtime payments
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3.)Which of the following is NOT an example of internal information for the
accounts department?
A.)Goods received note
B.)Time sheets for employees
C.)Materials requisitions from the factory
D.)Purchase invoices from suppliers
4.)The Wages Control Account for a period in the integrated accounting system of
a business is:
Wages payable
Tax
$
85,000
25,000
110,000
Work-in-progress
Production overhead
$
80,000
30,000
110,000
What is the direct labour cost for the period?
A.)$30,000
B.)$80,000
C.)$85,000
D.)$110,000
5.)What is a time sheet used for?
A.)To calculate pay only
B.)To charge cost centres for work done only
C.)To record attendance time
D.)To calculate pay and to charge cost centres for work done
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MA1 MANAGEMENT INFORMATION
ASSIGNMENT 17
1.)At the end of week 23 a business made a payment for wages. Of the gross
amount of $23,700, $3,700 was for indirect wages and the remainder was for direct
worker’s wages?
What is the double entry for the labour costs for the week?
A.)
Debit
Credit
Credit
Wages control
Work in progress
Production overhead
$23,700
$20,000
$3,700
B.)
Debit
Credit
Credit
Wages control
Work in progress
Production overhead
$23,700
$3,700
$20,000
C.)
Debit
Debit
Credit
Work in progress
Production overhead
Wages control
$20,000
$3,700
$23,700
D.)
Debit
Debit
Credit
Work in progress
Production overhead
Wages control
$3,700
$20,000
$23,700
2.)Which of the following is NOT a purpose of a timesheet?
A.)Provide management with information for analysis
B.)To use as a record of hours spent
C.)To be used as a basic for billing for services
D.)Authorising holiday time
3.)Which of the following may be used to support claims for overtime
payments for salaried staff?
A.)Employee records cards
B.)Job cards
C.)Payslips
D.)Timesheets
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4.)Which of the following is NOT a purpose of a jobcard?
A.)Providing information on the whereabouts of employees
B.)Authorising overtime payments
C.)Assisting coding of labour costs
D.)Ensuring time is recorded accurately
5.)In an interlocking accounting system what would be the entry in the cost
accounts to record the charging of indirect production labour costs?
Debit
A)Cost ledger control
B)Production overhead
C)Wages
D)Work-in-progress
Credit
Production overhead
Wages
Financial ledger control
Wages
LABOUR RATIOS
DAILY QUIZ 18
1.)Direct labour hours worked in a cost centre in a period were 360 hours above
the budget of 5,670 hours. The efficiency ratio in the period was 97%.
Would the capacity and production volume ratios in the period be above or
below 100%?
A.)
B.)
C.)
D.)
Capacity ratio
Below 100%
Below 100%
Above 100%
Above 100%
Production volume ratio
Below 100%
Above 100%
Below 100%
Above 100%
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MA1 MANAGEMENT INFORMATION
2.)The following ratios were calculated for a period:
Production volume
Efficiency
98%
105%
On the basis of the above ratios, is each of the following statements true or
false?
(1) Actual hours were more than budgeted hours
(2) Standard hours of production were more than actual hours
(3) Budgeted hours were less than standard hours of production
A.)
B.)
C.)
D.)
True
2
2 and 3
1 and 3
1 and 2
False
1 and 3
1
2
3
3.)A manufacturer makes three very different products, the X, Y and Z. The
standard time allowed for each unit of product is as follows:
X
Y
Z
1 hour
1.5 hours
1.75 hours
During April the following units were produced:
800 units of Y, 1,400 units of Z and 2,000 units of X.
What are the standard hours of output for April?
A.)4,200 standard hours
B.)6,400 standard hours
C.)5,500 standard hours
D.)5,650 standard hours
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The following information relates to questions 4 and 5
Budgeted and actual production data for the year that has just ended are as follows.
Product
W
X
Y
Z
Budgeted Production
Units
Std. machine hours
15,000
3,000
20,000
8,000
14,000
7,000
6,000
9,000
Actual Production
Units
12,000
25,000
16,000
5,000
Total machine hours worked in the period amounted to 29,000 hours.
4.)What was the capacity ratio in the year, as a percentage to one decimal
place?
A.)93.1%
B.)103.3%
C.)105.5%
D.)107.4%
5.)What was the efficiency ratio in the year, as a percentage to one decimal
place?
A.)96.2%
B.)103.3%
C.)103.9%
D.)107.4%
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ASSIGNMENT 18
1.)A company makes a product for which the standard labour time is 5 hours per
unit. The budgeted production hours for a given week were 10,500. During the
week the production staff were able to produce 1,980 units of product. Actual wage
costs were $65,000 and idle time was recorded as $1,625. The wage rate was $6.50
per hour.
The efficiency ratio was therefore:
A.)94.3%
B.)97.5%
C.)99.0%
D.)101.5%
2.)What are three main labour control ratios?
A.)Efficiency, capacity utilization, production volume
B.)Rate, efficiency, capacity
C.)Rate, idle time, production volume
D.)Capacity, idle time, efficiency
Data for questions 3 and 4
During quarter 2, a manufacturing business had budgeted for 12,000 labour hours
to be worked. The actual hours were 11,400 and the standard hours of production
were 10,800
3.)What is the labour capacity utilization ratio (to one decimal place)?
A.)90.0%
B.)94.7%
C.)95.0%
D.)105.6%
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4.)What is the labour production volume ratio (to one decimal place)?
A.)90.0%
B.)94.7%
C.)95.0%
D.)105.6%
5.)During quarter 2, a manufacturing business had budgeted for 12,000 labour
hours to be worked. The actual hours were 11,400 and the standard hours of
production were 10,800.
What is the labour efficiency ratio (to one decimal place)?
A.)90.0%
B.)94.7%
C.)95.0%
D.)105.6%
MANAGEMENT INFORMATION
DAILY QUIZ 19
1.)Two statements follow about data and information:
1.Data is a scientific term for facts, figures and information
2.Information is data which has been processed
Which of the following is correct with regard to the above two statements?
A.)Both statements are true
B.)Both statements are false
C.)Statement 1 is true but statement 2 is false
D.)Statement 1 is false but statement 2 is true
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2.) Which of the following is an essential feature of useful management
information?
A.)Completely accurate
B.)Appropriate for any purpose
C.)Cost effective
D.)Distributed regularly
3.)Which of the following is NOT CORRECT?
A.)Cost accounting can be used for inventory valuation to meet the requirements of
internal reporting only
B.)Management accounting provides appropriate information for decision making,
planning, control and performance evaluation
C.)Routine information can be used for both short-term and long-run decisions
D.)Financial accounting information can be used for internal reporting purposes
4.)Which of the following would be data rather than information?
A.)Sales increase/decrease per product in last quarter
B.)Total sales value per product
C.)Sales made per salesman as a percentage of total sales
D.)Sales staff commission as a percentage of total sales
5.)Which of the following could be considered to be limitation of cost and
management accounting information?
A.)Affected by changing prices over time
B.)Includes non-financial as well as financial information
C.)Produced periodically
D.)Produced in the format required by management
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MA1 MANAGEMENT INFORMATION
ASSIGNMENT 19
1.)Which of the following statements concerning the difference between
management accounts and financial accounts is incorrect?
A.)Financial accounts are governed by strict accounting rules and regulations,
management accounts are not
B.)There is a legal requirement for management accounts
C.)Management accounts are often required for individual divisions and/or
products whereas financial accounts usually cover the whole company
D.)Management accounts are mainly for internal purposes whereas financial
accounts are mainly for external purposes
2.)Which of the following information rather than simply data?
(1)A random list of the wages of all employees
(2)A list of all stock items that haven’t sold at all in the last three months
(3)A report showing where expenses are 10% or more over budget
(4)A list of all invoices that have been paid by the company
A.)1 and 4 only
B.)2, 3 and 4 only
C.)2 and 3 only
D.)All items are information rather than just data
3.)Which of the following statements about management information is/are
true?
1.It can only be sourced from within the organisation
2.To be reliable it must be written and verified
3.It can consist of both numeric and non-numeric information
A.)3 only
B.)1 and 3 only
C.)1 and 2 only
D.)1, 2 and 3
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4.)Consider the following incomplete statements relating to management
information:
(1)Clear to the user
(2)Detailed and completely accurate
(3)Provided whatever the cost
(4)Relevant for purpose
Which of the above are necessary features of useful management
information?
A.)(1) and (2)
B.)(1) and (4)
C.)(2) and (4)
D.)(1), (2) and (3)
5.)Which of the following items would be included in the financial accounting
system but NOT in the management accounting system?
A.)Sales commissions payable to sales representatives
B.)Costs of repairs to the office air conditioning system
C.)Profits paid out in dividends to the business owners
D.)Direct labour costs
BUSINESS ORGANISATION
DAILY QUIZ 20
1.)A company’s accounting system operates so that the cost accounts are
independent of the financial accounts. The two sets of accounts are reconciled on a
regular basis to keep them continuously in agreement.
What is this type of accounting system known as?
A.)Independent accounts
B.)Interlocking accounts
C.)Reconciled accounts
D.)Integrated accounts
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2.)A company operates a retail supermarket chain selling a range of grocery and
household products. It has branches throughout the country and is reviewing the
range of goods to be stocked in each of these branches.
How might the company best analyse its profitability for this purpose?
A.)By area of the country
B.)By contract with each supplier
C.)By customer payment method
D.)By product line stocked
3.)The following relate to batch processing or to real-time processing of data:
1.Audit trails are easily made since the processing of data occurs at pre-determined
times
2.Customer queries can be responded to immediately
3.Processing can be performed during the evening when the computer is not being
used interactively
4.The data is always up-to-date
Which of the above are advantages of real-time processing?
A.)1 and 2 only
B.)1 and 3 only
C.)2 and 4 only
D.)1,3 and 4
4.)What is an interlocking bookkeeping system?
A.)A single, combined system containing both cost accounting and financial
accounting records
B.)A system combined cost accounting and management accounting
C.)A system supported by prime entry records
D.)A system where separate accounts are kept for cost accounting and financial
accounting
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5.)Which of the following statements relate to the policy manual of an
organization?
1.Policies should be in place to deal with the authorization of the purchase of fixed
assets
2.Employees will need to know where to find policy manual to refer to but need
not have read it
3.Strict adherence to the manual can lead to inflexibility
A.)All three
B.)1 and 2 only
C.)1 and 3 only
D.)2 and 3 only
ASSIGNMENT 20
1.)Which of the following is an advantage of centralization?
A.)It helps to develop the skills of junior managers
B.)It avoids overburdening top managers in terms of workload and stress
C.)Senior managers can take a wider view of problems and consequences
D.)Local factors can be taken into account when making decision
2.)Which of the following describes the cost ledger control account?
A.)An account which can be used to reconcile creditor (supplier) balances
B.)An account which can be used to reconcile debtor (customer) balances
C.)An account in the cost ledger to record financial items
D.)An account in the financial ledger to record costing items
3.)The cost accountant has produced a report showing the hourly output from the
factory floor for the last week.
Who in the organization is most likely to require this information?
A.)The financial accountant
B.)The sales director
C.)The production manager
D.)The human resource manager
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4.)The management accountant of X has written a report assessing the cost savings
that could be made if the company were to invest in new technology
In which area will report primarily aid the management of X?
A.)Budgeting
B.)Control
C.)Decision making
D.)Monitoring
5.)Which of the following is NOT an example of a question that a trainee
accountant may be asked in respect a cost and management accounting
system?
A.)When revenue streams should the company seek to maximize in the next year?
B.)What have revenues for each stream been in the last period?
C.)What has the cost of goods produced or services provided been for the last
period?
D.)What has the cost of operating a department been for the last period?
COST CODING
DAILY QUIZ 21
1.)An extract from the list of accounts of a chemical processor is shown below.
Direct materials
Direct labour
Indirect materials
Indirect labour
Cost codes
001-099
100-199
200-299
300-399
Which of the following items is coded INCORRECTLY?
Description
A.)Chemical used in process
B.)Wages of process supervisor
C.)Chemicals used for cleaning
D.)Wages of maintenance engineer
Code
058
103
238
368
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2.)Which of the following are features of an efficient and effective coding
system?
1.Codes need to be complex to include all items
2.Each code must have a combination of alphabetic and numeric characters
3.Codes for a particular type of item should be consistent in length and structure
A.)1 only
B.)3 only
C.)1 and 2
D.)2 and 3
3.)A coding system uses a combination of letters and numbers to classify costs.
The first two digits of each code represent the cost centre, the third and fourth
digits represent the type of expense and the fifth and sixth digits represent the
detail of the expense.
