CAT T4

FREE ONLINE CBE BASED MOCK EXAM

50 Questions
Updated for Exams in

2010
Prepared by | Hasaan Fazal

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CAT – T4

Accounting for Costs | CBE Based Test

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CAT – T4 Q1

Accounting for Costs | CBE Based Test

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Ordering cost forms part of: A. B. C. D. FOH Direct material Revenue expense Deferred costs

Q2
Purchase order is sent to: A. B. C. D. Supplier Store keeper Accounts department Cost control department

The following data relates to Question#3, 4, 5 & 6
Annual requirement Invoice value Freight Ordering cost Carrying cost 46875 0.45 0.05 25/order 12% of average stock

Q3. Calculate economic order quantity Q4. What is the total handling cost for the year if the order quantity is 3000 and buffer stock is 1000? Q5. If cost of ordering increases by 12% in the next year, what will be EOQ for the next year? Q6. After how many days should the next order be placed? Q7
Which of the following is NOT true if company implements a good incentive scheme? A. B. C. D. Employees will earn more Employees will produce more Cost of production will decrease Per unit cost of production will decrease

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CAT – T4

Accounting for Costs | CBE Based Test

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CAT – T4

Accounting for Costs | CBE Based Test

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The following data relates to Question# 8 & 9
If a productive worker has a basic monthly pay of \$400 and is entitled to a paid vacation of 4 weeks than his:

Q8. Annual direct labour cost is: Q9. Annual indirect labour cost is: The following data relates to Question# 10, 11 & 12
Minimum lead time average lead time maximum lead time maximum usage minimum usage re-order quantity 4 days 5 days 7 days 500 units per day 300 units per day 5400 units

Q10. Calculate re-order level Q11. Calculate minimum stock level Q12. Calculate maximum stock level Q13
The purpose of calculating an EOQ is: A. B. C. D. To minimize the stockholding quantity to minimize the stockholding cost to minimize the total cost of purchasing and storing the material to enable the reorder level of the material to be established

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CAT – T4

Accounting for Costs | CBE Based Test

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The following data relates to Question# 14, 15 & 16
Follow is the labour data of a company for a given week Days units hours Monday 270 8 Tuesday 210 8 Wednesday 300 8 Thursday 240 8 Friday 260 8 If company has implemented a 100% bonus plan with a base wage of \$6 per hour and a standard production rate is 30 units per hour than;

Q14. What is the amount of bonus payable on Wednesday? Q15. What is the gross pay payable on Friday? Q16. What is the labour cost per unit of Thursday? Q17
Overheads that are apportioned are such costs which are: 1. Not caused by one cost centre 2. Caused by only one cost centre 3. Joint costs 4. Directly allocable Which of the above holds true with apportionment? A. B. C. D. 1 only 1 & 3 only 2 & 4 only 4 only

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CAT – T4 Q18

Accounting for Costs | CBE Based Test

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Cost (\$)

The graph above is an example of: A. B. C. D. Cost decreasing at increasing rate Cost increasing at increasing rate Cost increasing at decreasing rate Cost decreasing at decreasing rate

Q19
Classification of costs whether it is avoidable or not, is necessary because: A. B. C. D. Both avoidable and unavoidable are considered in decision Only unavoidable costs are considered in decision making Only avoidable costs are considered in decision making None of the above

Q20
In which costing method the fixed cost is charged in the period in which units are sold? A. B. C. D. Marginal costing Absorption costing Unit costing Job costing

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CAT – T4 Q21

Accounting for Costs | CBE Based Test

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The company ZABA ZABA Ltd has enjoyed 20% increase in profit this year. The company produces on order and maintains no closing stock. Currently they are using absorption costing, if company was using marginal costing than reported profits would be: A. B. C. D. 20% lesser than current profits 40% more than current profits Remains the same None of the above

Following data relates to Question# 22, 23 & 24
Following PER UNIT data relates to Spectrum ltd which manufactures 10,000 machines a month Direct Material 750 Direct Labour 300 Variable OH 150 Fixed OH 600 Selling price is 2400/unit Production for the periods P1 P2 and P3 is as follows: P1 P2 P3 Production 10,000 8,000 11,000 Sales 8,000 9,000 12,000 Calculate:

Q22. Difference in profit pertaining to P1 between absorption and marginal costing methods Q23. under/over absorbed overheads in P2 if actual overheads are 76,000.
[Note: In case of under absorption, denote your figure with minus sign for example “-xxx” ]

Q24. Fixed costs for period P3

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CAT – T4

Accounting for Costs | CBE Based Test

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The following data relates to Question# 25, 26, 27 & 28
Sales price per unit 15 variable cost 8 total fixed manufacturing cost 25,000 variable admin cost per unit 3 total annual fixed marketing expense 15,000 Assuming no opening stock, during 12,500 units were produced and 10,000 units were sold and normal capacity is 12,500 units. Calculate:

Q25. Ending inventory under marginal costing Q26. Ending inventory under absorption costing Q27. Total variable cost charged to expense under marginal costing Q28. Total fixed cost charged to expense under absorption costing Q29
A change in per unit variable costs: A. B. C. D. Does not change the contribution margin ration but changes break even point Changes the contribution margin ratio and break even point Changes the contribution margin ratio but have no effect in break even point Have no effect on break even point and contribution-margin ration

Q30
A change in fixed cost will bring change in: A. B. C. D. Contribution margin figure Contribution margin ratio Break even point All of the above

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CAT – T4 Q31

Accounting for Costs | CBE Based Test

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A combined increase in the fixed and variable costs will cause the break-even point to move: A. B. C. D. Towards the origin of the graph Away from the origin of the graph Will remain unchanged It cannot be decided with this much limited information

The following data relates to Question# 32, 33 & 34
The company X-men is considering a price reduction policy. Selling price 100 Variable Cost 40 Company expects a profit of 2,750,000 after charging a fixed cost of 850,000. Suggestion % Reduction in price % increase in sales 1 5 10 2 7 20 3 10 25 Calculate:

Q32. Profit under suggestion 1 Q33. Break even under suggestion 2 Q34. Contribution margin ration under suggestion 3

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CAT – T4

Accounting for Costs | CBE Based Test

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The following data relates to Question# 35, 36 37, 38, 39 & 40
The Solid State LLC has planned to produce 10,000 units of Blinky with a normal spoilage rate of 5%. 1 unit of Blinky requires 2 units of Darky and 4 units of Blacky. Unit cost of Darky and Blacky is \$4.5 and \$5.4 respectively. In addition to this an indirect material named Smoothy is also added which costs \$12,000 in total. To produce 1 unit of Blinky we require 20 minutes. The wage rate is \$3 per hour. Overheads are applied at 70% of total labour cost. The actual numbers of units lost during the process were 720. The actual output was 9,280 units.

Q35
During the process we had an A. B. C. D. Abnormal gain of 220 Abnormal loss of 220 Abnormal gain of 500 Abnormal loss of 500

Q36. What is the expected output? Q37. What is the total cost incurred? Q38. What is the average cost per unit? Q39. What is the value of finished goods completed? Q40. What is the value of Abnormal Loss/Gain during the process?
[Note: Incase of Abnormal loss, denote your value with minus sign e.g. “-xxx”]

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CAT – T4

Accounting for Costs | CBE Based Test

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The following data relates to Question# 41, 42 & 43
The Voltron Co. produces several