Relevant codes for a particular expense are:
Code
Selling expense
24
Northern division
ND
Commission
SC
What is the correct code for the above expense?
A.)SC24ND
B.)NDSC24
C.)ND24SC
D.)24SCND
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4.)Which of the following would be an appropriate cost unit for a
manufacturing company?
(1)1 unit of product
(2)1 batch of product consisting of 1,000 units
(3)The finance department
(4)A member of the sales team
A.)(1) and (4)
B.)(1),(2) and (4)
C.)(3) and (4)
D.)(1) and (2)
5.)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
ASSIGNMENT 21
1.)A company uses the following coding system.
000062
000063
000064
Salaries
Postage
Stationery
Which type of coding system is this?
A.)Block
B.)Mnemonic
C.)Sequential
D.)Hierarchical
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2.)The following is an extract from the list of accounts of a washing machine
manufacturer:
Direct Materials
Direct Labour
Direct expenses
Production overheads
Cost codes
1000-1999
2000-2999
3000-3999
4000-4999
Which of the following are coded correctly?
Code
A.)4160
B.)2430
C.)1670
D.)3020
Description
wages of operatives who work on the product
wages of production department supervisor
cleaning materials
royalties for component used in manufactured product
3.)A company uses the following coding system.
3
32
31
322
=
=
=
=
Wood
Hard wood
Soft wood
Oak hard wood
Which type of coding system is this?
A.)Sequential
B.)Hierarchical
C.)Mnemonic
D.)Block
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4.)An extract from the list of accounts of a car manufacturer are as follows.
Direct materials
Indirect materials
Direct labour
Indirect labour
Cost codes
1000 – 1999
2000 – 2999
3000 – 3999
4000 – 4999
Which of the following items is coded INCORRECTLY?
Description
A.)Wages of canteen staff
B.)Wages of stores supervisor
C.)Car engines
D.)Cleaning material
Code
4131
4252
1536
1786
5.)What would be the most appropriate cost unit for a cake manufacturer?
A.)Cake
B.)Batch
C.)Kilogram
D.)Production run
OVERHEADS
DAILY QUIZ 22
1.)Which of the following is correct when considering the allocation,
apportionment and reapportionment of overheads in an absorption costing
situation?
A.)Only production related costs should be considered
B.)Allocation is the situation where part of an overhead is assigned to a cost centre
C.)Costs may only be reapportioned from production centres to service centres
D.)Any overheads assigned to a single department should be ignored
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2.)When a company makes 5,000 units in a period, the total absorption per unit is
$20, of which $12 is the variable cost.
What will the total absorption cost per unit be if production is 8,000 units?
A.)$20.0
B.)$17.0
C.)$15.5
D.)$12.50
3.)Which of the following is not a recognized method of overhead absorption?
A.)Recovery rate per direct labour hour
B.)Recovery rate per machine hour
C.)As a % of sales value
D.)As a % of prime costs
4.)Which of the following relates to capital expenditure?
A.)Cost of acquiring and enhancing non-current assets.
B.)Cost of running and maintaining non-current assets
C.)Cost incurred manufacturing or providing services
D.)Recorded as an asset in income statement
5.)Which of the following is an administrative OH cost?
A.)Cost of fuel for machinery
B.)Legal charges
C.)Salary of a sales manager
D.)Cost of printing price list
ASSIGNMENT 22
1.)In absorption costing, what do products costs include?
A.)Prime cost only
B.)Fixed Costs only
C.)Variable costs only
D.)Variable and fixed production costs
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2.)Which of the following statement is correct with respect to the absorption
costing?
A.)Closing inventory is valued at full production cost
B.)Any over or under absorption of overheads is carried forward to the next month
C.)Apportionment means all departments get equal share of overheads
D.)None of the above
3.)State whether the following statement is true or false.
The electricity expenses of ABC plc’s plant manufacturing 5 types of products for
the company can be classified as direct expenses when costing the products.
A.)True
B.)False
4.)For which of the following reasons would the absorption rate be used?
A.)To attribute the overheads to products
B.)To spread overhead indirect cost across several cost centers
C.)To control overheads
D.)To allocate overhead costs to cost center
5.)The following data is available for a paint department for the latest period
Budgeted production overhead
$150000
Actual production overhead
$150000
Budgeted machine hours
60000
Actual machine hours
55000
Which of the following statement is correct?
A.)There was no under or over absorption of overhead
B.)Overhead was $13636 over absorbed
C.)Overhead was $12500 over absorbed
D.)Overhead was $12500 under absorbed
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ALLOCATION AND APPORTIONMENT
DAILY QUIZ 23
1.)The following indirect costs were incurred in a factory in a period:
Rental of premises
$80,000
Utilities
$25,000
There are two cost centres, A and B, in the factory which between them occupy the
20,000 square metres (sq m) of floor space (cost centre A, 8,000 sq m; cost centre
B, 12,000 sq m).
What is the total indirect cost apportionment to cost centre B in the period if
floor space is used as the basis of apportionment?
A)$42,000
B)$52,500
C)$63,000
D)$105,000
2.)What is the term that is used to describe the process of charging an entire
expense to a single cost centre?
A.)Allocation
B.)Apportionment
C.)Absorption
D.)Re-apportionment
3.)An organization has two production departments, A and B, and two services
departments, stores and the canteen.
The overhead cost for the organization in total are as follows:
$
Rent
32,000
Building maintenance costs
5,000
Machinery insurance
2,400
Machinery depreciation
11,000
Machinery running expenses
6,000
Power
7,000
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There are also specific costs that have already been allocated to each cost centres
as follows:
$
Department A
5,000
Department B
4,000
Stores
1,000
Canteen
2,000
The following information about the various cost centres is also available:
Total
Floor Space (sq ft) 30,000
Power usage
100%
Value of
machinery ($000) 250
Machinery
hours (000)
80
Value of
equipment ($000) 20
Number of
employees
40
Value of stores
requisitions
150
Dept A
15,000
45%
Dept B
8,000
40%
Stores
5,000
5%
Canteen
2,000
10%
140
110
-
-
50
30
-
-
5
15
20
15
3
2
100
50
-
-
Allocate and apportion the costs to the four departments.
Do not reapportion the service cost centre costs to the production cost centre.
4.)A method of dealing with overheads involves spreading common costs over cost
centres in the basis of benefit received
What is this method known as?
A.)Overhead absorption
B.)Overhead apportionment
C.)Overhead absorption
D.)Overhead analysis
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5.)Which of the following departments is NOT a service cost centre in a
manufacturing company?
A.)Accounting
B.)Assembly
C.)Maintenance
D.)Personnel
ASSIGNMENT 23
1.)What is the term used to describe the process of sharing an expense
amongst a number of cost centres?
A.)Allocation
B.)Apportionment
C.)Absorption
D.)Re-apportionment
2.)Which of the following statements best describes overhead allocation?
A.)The charging of overhead to cost units
B.)The allotment of proportions of items of cost to cost centres or cost units
C.)The charging of direct material to jobs
D.)The allotment of whole items of indirect cost to cost centres
3.)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 hour of the machinery in each cost centre
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4.)What is the charging of an overhead cost directly to a cost centre known
as?
A)Overhead absorption
B)Overhead allocation
C)Overhead apportionment
D)Overhead assignment
5.)A factory has two production cost centres, assembly and finishing, as well as
two service cost centres, maintenance and stores. After the allocation and
apportionment of overheads the following total have been established:
Allocated and apportioned
overheads
Assembly
$
52,400
Finishing
$
41,300
Maintenance Stores
$
$
18,590
15,200
The maintenance department is estimated to spend 400 hours in the assembly cost
centre and 250 hours in the finishing cost centre. The assembly cost center will
make 140 materials requisitions during the next period but the finishing cost centre
will only make 60 materials requisitions.
What is the total production overhead for the assembly department?
A.)$22,080
B.)$52,400
C.)$53,010
D.)$74,480
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RE-APPORTIONMENT
DAILY QUIZ 24
1.)There are two production cost centres and two service cost centres in a factory.
Production overheads have been allocated and apportioned to cost centres and now
require re-apportionment from service cost centres to production cost centres.
Relevant details are:
Service cost
Service cost
centre A
centre B
Total overhead
$42,000
$57,600
% to Production Cost Centre X
40
55
% to Production Cost Centre Y
60
45
What is the total re-apportionment to Production Cost Centre Y?
A.)$42,720
B.)$48,480
C.)$51,120
D.)$56,880
2.)A business has two production departments, manufacturing and finishing.
Details of the overhead absorption rates used in these two departments are as
follows:
Manufacturing overhead absorption rate
Finishing overhead absorption rate
= $1.47 per machine hour
= $3.04 per labour hour
One product, the Gant, has the following details.
Manufacturing
Labour hours per unit
4
Machine hours per unit
6
Finishing
2
1
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How much total overhead would be included in the cost of one unit of the
Gant (to the nearest cent)?
A.)$11.76
B.)$11.90
C.)$11.96
D.)$14.90
3.)Total Factory Overheads Cost = $20,000
Allocated Overheads = 50,000
Break-up is as follows:
Cutting Department = 20,000
Machining Department = 10,000
Stores = 10,000
Maintenance = 10,000
Apportioned Overheads and basis are as follows:
Rent = $10,000
Power = $50,000
Floor Area Cutting Dept
20,000
5000
Power
50%
Machining Dept
10,000
30%
Stores
2000
10%
Maintenance
3000
10%
Re-apportionment basis are as follows:
Cutting Dept
Machining Dept
Stores
50%
50%
Maintenance
70%
30%
Stores
-
Maintenance
-
No. of units
P1
10,000
P2
10,000
P1
P2
Cutting Dept
4 hours
2 hours
Machining Dept
1 hour
6 hours
Calculate total production overhead absorbed in product P1 and P2.
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MA1 MANAGEMENT INFORMATION
4.)A company has 3 production cost centres, Cutting and Finishing.
The overheads and operating hours for the two cost centres are:
Cutting:
Finishing:
$210,000
$200,000
60,000 machine hours
5,000 machine hours
4,000 labour hours
14,000 labour hours
From the information given what should be the basis for overhead
absorption?
A.)Both cost centres should be based on machine hours
B.)Both cost centres should be based on labour hours
C.)Based on machine hours for Cutting and labour hours for Finishing
D.)Based on labour hours for Cutting and machine hours for Cutting
5.)Cuecraft Ltd manufactures pool and snooker cues. It has three production cost
centres:
 machining
 finishing
 packing
The planned overhead for the next budget period has been allocated and
apportioned to the cost centres is:
Machining
Finishing
Packing
$65,525
$36,667
$24,367
Budgeted cost centre activity volumes for the same period show:
Machining
Finishing
Packing
7,300 machine hours
6,250 direct labour hours
5,200 direct labour hours
81
MA1 MANAGEMENT INFORMATION
Determine separate overhead absorption (recovery) rates for each cost centre
on the following bases:
 Machining – machine hours
 Finishing – direct labour hours
 Packing – direct labour hours
ASSIGNMENT 24
1.)Which of the following is not a recognized method of overhead absorption?
A.)Recovery rate per direct labour hour
B.)Recovery rate per machine hour
C.)As a % of sales value
D.)As a % of prime costs
2.)A factory has two production cost centres, assembly and finishing, as well as
two service cost centres, maintenance and stores. The rent and rates for the next
period is anticipated to be $40,000. The floor area occupied by each of the cost
centres is:
Assembly
Finishing
Stores
Maintenance
2,000 m2
1,400 m2
1,000 m2
600 m2
What amount should be apportioned to the stores cost centre for rent and
rates?
A.)Nil
B.)$8,000
C.)$11,200
D.)$16,000
82
MA1 MANAGEMENT INFORMATION
3.)Ballard Ltd makes three products A, B and C. Each passes through two
departments: Machining and Assembly.
Budgeted production in each department by each product
Units
Machining
Product A
1,000
1 hr
Product B
2,000
2 hrs
Product C
500
None
Overheads are budgeted as follows:
Machining
Assembly
$100,000
$150,000
Assembly
1 hr
1/2 hr
4 hrs
Calculate the Overhead absorbed by Product B using a separate departmental
overhead rate
$
4.)For the year ended 31 December 20X4 the planned overhead for the Machining
Cost Centre at Cuecraft Ltd was:
Overhead
Volume of activity
$132,000
15,000 machine hours
In January 20X4 the cost centre incurred $12,000 of overhead and 1,350 machine
hours were worked.
Calculate the pre-determined overhead absorption rate per machine hour and
the overhead under or over-recovered in the month.
OH absorption rate
$
Under/Over absorbed
$
83
MA1 MANAGEMENT INFORMATION
5.)Which of the following statements about predetermined overhead
absorption rates are true?
1.Using a predetermined absorption rates avoid fluctuations in unit costs caused by
abnormally high or low overhead expenditure or activity levels
2.Using a predetermined absorption rate offers the administrative convenience of
being able to record full production costs sooner
3.Using a predetermined absorption rate avoids problems of under/over absorption
of overheads because a constant rate is available
A.)1 and 2 only
B.)1 and 3 only
C.)2 and 3 only
D.)All of them
Under/Over absorbed and Ledger Entries
DAILY QUIZ 25
1.)A manufacturing business has two production departments, X and Y, for which
the following annual budgeted figures have been prepared.
Budgeted overhead expenditure
Overhead absorption basis
Budgeted activity
Department X
$840,000
Machine hours
40,000
machine hours
Department Y
$720,000
Direct labour hours
60,000
direct labour hours
Actual overhead expenditure and actual activity levels for the year were:
Actual overhead expenditure
Actual activity
Department X
$895,000
41,500
machine hours
Department Y
$735,000
62,400
direct labour hours
Required:
(a)Establish the overhead absorption rates for each department for the year.
(b)Calculate the under - or - over absorbed overheads in each department for the
year.
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MA1 MANAGEMENT INFORMATION
2.)The predetermined overhead absorption rate in a production cost centre for a
period was $14·60 per machine hour.
Budgeted and actual overheads and machine hours in the cost centre for the period
were:
Budget
Actual
Overheads Machine hours
$94,900
6,500
$96,720
6,745
What was the overhead over/under-absorption?
A.)$1,757 over-absorbed
B.)$1,820 under-absorbed
C.)$3,577 over-absorbed
D.)$3,577 under-absorbed
3.)Which of the following situations will result in overhead under-absorption?
1.Actual overhead less than budgeted overhead
2.Budgeted overhead less than absorbed overhead
3.Absorbed overhead less than actual overhead
A.)1 only
B.)1 and 2
C.)3 only
D.)2 and 3
85
MA1 MANAGEMENT INFORMATION
4.)The following data are available relating to overheads in two production cost
centres:
Cost Centre A
Cost Centre B
Budget
$54,030
$76,910
Actual
?
?
Absorbed
$54,960
$76,250
Over/under-absorbed
?
$520 under-absorbed
What is known on the basis of the available data above?
A.)Actual overheads in cost centre B were less than budget
B.)Overheads absorbed in cost centre B exceeded actual overheads
C.)Overheads were over-absorbed in cost centre A
D.)Overheads were under-absorbed in cost centre A
5.)A manufacturing company uses an integrated accounting system. The
production overhead absorption rate is $3 per direct labour hour. Production
overhead incurred last period was $85,000 and 27,000 direct labour hours were
worked.
What would be the accounting entry to record the under or over absorption of
production overhead for the period?
Debit
A.)Income Statement
B.)Overhead control account
C.)Work in progress account
D.)Overhead control account
Credit
$4,000 Overhead control account
$4,000 Income Statement
$4,000 Overhead control account
$4,000 Work in progress account
$4,000
$4,000
$4,000
$4,000
ASSIGNMENT 25
1.)A company operates an integrated accounting system.
What would be the accounting entries for manufacturing overhead over
absorbed?
Debit
A.)Overhead control account
B.)Income statement
C.)Work in progress account
D.)Overhead control account
Credit
Income statement
Overhead control account
Overhead control account
Work in progress account
86
MA1 MANAGEMENT INFORMATION
2.)A company uses a blanket overhead absorption rate of $5 per direct labour hour.
Actual overhead expenditure in a period was as budgeted. The under/over absorbed
overhead account for the period have the following entries:
DR
CR
$
$
Production overhead
4,000 Profit or loss account
4,000
4,000
4,000
Which of the following statements is true?
A.)Actual direct labour hours were 800 less than budgeted
B.)Actual direct labour hours were 800 more than budgeted
C.)Actual direct labour hours were 4,000 less than budgeted
D.)Production overhead was over absorbed by $4,000
3.)The following data relate to a production cost centre for the period just ended:
Budgeted overhead expenditure
Predetermined overhead absorption rate
Actual activity
Actual overhead expenditure
$53,900
$24.50 per machine hour
2,070 machine hours
$54,670
What was the overhead over/under-absorption in the period?
A.)$770 over absorbed
B.)$770 under absorbed
C.)$3,185 under absorbed
D.)$3,955 under absorbed
4.)A cost center has an overhead absorption rate of $4.25 per machine hour, based
on a budgeted activity level of 12400 machine hours. In the period covered by the
budget, actual machine hours worked were 2% more than the budgeted hours and
the actual overhead expenditure incurred in the cost center was $56389.
What was the total over or under absorption of overheads in the cost center
for the period?
A.)$1054 over absorbed
B.)$2635 under absorbed
C.)$3689 over absorbed
D.)$3689 under absorbed
87
MA1 MANAGEMENT INFORMATION
5.)A manufacturing company uses a machine hour rate to absorb production
overheads, which were budgeted to be $130500 for 9000 machine hours. Actual
overheads incurred were $128480 and 8800 machine hours were recorded.
What was the total under absorption of production overheads?
A.)$880
B.)$900
C.)$2020
D.)$2900
ABSORPTION & MARGINAL COSTING-1
DAILY QUIZ 26
1.)A company commenced business on 1 March making one product only, the cost
card of which us as follows:
$
Direct labour
5
Direct material
8
Variable production overhead
2
Fixed production overhead
5
Standard production cost
20
The fixed production overhead figure has been calculated on the basis of a
budgeted normal output of 36,000 units per annum. The fixed production overhead
incurred in March was $15,000.
Selling, distribution and administration expenses are:
Fixed
Variable
$10,000 per month
15% of the sales value
The selling price per unit is $50 and the number of units produced and sold were:
Production
Sales
March (units)
2,000
1,500
Prepare the absorption costing income statement for March.
88
MA1 MANAGEMENT INFORMATION
2.)A company manufactures a single product which it sells for $35 per unit. The
planned output for 20X6 was 6,000 units. The unit product cost comprises:
Direct labour
Direct material
Variable overhead
1.5 hours x $2.50/hour
Fixed overhead
1.5 hours x $8.00/hour
$
8.50
2.50
3.75
12.00
26.75
If the forecast inventory level at 31 December was 360 units and it was valued
on the basis of absorption cost, what would be the value of the inventory held
on the date?
A.)$3,960
B.)$5,310
C.)$9,630
D.)$12,600
3.)You are presented with the following information about sales and costs for a
business that makes and sells a range of products:
Sales revenue
Direct labour
Direct material
Production overhead
Other overhead costs
$
320,000
100,000
75,000
78,000
50,000
The business uses absorption costing. There were no opening or closing
inventories of the product
What profit would be reported for the period, using absorption costing?
A.)$15,000
B.)$17,000
C.)$20,000
D.)$23,000
89
MA1 MANAGEMENT INFORMATION
4.)Which of the following is a reason why profit for a period for a
manufacturer will differ depending upon whether absorption costing or
marginal costing is used?
A.)Changes in raw material inventory during the period
B.)Over-absorption of fixed production overhead
C.)Closing finished goods inventory higher than opening inventory
D.)Expenditure on variable manufacturing costs in excess of budget
5.)With which costs is absorption costing concerned?
A.)Direct labour costs only
B.)Direct material costs only
C.)Fixed costs only
D.)Variable and fixed costs
ASSIGNMENT 26
1.)Duo Ltd makes and sells one product, the Alpha. The following information is
available for period 3:
Alpha
Production (units)
2,500
Sales (units)
2,300
Opening Inventory (units)
0
Financial data:
Unit selling price
Unit cost:
direct materials
direct labour
variable production overheads
fixed production overheads
variable selling overheads
Alpha
$
90
15
18
12
30
1
Fixed production overheads for the period were $52,500 and fixed administration
overheads were $13,500.
90
MA1 MANAGEMENT INFORMATION
Required:
(a)Prepare a statement of profit or loss for period 3 based on absorption costing
principles.
2.)Which of the following statements is true?
A.)Stock valuation using marginal cost is acceptable for external reporting; using
TAC is not acceptable for external reporting
B.)Both MC and MC are acceptable for external reporting
C.)TAC is better for decision-making
D.)Stock valuation using TAC is acceptable for external reporting; using MC is not
acceptable for external reporting
3.)A manufacturing company makes one product which uses 2kg of raw material
per unit of product, at a cost of $3.80 per kg. Each unit of the product requires 2.5
hours of labour, which is paid at $7.80 per hour. The company incurs fixed
production costs of $6,000 per month, and the factory produces 2,000 units of the
product each month. There is no inventory of the product at 1 June 20X3 but only
1,600 units of the product were sold in June
What is the closing inventory valuation at 30 June 20X3 under absorption
costing?
A.)$10,840
B.)$12,040
C.)$12,340
D.)$48,160
4.)Which of the following statement is correct with respect to the absorption
costing?
A.)Closing inventory is valued at full production cost
B.)Any over or under absorption of overheads is carried forward to the next month
C.)Apportionment means all departments get equal share of overheads
D.)None of the above
91
MA1 MANAGEMENT INFORMATION
5.)A company has the following budgeted costs and revenues:
$ per unit
Sales price
50
Variable production cost
18
Fixed production cost
10
In the most recent period, 2,000 units were produced and 1,000 units were sold.
Actual sales price, variable production cost per unit and total fixed production
costs were all as budgeted. Fixed production costs were over absorbed by $4,000.
There was no opening inventory for the period.
What would be the reduction in profit for the period if the company had used
marginal costing rather than absorption costing?
A.)$4,000
B.)$6,000
C.)$10,000
D.)$14,000
92
MA1 MANAGEMENT INFORMATION
ABSORPTION & MARGINAL COSTING-2
DAILY QUIZ 27
1.)A company commenced business on 1 March making one product only, the cost
card of which us as follows:
$
Direct labour
5
Direct material
8
Variable production overhead
2
Fixed production overhead
5
Standard production cost
20
The fixed production overhead figure has been calculated on the basis of a
budgeted normal output of 36,000 units per annum. The fixed production overhead
incurred in March was $15,000.
Selling, distribution and administration expenses are:
Fixed
Variable
$10,000 per month
15% of the sales value
The selling price per unit is $50 and the number of units produced and sold were:
Production
Sales
March (units)
2,000
1,500
Prepare the marginal costing income statement for March.
93
MA1 MANAGEMENT INFORMATION
2.)E operates a marginal costing system. For the forthcoming year, variable costs
are budgeted to be 60% of sales value and fixed costs are budgeted to be 10% of
sales value.
If E were to increase the selling price by 10% and all other costs and
production and sales volumes were to remain the same what would be the
effect on E’s contribution?
A.)a decrease of 2%
B.)an increase of 5%
C.)an increase of 10%
D.)an increase of 25%
3.)A company with a single product sells more units than it manufactures in a
period.
Which of the following correctly describes the use of marginal costing in
comparison with absorption costing in the above situation?
A.)Both profit and inventory values will be higher
B.)Both profit and inventory values will be lower
C.)Profit will be higher; inventory values will be lower
D.)Profit will be lower; inventory values will be higher
4.)The following information relates to Product X for Month 1:
Opening Inventory
Nil
Production
900 units
Sales
800 units
If marginal costing rather than absorption costing is used, what is effect on
profit and inventory valuation?
A.)Profit higher
B.)Profit higher
C.)Profit lower
D.)Profit lower
Inventory valuation higher
Inventory valuation lower
Inventory valuation higher
Inventory valuation lower
94
MA1 MANAGEMENT INFORMATION
5.)Which of these statements are true of marginal costing?
(1)The contribution per unit will be constant if the sales volume increases
(2)There is no under or over absorption of overheads
(3)Marginal costing does not provide useful information for decision making
A.)(1) and (2) only
B.)(2) and (3) only
C.)(2) only
D.)(1),(2) and (3)
ASSIGNMENT 27
1.)Duo Ltd makes and sells one product, the Alpha. The following information is
available for period 3:
Alpha
Production (units)
2,500
Sales (units)
2,300
Opening Inventory (units)
0
Financial data:
Unit selling price
Unit cost:
direct materials
direct labour
variable production overheads
fixed production overheads
variable selling overheads
Alpha
$
90
15
18
12
30
1
Fixed production overheads for the period were $52,500 and fixed administration
overheads were $13,500.
Required:
(a)Prepare a statement of profit or loss for period 3 based on marginal costing
principles.
95
MA1 MANAGEMENT INFORMATION
2.)A company manufactures a single product. Unit costs are:
Variable production
Fixed production
Variable selling
Fixed selling
$/Unit
14·75
8·10
2·40
5·35
400,000 units of the product were manufactured in a period, during which 394,000
units were sold. There was no inventory of the product at the beginning of the
period.
Using marginal costing, what is the total value of the finished goods inventory
at the end of the period?
A)$88,500
B)$102,900
C)$137,100
D)$183,600
3.)Production costs of product X have been classified in various ways:
Prime costs
Variable costs
Fixed overheads
Direct labour
Variable overheads
Direct materials
$50.80 per unit
$54.44 per unit
$15.20 per direct labour hour
2.6 hours per unit at $12.00 per hour
$1.40 per direct labour hour
$19.60 per unit
What is the total production cost per unit of product X?
A.)$105.24
B.)$144.76
C.)$93.96
D.)$125.16
96
MA1 MANAGEMENT INFORMATION
4.)Company Z uses a marginal costing system as the basis for its profit statements
for management. 4,660 units of the Company’s single product were sold in Period
6 for a total revenue of $88,540. Production in the period were 4,730 units.
Unit costs of the product are:
Direct costs
Variable production overhead
Fixed production overhead
Variable non-production overhead
Fixed non-production overhead
$ per unit
6.20
0.90
4.60
1.40
2.90
$ per unit
11.70
4.30
16.00
What is the total contribution in Period 6?
A.)$48,335
B.)$55,454
C.)$34,018
D.)$48,930
5.)Using marginal costing, what is the basis for valuing inventory of finished
goods in a manufacturing business?
A.)Direct + indirect production costs
B.)Prime costs + total variable costs
C.)Prime costs + variable production overheads
D.)Production costs + variable non-production costs
97
MA1 MANAGEMENT INFORMATION
ABSORPTION & MARGINAL COSTING-3
DAILY QUIZ 28
1.)A factory produces a product called the ZZ which has direct materials costs per
unit of $4.20 and a direct labour cost per unit of $4.65. Each unit of the ZZ spends
half an hour in the assembly department and quarter of an hour being packed. The
overhead absorption rate are $4.80 per hour in the assembly department and $3.60
per hour in the packaging department
What is the total production cost of one unit of the ZZ?
A.)$3.80
B.)$8.40
C.)$8.85
D.)$12.15
2.)The overhead absorption rate for product Y is $2.50 per direct labour hour. Each
unit of Y requires 3 direct labour hours. Stock of product Y at the beginning of the
month was 200 units and at the end of the month was 250 units.
What is the difference in the profits reported for the month using absorption
costing compared with marginal costing?
A.)The absorption costing profit would be $375 less
B.)The absorption costing would be $125 greater
C.)The absorption costing profit would be $375 greater
D.)The absorption costing profit would be $1875 greater
98
MA1 MANAGEMENT INFORMATION
Data for questions 3 to 5:
A product that a company manufactures requires 3 kg of material A costing $6.20
per kg and 4 kg of material B costing $5.60 per kg. The product requires 2 hours of
labour at a cost of $7.40 per hour. The product is sold in packs of 10 and the
packaging for 10 units costs $22. Fixed production costs are $60,000 per annum
and selling, distribution and administration costs are $24,000 per annum. The
company makes 15,000 units of the product each year.
3.)What is the prime cost of the product?
A.)$55.80
B.)$58.00
C.)$62.00
D.)$77.80
4.)What is the production cost of the product?
A.)$55.80
B.)$58.00
C.)$62.00
D.)$77.80
5.)What is the total cost of the product?
A.)$62.00
B.)$63.60
C.)$81.80
D.)$83.40
99
MA1 MANAGEMENT INFORMATION
ASSIGNMENT 28
1.)A product uses 6 kilograms of raw material and takes two direct labour hours to
make. Raw materials cost $2.50 per kilogram and direct labour is paid $4 per hour.
Variable production overheads are 25% of labour costs. The budgeted fixed
production costs for the year were $120,000 and budgeted direct labour hours were
20,000. Fixed overheads are recovered on a direct labour basis
What is the full production cost per unit of the product?
A.)$25
B.)$31
C.)$35
D.)$37
2.)Production costs of product X have been classified in various ways:
Prime costs
$50.80 per unit
Variable costs
$54.44 per unit
Fixed overheads
$15.20 per direct labour hour
Direct labour
2.6 hours per unit at $12.00 per hour
Variable overheads
$1.40 per direct labour hour
Direct materials
$19.60 per unit
What is the total production cost per unit of product X?
A.)$105.24
B.)$144.76
C.)$93.96
D.)$125.16
3.)A company with a single product sells more units than it manufactures in a
period.
Which of the following correctly describes the use of marginal costing in
comparison with absorption costing in the above situation?
A.)Both profit and stock values will be higher
B.)Both profit and stock values will be lower
C.)Profit will be higher; stock values will be lower
D.)Profit will be lower; stock values will be higher
100
MA1 MANAGEMENT INFORMATION
4.)The following information relates to Product X for Month 1:
Opening inventory
Production
Sales
Nil
900 units
800 units
If marginal costing rather than absorption costing is used what is the effect on
profit and inventory valuation?
A)Profit higher
B)Profit higher
C)Profit lower
D)Profit lower
Inventory valuation higher
Inventory valuation lower
Inventory valuation higher
Inventory valuation lower
5.)Production cost centre X absorbs overheads on a machine hours basis and the
following data is available for the most recent period.
Overheads
Machine hours
Budget
$24,760
450
Actual
$18,950
400
What is the predetermined production overhead absorption rate (to two
decimal places)?
A.)$42.11
B.)$47.38
C.)$55.02
D.)$61.90
101
MA1 MANAGEMENT INFORMATION
JOB COSTING
DAILY QUIZ 29
1.)A business has a job costing system and prices jobs using total absorption
costing. The cost estimate for Job 264 are as follows:
Direct materials 50 kg @ $4 per kg
Direct labour
30 hours @ $9 per hour
Variable production overhead $6 per direct labour hour
Fixed production overheads are budgeted as $80,000 and are absorbed on the basis
of direct labor hours. The total budgeted direct labour hours for the period are
20,000.
Other overheads are recovered at the rate of $40 per job.
Calculate the total job cost for Job 264.
$
2.)Costs are determined for different manufactured jobs. A mark-up is then applied
to each total job cost (manufacturing and non-manufacturing costs) in order to
achieve a target profit margin. The completed Job 163 has total manufacturing
costs of $734. Non-manufacturing overheads are absorbed at 10% of selling price.
The target profit margin is 6% of selling price.
What is the selling price of Job 163 (to the nearest $)?
A.)$874
B.)$851
C.)$864
D.)$859
3.)The following data relate to Product D.
Material cost per unit
$20.00
Labour cost per unit
$69.40
Production overhead cost per machine hour
$12.58
Machine hours per unit
14
General overhead absorption rate
8% of total production cost
What is the total cost per unit of Product D, to the nearest $0.01?
$
102
MA1 MANAGEMENT INFORMATION
4.)A manufacturer absorbs production overheads into the cost of jobs as a
percentage of actual direct labour cost. Two jobs were worked on during a period:
Job 1 ($) Job 2 ($)
Opening work-in-progress
5,269
–
Direct materials in the period
10,726 4,652
Direct labour in the period
4,360
2,940
Production overheads of $9,855 were incurred in the period. Job 2 was completed
in the period.
What is the value of work in progress at the end of the period?
A)$20,972
B)$24,941
C)$26,241
D)$20,355
5.)Which of the following is a feature of job costing?
A.)Production is carried out in accordance with the wishes of the customer
B.)Associated with continuous production of the large volumes of low-cost items
C.)Product costs are charged using the variable production costs only
D.)Costs are charged over the units produced in the period
ASSIGNMENT 29
1.)Job XX had been completed at a total production cost of $3,633. Administration
and selling overheads are applied at 20% of production cost. The selling price of
each job is established so as to provide a GROSS profit margin of 30%.
What is the selling price of Job XX?
A.)$4,723
B.)$5,190
C.)$5,668
D.)$6,228
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MA1 MANAGEMENT INFORMATION
2.)Which of the following statements is/are correct?
(1)A materials requisition note is used to record the issue of direct material to a
specific job
(2)A typical job cost will contain actual costs for material, labour and production
overheads, and non-production overheads are often added as a percentage of total
production cost.
A.)(1) only
B.)Both (1) and (2)
C.)(2) only
D.)Neither statement is correct
Data for questions 3 to 5
A firm makes special assembles to customer’s orders and uses job costing.
The data for a period are:
Job number
Job number
Job number
AA10
BB15
CC20
$
$
$
Opening WIP
26,800
42,790
0
Material added in period 17,275
0
18,500
Labour for period
14,500
3,500
24,600
The budgeted overheads for the period were $126,000 and should be absorbed
based on labour hours. Details of budgeted labour hours for each job, in this
period, are as follows.
Budgeted labour hours
AA10
580
BB15
140
CC20
984
3.)What overhead should be added to job number CC20 for the period (to the
nearest $)?
A.)$42,887
B.)$10,352
C.)$72,761
D.)$126,000
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4.)Job number BB15 was completed and delivered during the period.
What is the total cost of job number BB15?
A.)$13,852
B.)$46,290
C.)$56,642
D.)$119,051
5.)Job numbers AA10 and CC20 remained incomplete at the end of the period.
What was the value of closing work-in-progress at the end of the period of Job
AA10?
A.)$58,575
B.)$79,687
C.)$101,462
D.)$86,962
BATCH COSTING
DAILY QUIZ 30
1.)Jetprint Ltd specializes in printing advertising leaflets and is in the process of
preparing its price list. The most popular requirement is for a folder leaflet made
from a single sheet of A4 paper. From past records and budgeted figures, the
following data has been estimated for a typical batch of 10,000 leaflets:
Artwork
Machine set-up
Paper
Ink and consumables
Printer’s wages 4 hours at
$65
4 hours @ $22 per hour
$12.50 per 1,000 sheets
$40
$8 per hour
Note: Printer’s wages vary with volume.
General fixed overheads are $15,000 per period during which a total of 600 labour
hours are expected to be worked.
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Required:
Calculate cost for 10,000 and 20,000 leaflets.
10,000 Leaflets
$
20,000 Leaflets
$
2.)Consider the following statements:
1.Job costing is only applicable to service organizations
2.Batch costing can be used when a number of identical products are manufactured
together to go into finished stock
Is each statement TRUE or FALSE?
Statement 1
A.)False
B.)False
C.)True
D.)True
Statement 2
False
True
True
False
3.)A company produces goods in batches. One batch produced in May was batch
B6, to which the following information relates:
Direct material P:
litre
Direct material Q:
litre
500 litres were issued from stores at a cost of $4.50 per
750 litres were issued from stores at a cost of $5.50 per
70 litres of material Q were returned
320 labour hours were worked at a cost of $8 per hour
What is the direct materials cost of batch B6?
A.)$8,935
B.)$5,990
C.)$6,375
D.)$8,550
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4.)Which of the following is a disadvantage of batch processing?
A.)Information will not always be up-to-date
B.)It is not suitable for internal regular tasks
C.)A ‘missing’ record cannot be located
D.)Batches sent off for processing cannot be tracked
5.)P Co manufactures ring binders which are embossed with the customer’s own
logo. A customer has ordered a batch of 300 binders. The following data illustrate
the cost for a typical batch of 100 binders.
$
Direct materials
30
Direct labour
10
Machine set-up (Fixed batch cost)
3
Design and artwork (Fixed batch cost)
15
58
Direct employees are paid on a piecework basis.
P Co absorbs production and selling overheads at a rate of 20 per cent of direct
wages cost.
What is the total cost for a batch of 300 binders? (to the nearest cent)
A.)$60.00
B.)$193.20
C.)$144.00
D.)$156.00
ASSIGNMENT 30
1.)Which of the following defines batch costing?
A.)A costing method used where each cost unit is separately identifiable, where
production may not take place for inventory
B.)A costing method used where there are separately identifiable processes, where
production may take place for continuous jobs
C.)A costing method used where each cost units is separately identifiable, where
production may take place for inventory
D.)A costing method used where there are continuous processes
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2.)A company manufactures table football tables, and has the following
budgeted overheads for the next month.
Department
Welding
Assembly
Budgeted Overheads
$6,000
$8,000
Budgeted activity
1,200 labour hours
1,000 labour hours
Selling and administrative overheads are 20% of production cost. Production of
250 tables, type Garlandi 1, made as Batch 8008, incurred the following costs.
Materials
Labour
$10,000
100 hours welding shop at $7/hour
250 hours assembly shop at $10/hour
The cost of hiring special X-ray equipment for testing the welds was $600.
What is the cost per unit for Batch 8008?
A.)$81.60
B.)$78.24
C.)$75.36
D.)$65.20
3.)The following items may be used in costing batches.
1.Actual material cost
2.Actual manufacturing overheads
3.Absorbed manufacturing overheads
4.Actual labour cost
Which of the above are contained in a typical batch cost?
A.)1,2 and 4 only
B.)1 and 4 only
C.)1,3 and 4 only
D.)1,2,3 and 4
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4.)A company has established the following information for the costs and revenues
at an activity level of 500 units:
$
Direct materials
2,500
Direct labour
5,000
Production overheads
1,000
Selling costs
1,250
Total cost
9,750
Sales revenue
17,500
Profit
7,750
20% of the selling costs and 50% of the production overheads are fixed over all
levels of activity.
What would be the profit at an activity level of 1,000 units?
A.)$15,500
B.)$16,250
C.)$16,500
D.)$17,750
5.)The direct costs for batch number 35401, comprising 200 men’s shirts, were as
follows:
Materials
Labour
$3,000
120 hours @ 55 hour
Production overheads are absorbed at a company-wide rate of $12 per direct labour
hour.
Non-production overheads are absorbed at a rate of $1,000 per batch.
What is the total production cost per unit of each shirt in the batch?
A.)$18.00
B.)$22.20
C.)$25.20
D.)$30.20
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PROCESS COSTING-1
DAILY QUIZ 31
1.)What is an equivalent unit?
A.)A unit of output which is identical to all others manufactured in the same
process
B.)Notional whole units used to represent uncompleted work
C.)A unit of product in relation to which costs are ascertained
D.)The amount of work achievable, at standard efficiency levels, in an hour
2.)12,000 kg of materials, cutting $86,090 were input to a manufacturing in a
period during which conversion costs totaled $39,320. Losses in the period were
960 kg with no saleable value. The normal loss is 10% of input.
What was the total manufacturing cost per kg of expected output (to two
decimal places of $)?
A.)$9.68
B.)$10.45
C.)$11.36
D.)$11.61
3.)2,700 kg of material, costing $9·00 per kg, was input to a manufacturing process
in a period. 10% of input is lost through wastage. Conversion costs totaled $18,640
in the period. There was no work-in-progress at the start or end of the period.
What was the cost per kg of output in the period?
A.)$15·90
B.)$16·67
C.)$17·67
D.)$16·90
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4.)In which of the following areas of production would process costing NOT
be used?
A.)Food processing
B.)Paper milling
C.)Car manufacture
D.)Milk treatment
5.)In a production process the percentage completion of the work-in-progress
(WIP) at the end of a period is found to have been understated.
When this is corrected what will be the effect on the cost per unit and the total
value of the WIP?
Cost per unit
A.)Decrease
B.)Decrease
C.)Increase
D.)Increase
Total value of WIP
Decrease
Increase
Decrease
Increase
ASSIGNMENT 31
1.)In the context of process costing, which of the following best describes an
‘equivalent unit’?
A.)a unit of cost based on optimum efficiency
B.)an effective whole unit representing the varying degrees of completion of work
C.)a unit made in more than one process cost centre.
D.)a unit being currently made which is the same as previously manufactured
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2.)In a manufacturing process, 8,800 kg of raw material were input in a particular
period. There are no losses or gains from the process. 7,700 kg of finished output
are completed in the period. There was no opening work-in-progress. The work-inprogress at the end of the period had the following stage of completion.
Materials
100%
Conversion costs 45%
What were the equivalent units of production in the period?
Materials
A.)7,700
B.)7,700
C.)8,800
D.)8,800
Conversion Costs
7,700
8,195
8,800
8,195
3.)A company has one finishing process and uses process costing. During a period
500 units costing $27,800 were input to the process. Losses are 15% of input.
There is no opening or closing work in progress.
Which of the following is the cost per unit?
A.)$55.60
B.)$65.41
C.)$61.78
D.)$58.53
4.)A company uses process costing to value its output. The following was recorded
for the period:
Input materials
2,000 units at $4.50 per unit
Conversion costs
$13,040
Loss
5% of input
There were no opening or closing inventories.
What was the valuation of one unit of output?
A.)$11.80
B.)$11.60
C.)$11.20
D.)$11.00
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5.)340 litres of Chemical X were produced in a period. There is a loss of 10% of
material input into the process.
How many litres have been input in the month (to the nearest litre)?
A.)370 litres
B.)374 litres
C.)378 litres
D.)380 litres
PROCESS COSTING-2
DAILY QUIZ 32
1.)There was no work-in-progress in a manufacturing process at the start of a
period. 18,000 units of a product commenced processing in the period during
which completed output was 16,100 units. The work-in-progress was 75%
complete for conversion costs which were $4·60 per equivalent unit. There were
no losses or gains in the process.
What amount was included in the closing work-in-progress for conversion
costs?
A)$6,555
B)$8,740
C)$11,653
D)$18,515
2.)Process B had no opening inventory 13,500 units of raw material were
transferred in at $4.50 per unit. Additional material at $1.25 per unit was added in
process. Labour and overheads were $6.25 per completed unit and $2.50 per unit
incomplete.
If 11,750 completed units were transferred out, what was the closing inventory
value in Process B?
A.)$6,562.50
B.)$12,250.00
C.)$14,437.50
D.)$25,375.00
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3.)A company uses process costing for its only process which produces Product Z.
No losses in the process. There was no work-in-progress at the start of a period.
During the period 550 kgs of raw material were input to the process. In the same
period 150 kgs of the finished product were output from the process. The work-inprogress remaining was 75% complete with respect to materials and 50% complete
with respect to conversion costs.
What were the equivalent units for costing work-in-progress at the end of the
period?
Material
A.)400 kg
B.)200 kg
C.)300 kg
D.)300 kg
Conversion costs
200 kg
400 kg
200 kg
400 kg
4.)Completed output from a manufacturing process in a period totaled 5,640 units.
There was no work-in-progress at the beginning of the period but 780 units, 60%
complete, remained in the process at the end of the period
What are the equivalent units of the closing work-in-progress?
A.)312
B.)468
C.)780
D.)6,108
5.)Raw materials costing $12,800 were input to a process during a period.
Conversion costs totaled $18,430. There was no work-in-progress at the beginning
of the period and no process losses during the period. 3,600 units of the product
were completed in the period with 400 units remaining in the process at the end of
the period, complete for materials and with 70% of the conversion costs applied.
What was the production cost per unit?
A.)$7.81
B.)$7.95
C.)$8.05
D.)$8.68
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ASSIGNMENT 32
1.)A manufacturing process had no work-in-progress at the beginning of a period.
20,000 units of raw material, costing $8.20 per unit were input to the process in the
period. 18,600 completed units were transferred out. Conversion costs were $7.65
per completed unit and $6.12 per incomplete unit
What was the value of the closing work-in-progress?
A.)$8,568
B.)$20,048
C.)$22,190
D.)$30,788
2.)No losses or gains occur in a manufacturing process. There was no work-inprogress at the start of a period during which 9,600 litres of a raw material were
input to the process. 8,700 litres of finished product were output from the process
in the period. The stage of completion of the work-in-progress was:
Materials 100%
Conversion costs 60%
What were the equivalent units of production in the period?
Materials
A.)8,700
B.)8,700
C.)9,600
D.)9,600
Conversion costs
8,700
9,060
9,240
9,600
3.)The cost of output goods is found by calculating the net costs of the
manufacturing process and dividing by the number of units produced.
What is this approach known as?
A.)Job costing
B.)Batch costing
C.)Process costing
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MA1 MANAGEMENT INFORMATION
4.)A company uses process costing. At the start of the year there were no
unfinished products, but at the end of January of the 4,000 products that were
started there were 250 which were only 70% complete. There were no losses in the
period and the process costs were $2,355.
What is the value of the finished output shown in the process account?
A.)$2,208
B.)$2,465
C.)$2,250
D.)$2,355
5.)Procal Ltd is a manufacturer. In Period 1 the following production occurred
Units started (there was no opening WIP) =
1,300 units
Closing WIP
=
500 units
Degree of completion of closing WIP:
Materials
80%
Conversion costs
50%
Costs incurred in Period 1:
Materials
$7,200
Conversion
$4,200
What was the total cost per equivalent unit of production?
A.)$6.00
B.)$8.77
C.)$9.54
D.)$10.00
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SPREADSHEET-1
DAILY QUIZ 33
Data for questions 1 to 3:
You have acquired a spreadsheet package, Excel. You want to use it to devise a
monthly schedule of your firm’s income and expenditure over the past three
months, in a format as shown below. The schedule is to be updated every month.
You decide that columns should represent months, with one column containing a
three-month total. Each row represents an item of income or expenditure, with a
final profit figure for the month at the bottom of each column, as in the illustration
below. You also want to list the amount owing to your firm by its clients at the end
of each month.
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1.)What should you enter in cell B4 when you construct the model, to make
best use of the spreadsheet’s facilities?
A.)=66000
B.)=21500 + 22000 + 22500
C.)=SUM(C4:E4)
D.)=(C:E)*4
2.)In Microsoft Excel, which of the following would NOT correctly perform
the calculation required in cell B17 (assuming the remainder of the
spreadsheet is complete)?
A.)=B4-SUM(B7:B15)
B.)=SUM(C17:E17)
C.)=B4-B7-B8-B9-B10-B11-B12-B13-B14-B15
D.)=SUM(C4:E4)-SUM(C7:E16)
3.)You now wish to make your model more sophisticated, to include the
percentage change in revenue month by month is required.
Which of the following alternatives best expresses how you would input this
requirement inti your spreadsheet?
A.)=(C4-D4)/D4 formatted as a percentage
B.)=C4-D4/D4 formatted as a percentage
C.)=((C4-D4)/D4)x100
D.)=C4/D4 formatted as a percentage
4.)Which of the following data can be entered onto a spreadsheet?
A.)Text and numbers only
B.)Formulae, text and numbers
C.)Numbers and formulae only
D.)Text and formulae only
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5.)Which of the following does the formula bar display?
A.)The formula in the active cell and no other information
B.)The formula of the active cell and the formula in the active cell
C.)The formula in the active cell and the result of the formula
D.)The formula of the active cell, the formula in the active cell and the result of the
formula
ASSIGNMENT 33
1.)The following statements relate to spreadsheet formulae
1.The formula =C4*5 multiplies the value in c4*5
2.The formula =C4*117.5% reduces the value in C4 by 17.5%
3.The formula =C4*B10-D1 multiplies the value in C4 by that in B10 and their
subtracts the value in D1 from the result
Which statements are correct?
A.)1 and 2 only
B.)1 and 3 only
C.)2 and 3 only
D.)1, 2 and 3
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Questions 2 to 4 refer to the spreadsheet shown below.
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2.)The cell F5 (column F row 5) shows the opening position for month 3. The
value in this cell is a formula.
Which of the following would NOT be a correct entry for this cell?
A.)=E7-E30+D32
B.)=E5+E7-E30
C.)=E32
D.)=2860
3.)The formula in D17 (column D row 17) adds a percentage national insurance
charge to the sub total of staff costs.
Which of the formulae shown below would be a suitable formula for cell D17?
A.)=SUM(D11:D17)*0.1
B.)=SUM(D11:D16) + 10%
C.)=SUM(D11:D16)*10%
D.)=SUM(D11:D17)*C17
4.)The cell D30 (column D row 30) shows the total costs.
Which of the following is the correct formula for this cell?
A.)=D28 + D18
B.)=SUM(D11:D28)
C.)=SUM(D7:D28)
D.)D18+D28
5.)If a cell contains ####, what does this mean?
A.)There is not enough room to display the required number in the cell
B.)There is not enough room to display the required text in the cell
C.)There is not enough room to display either the required number or text in the
cell
D.)The result of the formula cannot be displayed as the formula is nonsensical
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SPREADSHEET-2
DAILY QUIZ 34
1.)This spreadsheet shows the target sales for each employee (column C) and the
amount that they actually sold (column D). The bonus value is calculated by
subtracting the actual sales from the target sales. If the employee has failed to
achieve their target level, then there is not bonus. The target figure for next month
(column F) is calculated by multiplying the target figure by a defined growth rate
(cell B15).
In the spreadsheet what is the formula in C11 (column C row 11)?
A.)=SUM(C5:C9)
B.)=AVERAGE(C5:C9)
C.)=SUM(C5:C11)
D.)=AVERAGE(C5:C11)
2.)Which of the following is NOT a formatting option available in Excel?
A.)Use of colour or shading
B.)Multi-sheet (3D) spreadsheet
C.)Formatting numbers
D.)Removing gridlines
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3.)Which of the following statements is true regarding the automatic
positioning of items within a cell, before any editing?
A.)Text is right aligned
B.)Numbers are right aligned
C.)Text is centered
D.)Numbers are centered
4.)A cell in a spreadsheet is displaying #DIV/0!
Which of the following may have caused this?
A.)A formula is attempting to divide by zero
B.)The cell is too small to display the required text or number
C.)A formula refers to a cell containing text
D.)A formula is referring to a cell that is not valid
5.)A spreadsheet cell contains the formula =C4*B10-D1.
What does this formula do?
A.)Multiplies the value in C4 by B10 and then subtract the value in D1
B.)Multiplies the value in C4 by the value of D1 subtracted from the value of B10
C.)Divides the value in C4 by B10 and then subtract the value in D1
D.)Displays the value of D1 subtracted from B10 in cell C4
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ASSIGNMENT 34
Questions 1 to 3 refers the spreadsheet shown below.
The cost card below shows how the cost of producing each unit of the component
214X is built up. Each individual cost in the total column is found by multiplying
the quantity (kg or hours) by the cost per kg or hour. In other words column D cells
contain formulae of type = BX*CX, except for the total in D16 which is a sum of
the cells above in column D.
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1.)If the skilled labour rate were to change from $9.40 to $9.50 per hour, the
values in which cells would change?
A.)C20 only
B.)C20 and C11 only
C.)C20, C11 and D11 only
D.)C20, C11, D11 and D16
2.)Overheads are absorbed into produce costs by charging $12.40 for each skilled
labour hour worked on the component.
If the skilled labour hours needed for each unit increased to 2.5 hours, the
values in which cells would change?
A.)B11 and B14 only
B.)B11, C11 and D16
C.)B11, B14, D11, D14 and D16
D.)B11, B14, C11, C14, D11, D14 and D16
3.)The text in cells A22 and A23 currently occupies two lines.
Which of the following options would keep the text on one line within cell
A22?
1.Use a smaller font size
2.Increase the row height
3.Increase the column width
A.)1 only
B.)1 and 2 only
C.)1 and 3 only
D.)1,2 and 3
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Questions 4 & 5 refers to the spreadsheet shown below.
A company offers its customers a 5% discount on orders of 1000 units or more of
material P.
4.)Which of the following formulae is in cell C6?
A.)=IF(B6>=1000,$B$13,$B$13*0.05)
B.)=IF(B6<1000,$B$13,$B$13*0.05)
C.)=IF(B6>=1000,$B$13,$B$13*(100-$B$14)/100)
D.)=IF(B6<1000,$B$13,$B$13*(100-$B$14)/100)
5.)Which of the following formulae is in cell D8?
A.)=B8/100*B13
B.)=B8*245
C.)=(C8/100)*B8
D.)=C8*B8
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ANSWERS
DAILY QUIZ 1 ANSWERS
1.)A
Strictly speaking, all these items should be direct materials costs in building a
house. However, material items with a low unit cost, such as nails and screws, are
treated as indirect materials costs. This is because the time and effort required to
measure low-cost items as direct costs is not worth the benefits obtained from the
management accounting information it would produce
2.)B
Power costs and depreciation charges are overhead costs. Materials used in
production are a direct material cost. Costs incurred obtained special tools for a
specific job are a direct expense of that job
3.)C
Prime cost is defined as the total direct production cost of an item. This consists of
direct material and direct labour cost, plus any direct expenses
4.)A
5.)A
ASSIGNMENT 1 ANSWERS
1.)D
A, B and C relate to overhead cost, not ‘direct expense'
2.)B
3.)B
An overhead cost is an indirect cost. This is a cost that cannot be traced directly to
a unit of production or sale, or any other cost unit. Overheads include indirect
materials costs, indirect labour costs and indirect expenses (for example, factory
rental costs, machinery insurance costs, machinery depreciation and so on)
4.)B
Managers are not usually classified as direct labour
5.)B
The full cost of a unit is its direct cost (prime cost) plus a share of overhead costs
(variable and fixed overhead). Full production cost could also be defined as the
variable production cost plus a share of fixed production overheads
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DAILY QUIZ 2 ANSWERS
1.)C
Of all the options this is the best description of a cost unit
2.)D
Material costs vary with the volume of production
3.)A
Variable cost per unit is constant. Chart 2 is total variable cost
4.)C
This is a simple definition of a semi-fixed (or semi-variable) cost
5.)D
The cost does not change for 300 and 400 units, therefore it cannot be variable or
semi-variable. It changes between 200 and 300 units, so it cannot be a totally fixed
cost. It must be stepped cost
ASSIGNMENT 2 ANSWERS
1.)C
Rent, rates and the production director’s salary would all be classified as fixed
costs
2.)C
3.)C
This is a stepped cost. A stepped cost is a cost that is fixed within a certain range of
activity levels, but then changes if the activity level rises above or falls below that
range to a new ‘fixed’ level. In this example, supervision costs will rise as activity
increases as more supervision staff have to be employed
4.)B
5.)C
DAILY QUIZ 3 ANSWERS
1.)D
2.)C
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3.)C
$
Total cost of 18,500 hours
251,750
Total cost of 17,000 hours
246,500
Variable cost of 1,500 hours
5,250
The variable overhead rate per hours is thus $3.50
Total cost of 17,000 hours
246,500
Less variable cost 17,000 x 3.50
59,500
Fixed cost
187,000
4.)A
5.)A
ASSIGNMENT 3 ANSWERS
1.)D
The line rental is a fixed cost and the per call charge is a variable cost, making the
overall bill a mixed (or semi-variable) cost
2.)C
3.)C
4.)A
5.)B
DAILY QUIZ 4 ANSWERS
1.)B
2.)C
Options A, B and D are all profit centres, as the managers would be responsible for
both revenues and costs. Only the manager in option C is responsible for costs only
3.)C
4.)C
5.)D
A profit centre is a part of the business which has both revenues and costs, but does
not make investment decisions
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ASSIGNMENT 4 ANSWERS
1.)D
2.)D
The manager has responsibility for investment as well as costs and revenues – this
is therefore an investment centre
3.)D
Investment centre performance should be measured by taking into account both the
profit earned and the amount of capital invested in the centre. Residual income is
profit less a notional charge for interest on capital employed. Either residual
income or Return on Capital Employed is therefore an appropriate performance
measure for an investment centre
4.)B
A profit centre manager will be responsible for costs and revenues only
5.)C
DAILY QUIZ 5 ANSWERS
1.)A
Gross profit is $51,000 - $42,500 = $8,500, which is 16.67% of $51,000
2.)A
Operating Profit
=
$150,000 + 50,000 – 120,000 – 35,000 – 25,000
=
$20,000
Operating Profit Margin =
$20,000
x 100
$150,000 + 50,000
= 10%
3.)C
4.)30%
5.)$220,000
ASSIGNMENT 5 ANSWERS
1.)A
2.)C
3.)A
4.)C
5.)B
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DAILY QUIZ 6 ANSWERS
1.)C
2.)A,C
3.)B
Prime entry records exist to reduce the amount of detail recorded in the ledgers
4.)B
5.)B
ASSIGNMENT 6 ANSWERS
1.)D
2.)A
3.)A
The cash or settlement discount is not deducted until payment is made
4.)B
5.)C
Only materials requisitions and goods received notes would be used for this
purpose
DAILY QUIZ 7 ANSWERS
1.)A
2.)C
Recording employee time is a function of a job card or a time sheet
3.)B
4.)D
The warehouse clerk is the person who can confirm receipt of the goods and
therefore will raise the goods received note
5.)B
ASSIGNMENT 7 ASNWERS
1.)A
2.)A
Option B describes a purchase requisition note. Option C describes a delivery note.
Option D describes a material requisition note
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3.)A
The sales process may begin with an enquiry from a potential customer. The
customer then places the order. When the order is delivered, the customer is sent
an invoice. The customer is then required to pay the invoice with the credit period
allowed
4.)A
5.)C
The delivery note is provided by the supplier, the goods received note is the
important document from the point of view of the purchasing cycle
DAILY QUIZ 8 ANSWERS
1.)B
2.)C
3.)B
4.)A
Under LIFO, the items in inventory will be valued at the most recent purchases
prices. Since inventory turnover is high the inventory prices are presumably close
to current prices. Therefore the correct answer is A
Option C applies if inventory is very old or LIFO is used. Option B relates to
LIFO, and Option D relates to the average prices method
5.)C
Units
$/unit
Value ($)
Purchase
1/1
4,000
2.50
10,000
31/1
1,000
2.00
2,000
5,000
12,000
Sales
15/2
(3,000)
2.50
(7,500)
2,000
4,500
Purchases 28/2
1,500
2.50
3,750
3,500
8,250
Sales
14/3
(500)
2.50
(1,250)
3,000
7,000
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MA1 MANAGEMENT INFORMATION
ASSIGNMENT 8 ANSWERS
1.)C
Purchase
1/1
31/1
Sales
15/2
Purchases
28/2
Sales
14/3
Units
4,000
1,000
5,000
(1,000)
(2,000)
2,000
1,500
3,500
(500)
3,000
$/unit
2.50
2.00
2.00
2.50
2.50
2.50
Value ($)
10,000
2,000
12,000
(2,000)
(5,000)
5,000
3,750
8,250
(1,250)
7,500
2.)D
A and C are relevant only to physical inventory movement
B is a description of the LIFO method
3.)B
Using FIFO, inventory is issued at the earliest price
The issue on the 19 January would be made up of 500 costing
1000 costing
600 x $2.80
The issue on the 31 January would be made up of 1,000 x $2.80
800 x 2.90
Total issue value
$1,250
$2,750
$1,680
$2,800
$2,320
$10,800
4.)C
Using LIFO, the 1,900 units of closing inventory is valued as the opening
inventory of 500 units ($1,250) plus the 1,000 units received on 4 January ($2,750)
plus 400 of the units received on 11 January, which have a value of $4,480 x
400/1,600 = $1,120
$
500 units of opening inventory
1,250
1,000 units received on 4 January
2,750
400 units received on 11 January
1,120
Total value of closing inventory
5,120
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MA1 MANAGEMENT INFORMATION
5.)D
LIFO will price closing inventory using the values of the earliest items received
DAILY QUIZ 9 ANSWERS
1.)D
2.)D
3.)B
4.)D
5.)B
Date
1 June
3 June
Received
Balance
100
300
5 June
12 June
Issued
220
400
180
170
350
24 June
Closing
Inventory
300
50
Total
inventory value
$
500
1,440
1,940
(1,067)
873
884
1,757
(1,506)
251
Unit cost
$
5.00
4.80
4.85*
4.85
4.85
5.20
5.02*
5.02
*
A new weighted average price is calculated every time there are receipts into
inventory
From the above records, it can be seen that the cost of material issued on 5 June
was $1,067. Therefore the correct answer is B
ASSIGNMENT 9
1.)B
2.)B
3.)C
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MA1 MANAGEMENT INFORMATION
4.)B
Receipts and Issues
Units
100
150
250
(100)
150
100
250
(75)
175
Price per unit
$
5.00
5.50
5.30
5.30
6.00
5.58
5.58
5.58
Cost
$
500.0
825.0
1,325.0
(530.0)
795.0
600.0
1,395.0
(418.5)
976.5
5.)B
DAILY QUIZ 10 ANSWERS
1.)A
2.)A
3.)D
4.)C
5.)B
ASSIGNMENT 10 ANSWERS
1.)A
Material used in production = 6,200 x 0.8kg = 4,960kg
But inventory has been reduced by 380kg, so material purchased = 4,960 – 380 =
4,580kg
2.)D
Material required per finished unit with a 10% loss:
1·8 ÷ 0·90 = 2
Total material required for manufacture:
2*2,000 = 4,000
Total materials to buy:
4,000 – 420 + 500 = 4,080
135
MA1 MANAGEMENT INFORMATION
3.)B
20,200 units x 1.4 litres/unit/0.9 = 31,422 litres
Option C was based on the sales, rather than the production, quantity (21,000 units
x 1.4 litres/unit / 9 = 32,667)
Option A multiplied the 1.4 litres by a factor of 1.1 (i.e. added 10% to the amount
required per finished unit) rather than divided by 0.9 (20,200 units x 1.4 litres/unit
x 1.1 = 31,108 litres)
Option D made no allowance for wastage thus assuming that the 1.4 litres was the
required material input per unit rather than the amount required in each unit of
output (20,200 units x 1.4 litres/unit = 28,280 litres)
4.)D
Sales budget
Increase in finished goods inventory
Production budget
Required for production (5,200 x 3)
Increase in closing inventory
Therefore budgeted purchase quantities
Units of T
5,000
200
5,200
Units of X
15,600
400
16,000
5.)D
Purchases = (number of units produced x 5kg) + Increase in inventory
Purchases = 3,000 x 5kg + 250kg = 15,250kg
DAILY QUIZ 11 ANSWERS
1.)B
2.)A
3.)B
4.)D
5.)A
136
MA1 MANAGEMENT INFORMATION
ASSIGNMENT 11 ASNWERS
1.)D
Inventory + orders – committed for use = 7,500 + 3,000 – 1,250 = 9,250
2.)C
The cost of indirect materials issued is credited to the stores account and
‘collected’ in the overhead control account pending its absorption into work in
progress. Therefore the correct answer is C
Option A represents the entries for the issue to production of direct materials
If you selected Option B you identified the correct accounts but your entries were
reversed
Option D is not correct. The issue of materials should not be charged direct to cost
of sales. The cost of materials issued should first be analysed as direct or indirect
and charged to work in progress or the overhead control account accordingly
3.)C
The credit entry must recognize that the materials have been taken out of
inventory, so answers A and B are incorrect. Given the materials are “direct”, then
the debit entry must be to WIP (C) rather than overheads (D)
4.)C
5.)B
275 + 650 – 300 = 625 units
DAILY QUIZ 12 ANSWERS
1.)D
2.)C
3.)D
4.)B
Piecework is an incentive-based pay scheme, because employees are paid more for
producing more, and so have an incentive to be more productive. A high day rate
scheme, in which employees receive a high basic rate of pay, does not offer an
incentive to be more productive
5.)A
137
MA1 MANAGEMENT INFORMATION
ASSIGNMENT 12 ANSWERS
1.)B
Maintenance staff would be an indirect labour cost
2.)B
$
240.00
54.00
6.00
300.00
100 units @ $2.40
20 units @ $2.70
2 units @ $3
3.)A
Good output = 240-8=232 units
100 units at $0.40
100 units at $0.50
32 units at $0.60
For 232 good units
$
40.00
50.00
19.20
109.20
4.)C
5.)A
DAILY QUIZ 13 ANSWERS
1.)
2.)
3.)
4.)
5.)A
ASSIGNMENT 13 ANSWERS
1.)B
2.)D
3.)A
Depreciation is an indirect cost because it does not relate directly to the number of
units produced.
Items 2 and 3 can be traced directly to specific cost units therefore they are direct
expenses
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MA1 MANAGEMENT INFORMATION
4.)B
Managers are not usually classified as direct labour
5.)D
DAILY QUIZ 14 ANSWERS
1.)D
2.)D
(630 hours/0.9) x $12 per hour = $8,400
3.)C
$
Direct production workers
(2,300 + 5,00 – 100) x $7.20
19,440
4.)C
5.)D
ASSIGNMENT 14 ANSWERS
1.)C
2.)B
$
Direct production workers – basic
(740 – 50) x $8.40
5,796
3.)C
Indirect workers: Basic (200 x $6)
Overtime premium
(40 x $6/3)
Direct workers: Overtime premium
(110 x $8.40/3)
Idle time
(50 x $8.40)
$
1,200
80
308
420
2,008
4.)C
5.)D
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MA1 MANAGEMENT INFORMATION
DAILY QUIZ 15 ANSWERS
1.)B
2.)B
3.)D
4.)C
325 units took
Standard time (325 x 36/60)
So
Bonus = ½ x 15 x $8 = $60
5.)D
Basic rate
Bonus
Total payment for job
180 hours
195 hours
15 hours were saved
72 hours x $10
(108 – 72) x $10 x 36/108
$
720
120
840
ASSIGNMENT 15 ANSWERS
1.)B
2.)C
3.)B
4.)B
5.)B
Working conditions, pension provisions and welfare are all costs associated with
retaining labour, not replacing labour
DAILY QUIZ 16 ANSWERS
1.)B
Basic pay (35*11) = 385
Overtime pay (11*1·40)*(38 – 35) = 46·2
Gross pay (385 + 46·20) = 431·20
Benefit contribution (431·2*·1) = 43·12
Net pay ($431·20 – $76·40 – $43·12) = $311·68
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MA1 MANAGEMENT INFORMATION
2.)C
Gross Pay: Basic (40 hours x $6.80)
Overtime (5 hours x $6.80 x 1.5)
PAYE
Employee’s benefit contributions
Net Pay
$
272.00
51.00
323.00
(58.00)
(31.00)
234.00
3.)D
Gross Pay: Basic (40 hours x $6.80)
Overtime (5 hours x $6.80 x 1.5)
Gross Pay
Employer’s benefit contributions
$
272.00
51.00
323.00
34.00
357.00
4.)A
The costs of payroll to the employer are the gross wages and salaries plus the the
employer’s state benefit contribution (National Insurance in the UK). Income tax
and employees’ state benefit contributions are deductions out of gross wages and
salaries, and so are a part of that cost
5.)C
The term ‘gross wages’ means the total amount earned by employees before
deductions for income tax, employees’ state benefit contributions (National
Insurance in the UK) and any other deductions from pay (such as pension
contributions by the employee). The employer has to pay an additional tax on
wages, the employer’s state benefit contributions. Theses are included within the
costs of labour in the management accounts. However, they are not an elemnet in
gross wages.
ASSIGNMENT 16 ANSWERS
1.)A
2.)A
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MA1 MANAGEMENT INFORMATION
3.)A
Paid to employees
Employees’ National Insurance contributions
Income tax
Gross Pay
Employer’s National Insurance contributions
Employer’s contribution to employees’ pension fund
Total labour cost
$
67,000
21,000
36,300
124,300
13,200
15,000
152,500
Gross earnings are the total earnings of employees. The employer must pay in
addition the employer’s National Insurance contributions, and if there is a pension
scheme for employees, the employer’s contributions into the scheme are also an
additional labour cost
4.)C
Employer’s benefit contributions are part of total labour cost, but not part of gross
pay
5.)D
DAILY QUIZ 17 ANSWERS
1.)B
2.)B
A job card is not used for agreeing a labour rate
3.)D
4.)B
The charge to work in progress is the direct labour cost, because it can be allocated
to individual products
5.)D
ASSIGNMENT 17 ANSWERS
1.)C
2.)D
Timesheets are not used for authorising holidays, but could be used for authorising
overtime payments
3.)D
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MA1 MANAGEMENT INFORMATION
4.)A
Jobcards are not used for monitoring the current whereabouts of employees as they
are signed and authorized after completing the job, by which time the information
relates to the past
5.)B
DAILY QUIZ 18 ANSWERS
1.)D
2.)A
3.)D
X
Y
Z
2,000 x 1 hour
800 x 1.5 hours
1,400 x 1.75
2,000
1,200
2,450
5,650
4.)D
5.)A
ASSIGNMENT 18 ANSWERS
1.)D
2.)A
3.)C
Capacity ratio
=
=
=
=
4.)A
Activity Ratio
=
=
=
Actual hours worked x 100
Budgeted hours
11.400 x 100
12,000
95.0%
Standard hours produced x 100
Budgeted hours
10,800 x 100
12,000
90.0%
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MA1 MANAGEMENT INFORMATION
5.)B
Efficiency ratio
=
=
=
Standard hours produced x 100
Actual hours worked
10,800 x 100
11,400
94.7%
DAILY QUIZ 19 ANSWERS
1.)B
2.)C
3.)A
4.)B
5.)A
ASSIGNMENT 19 ANSWERS
1.)B
2.)C
3.)C
4.)B
5.)C
Management accounts record revenues and costs. Sales commissions are a sales
overhead cost and repairs to the office air conditioning system are an
administration overhead cost. Dividends paid to the business owners are relevant to
the financial accounts, not the management accounts.
DAILY QUIZ 20 ANSWERS
1.)B
The question describes interlocking accounts, where the cost accounts are distinct
from the financial accounts
With integrated accounts, option D, a single set of accounting records provides
both financial and cost accounts
2.)D
The company is ‘reviewing the range of goods to be stocked’ in its branches. Its
best method of analyzing profitability is therefore by product or product line. The
other methods of analyzing profitability might all be valid, but not for the
particular purpose specified in the question
144
MA1 MANAGEMENT INFORMATION
3.)C
Real-time systems are updated immediately, so are always up to date
4.)D
An interlocking bookkeeping system is where separate accounts are kept for cost
accounting and financial accounting with regular reconciliations between the two
5.)C
Employees would be expected to have read the parts of the policy manual relevant
to their role in the organization
ASSIGNMENT 20
1.)C
If all decisions are made in the same place, then it will be easier for the decisionmakers to see the ‘bigger picture’ and therefore understand the consequences of
their decisions
2.)C
3.)C
4.)C
5.)A
DAILY QUIZ 21 ANSWERS
1.)B
The process supervisor should be coded as indirect labour
2.)B
Codes do not need to be complex or a mix of numbers and letters, but they should
be consistent
3.)C
4.)D
A cost unit is a unit of product or service to which costs can be related. A cost unit
is not always a single item, however. It may be a batch of 1,000 units, if that is
how the individual items are made. The finance department and a member of the
sales team are examples of cost centre
5.)B
145
MA1 MANAGEMENT INFORMATION
ASSIGNMENT 21 ANSWERS
1.)C
This is a sequential coding system
2.)D
3.)B
This is a hierarchical coding system
4.)B
It would be appropriate to use the costs for a batch of cakes, since the cost for an
individual cake might be too small. The cost per kilogram not relate to the same
number of cakes, and the cost per production run might relate to different
quantities of output
5.)D
Cleaning materials should be coded as indirect materials
DAILY QUIZ 22 ANSWERS
1.)A
2.)B
3.)C
4.)A
5.)B
ASSIGNMENT 22 ANSWERS
1.)D
2.)A
3.)False
4.)A
5.)D
DAILY QUIZ 23 ANSWERS
1.)C
Percentage occupancy for centre B
12,000/(8,000 + 12,000) = 60%
Overheads apportioned to B
(80,000 + 25,000)*60%
$63,000
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MA1 MANAGEMENT INFORMATION
2.)A
3.)
4.)B
A method of dealing with overhead which involves spreading common costs over
cost centres on the basis of benefit received is known as overhead apportionment
5.)B
The assembly department would be directly involved in production and therefore is
not a service cost centre
ASSIGNMENT 23 ANSWERS
1.)B
2.)D
This is a basic definition of overhead allocation
3.)C
4.)B
5.)D
Assembly costs
Reapportionment stores (15,200 x 140/(140 + 60))
Reapportionment maintenance (18,590 x 400/(400 + 250))
$
52,400
10,640
11,440
74,480
DAILY QUIZ 24 ANSWERS
1.)C
Total reapportionment to Cost Centre Y
$
25,200
25,920
51,120
60% x $42,000
45% x $57,600
2.)D
Gant
Manufacturing
Finishing
6 x $1.47
2 x $3.04
$
8.82
6.08
14.90
3.)
4.)C
5.)
147
MA1 MANAGEMENT INFORMATION
ASSIGNMENT 24 ANSWERS
1.)C
2.)B
Rent and rates
= $40,000/5,000 sq m x 1,000 sq m
= $8,000
3.)$58.75
4.)
5.)A
DAILY QUIZ 25 ANSWERS
1.)
2.)A
3.)C
4.)A
5.)A
Overhead absorbed
Overhead incurred
Under-absorbed overheads
$
81,000
85,000
4,000
This means that the overhead charged to production was too low therefore there
must be a debit to income statement. The credit entry is made in the overhead
control account
Option B demonstrate the entries for over-absorbed overhead
Options C and D are incorrect because under or over absorption of overhead does
not affect work in progress (WIP). The only overhead charge made to WIP is the
overhead absorbed based on the predetermined rate
148
MA1 MANAGEMENT INFORMATION
ASSIGNMENT 25 ANSWERS
1.)A
Over-absorbed overhead means that the overhead charged to production was too
high therefore there must be a credit to income statement. The debit entry is made
in the overhead control account. Therefore the correct answer is A
If you selected Option B you identified the correct accounts but your entries were
reversed. These entries represent those that would be made for under-absorbed
overhead
Options C and D are incorrect because the only overhead charge made to work in
progress (WIP) is the overhead absorbed into production based on the
predetermined rate. Under or over absorption does not affect WIP
2.)A
3.)D
4.)B
5.)A
DAILY QUIZ 26 ANSWERS
1.)
2.)C
3.)B
$
Sales revenue
Direct labour
Direct material
Production overhead
Other overhead costs
Profit
$
320,000
100,000
75,000
78,000
253,000
67,000
50,000
17,000
4.)C
Changes in raw material or expenditure on variable manufacturing costs in excess
of budget would not affect reported profit under absorption costing relative to
marginal costing.
Over-absorption of fixed production overhead would not affect the total amount of
costs charged, but only they are charged
149
MA1 MANAGEMENT INFORMATION
5.)D
A fully absorbed cost consists of direct costs (usually variable costs) plus fixed and
variable overheads
ASSIGNMENT 26 ANSWERS
1.)
2.)D
3.)B
Absorption Costing
Direct materials (2kg x $3.80)
Direct labour (2.5 hours x $7.80)
Production costs ($6,000/2,000)
Closing Inventory (400 units x $30.10)
$
7.60
19.50
3.00
30.10
$12,040
4.)A
5.)C
DAILY QUIZ 27 ANSWERS
1.)
2.)D
3.)C
4.)D
5.)A
ASSIGNMENT 27 ANSWERS
1.)
2.)A
3.)C
4.)D
5.)C
150
MA1 MANAGEMENT INFORMATION
DAILY QUIZ 28 ANSWERS
1.)D
Direct materials
Direct labour
Assembly ($4.80 x ½)
Packaging ($3.60 x ½)
$
4.20
4.65
2.40
0.90
12.15
2.)C
3.)B
Direct material cost A 3kg x $6.20
B 4kg x $5.60
Direct labour – 2 hours x $7.40
Packaging costs ($22/10)
Prime cost
$
18.60
22.40
14.80
2.20
58.00
4.)C
Prime cost
Fixed production overheads ($60,000/15,000)
Production cost
$
58.00
4.00
62.00
5.)B
Production cost
Selling, distribution etc costs ($24,000/15,000)
Total cost
$
62.00
1.60
63.60
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MA1 MANAGEMENT INFORMATION
ASSIGNMENT 28 ANSWERS
1.)D
The fixed production overhead absorption rate is $120,000/20,000 hours = $6 per
direct labour hour
$
Direct materials (6 kg x $2.50)
15
Direct labour
8
Variable production overhead (25% of 2 hours x $4)
2
Fixed production overhead (2 hours x $6)
12
Full production cost per unit
37
2.)C
3.)C
4.)D
5.)C
Budgeted overheads/budgeted machine hours = 24,760/450 = $55.02
DAILY QUIZ 29 ANSWERS
1.)
2.)A
3.)$286.76
4.)C
Overhead production cost for Job 1
(4,360/(4,360 + 2,940))*9,855 = $5,886
Total costs (5,269 + 10,726 + 4,360 + 5,886) = $26,241
5.)A
Job costing is a costing method applied where work is undertaken to customers’
special requirements. Option B describes process costing, C describes marginal
costing and D describes absorption costing
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MA1 MANAGEMENT INFORMATION
ASSIGNMENT 29 ANSWERS
1.)B
2.)A
Statement 1 is correct. The materials requisition note specifies the job number to
be charged with the cost of the materials issued
Statement 2 is incorrect. A job cost will contain actual costs for material and
labour, and non-production overheads are often added as a percentage of total
production cost. However, production overheads are usually charged to jobs using
a pre-determined overhead absorption rate because it is not possible to identify the
actual overhead cost of each job
Therefore the correct answer is A
3.)C
Overhead
=
984
x $126,000
(984 + 140 + 580)
=
984 x $126,000
1,704
=
$72,761
4.)C
Opening WIP
Labour for period
Overheads ( 140 x 126,000)
1,704
Total costs
Job BB15
$
42,790
3,500
10,352
56,642
If you selected Option A you forgot to add an opening WIP
If you selected Option B you forgot to add an overheads
If you selected Option D you added the overhead for CC20 instead
153
MA1 MANAGEMENT INFORMATION
5.)C
Job Number
AA10
Opening WIP
Material added
Labour for the period
Overhead ( 580 x 126,000)
1,704
WIP
$
26,800
17,275
14,500
42,887
101,462
Option A is the direct cost of job AA10, with no addition for overhead
Option B is the opening WIP plus the overhead for job AA10 only
Option D omits the labour cost
DAILY QUIZ 30 ANSWERS
1.)
2.)B
3.)B
$
2,250
3,740
5,990
Direct material P (500 litres x $4.50)
Direct material Q (750 – 70 litres x $5.50)
Total cost
4.)A
Information is not up to date under a batch processing system
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MA1 MANAGEMENT INFORMATION
5.)C
Since wages are paid on a piecework basis they are a variable cost which will
increase in line with the number of binders. The machine set-up cost and design
costs are fixed costs for each batch which will not be affected by the number of
binders in the batch.
For a batch of 300 binders:
$
Direct materials (30 x 3)
90.00
Direct labour (10 x 3)
30.00
Machine set up
3.00
Design and artwork
15.00
Production and selling overhead (30 x 20%)
6.00
Total cost
144.00
If you selected Option A you treated all of the costs as fixed costs
If you selected Option B you absorbed on 20% of materials costs
If you selected Option D you treated all of the costs as variable costs
ASSIGNMENT 30 ANSWERS
1.)C
Option A is a definition of job costing. Option D is a definition of process costing.
Option B does not define any particular costing method – it is a mixture of process
and batch costing. Option C is the definition of batch costing
155
MA1 MANAGEMENT INFORMATION
2.)B
Overhead absorption rate for production departments:
Welding
=
$6,000/1,200
=
$5per labour hour
Assembly =
$8,000/1,000
=
$8 per labour hour
Total cost – Batch no 8008
$
Direct material
Direct labour
Direct expense
Prime cost
Overheads
100 x $7 =
250 x $10 =
$
10,000
700
2,500
3,200
600
13,800
100 x $5 =
250 x $8 =
Production cost
Selling and administrative cost (20% of production cost)
Total cost
Cost per unit = $19,560/250 = $78.24
500
2,000
2,500
16,300
3,260
19,560
3.)C
4.)B
5.)C
Note: do not include non-production overheads
Total production cost of batch = 3,000 + (120 x 5) + (120 x 12) = $5,040
Cost per shirt = 5,040/200 = $25.20
DAILY QUIZ 31 ANSWERS
1.)B
An equivalent unit calculation is used in process costing to value any incomplete
units within work in progress and losses
Option A describes the output from any process, where all completed units are
identical
Option C describes a cost unit, and D describes a standard hour
2.)D
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MA1 MANAGEMENT INFORMATION
3.)B
The total value of WIP will increase. The number of equivalent units will increase
which will cause the cost per unit to decrease
4.)C
Option C would be suited to batch costing. The other three options are all suitable
for process costing
5.)C
ASSIGNMENT 31 ANSWERS
1.)B
2.)D
Finished goods
WIP
Total
3.)B
Output
Loss (15%)
Input
Material cost
7,700
1,100
8,800
Conversion costs
7,700
100%
495
complete
8,195
Total
kgs
425
75
500
The total cost of the inputs is $27,800
Cost per kg = $27,800/425 units = $65.41
4.)B
Cost per unit = net process costs/expected output
=(9,000 + 13,040)/(2,000-100)
=$22,040/1,900 = $11.60
5.)C
340 litres represents 90% of the input. 340/0.9 = 378 litres to the nearest litre
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MA1 MANAGEMENT INFORMATION
DAILY QUIZ 32 ANSWERS
1.)A
(18,000 – 16,100)*·75*$4·60 = 6,555
2.)C
Cost per unit in closing inventory
= $(4.50 + 1.25 + 2.50) = $8.25
Number of units in closing inventory = 13,500 – 11,750
= 1,750 units
Therefore, value of closing inventory = 1,750 units x $8.25
= $14,437.50
Option A applies a unit rate of $3.75, i.e. omitting the cost of the raw material
transferred into the process. Option B applies a unit rate of $7, omitting the
additional material added. Option D applies a unit rate of $14.50, i.e. all of the unit
rates supplied in the question. The work in progress should be valued at the rate
per incomplete unit in respect of labour and overheads
3.)C
Total
Materials Conversion costs
Kgs
Kgs
Kgs
Output
150
150 (100%)
150 (100%)
WIP
400
300 (75%)
200 (50%)
550
450
350
4.)B
Closing work-in-progress is 780 x 0.6 = 468
Total equivalent units for the period are 5,640 + 468 = 6,108
5.)B
Raw materials per unit = $12,800/(3,600 + 400)
Conversion costs per unit = $18,430/(3,600 + (70% x 400))
Total production cost per unit = $3.20 + $4.75
= $3.20
= $4.75
= $7.95
ASSIGNMENT 32 ANSWERS
1.)B
1,400 x $14.32 = $20,048
There are no losses in the process so there are 20,000 – 18,600 = 1,400 units of
work-in-progress. These are valued at $8.20 + $6.12 = $14.32
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MA1 MANAGEMENT INFORMATION
2.)C
Output 8,700
WIP (9,600 – 8,700) = 900
Equivalent units:
Finished goods
WIP
Total
3.)C
4.)C
5.)D
Started
=>
1,300
=>
Material costs
8,700
900 (900*100%)
9,600
Finished
800 (to balance)
+
+
Conversion costs
8700
540 (900* 60%)
9,240
CWIP
500
Finished units are 100% complete for both material and conversion
Equivalent units
Completed in CWIP EU
period EU
800
400 (80% x
500)
800
250 (50% x
500)
Total EU
Costs
Cost per EU
Total costs ($) ($)
1,200
7,200
6.00
1,050
4,200
4.00
11,400
10.00
DAILY QUIZ 33 ANSWERS
1.)C
There is no point in devising a spreadsheet if you are not prepared to let it work for
you, so answers A and B are not appropriate
2.)C
Answer B adds across the monthly net profit figures. Answer A subtracts the costs
listed from fee income in the year-to-date column. Answer D is effectively the
same calculation as answer A. Answer C is wrong: Excel requires an ‘=’ sign to
show that it is a formula
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MA1 MANAGEMENT INFORMATION
3.)A
Answer B is incorrect because the formula overlooks the fact that operations in
brackets are performed first. Answer C would give the correct number, but does
not make best use of the spreadsheet because the cell would not be formatted to
include a % sign. Answer D contains an incorrect formula. Answer A contains the
correct formula and the correct cell format
4.)B
Formulae, text and numbers can be entered onto a spreadsheet
5.)B
The formula bar displays the location of the active cell and the formula in the
active cell
ASSIGNMENT 33 ANSWERS
1.)B
1 and 3 only
=C4*117.5% adds 17.5% to the value in C4
2.)D
Putting a value in the cell, such as 2860, would mean that the cell was not updated
to reflect later changes to the spreadsheet
3.)C
Options A and D would create a circular reference. Option B would not calculate
10% of the subtotal of staff costs. Option C would calculate 10% of the subtotal
4.)A
The correct formula is = D28 + D18. Although D18 + D28 looks the same, because
it has no = sign it is not treated as a formula. Both of the other options count sub
totals as well as the cost items
5.)A
B and C are incorrect as if there is too much text for the size of the cell, it will spill
into adjacent cells if they are empty, or will be hidden by the contents of the
adjacent cell. If a nonsensical formula is entered into a cell, a different response
will be given. For example, if your formula results in a value being divided by 0,
#DIV/0! will appear
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MA1 MANAGEMENT INFORMATION
DAILY QUIZ 34 ANSWERS
1.)A
Cell C11 contains a total so AVERAGE is not a suitable function. Option D will
create a circular reference
2.)B
Multi-sheet spreadsheets are not a formatting option
3.)B
4.)A
5.)A
The multiplication will occur first before the subtraction of the value in D1
ASSIGNMENT 34 ANSWERS
1.)D
Whilst only one figure needs to be re-entered: the new labour rate in C20, the
figures in the other cells will all change to reflect the new rate
2.)C
B11 and B14 would have to be amended to the new value of 2.5. The values in
D11 and D14 would then change as a result, as would the total, D16. The rate per
hour referred to in cells C11 and C14 are unaffected
3.)C
A smaller font size and a wider cell would allow more text to be included on the
cell. Increasing the row height will have no effect on the amount of text that can be
included on one line
4.)D
A and B are incorrect as they calculate the price at 5%, rather than deducting the
discount from the price. C is incorrect as the discount is applied to orders below
1000 units by using the > sign incorrectly
5.)C
A and B are incorrect as they ignore the discount that this order qualifies for. D is
incorrect as it applies the price as though it were a price per unit when, in fact, the
price given is per hundred units
161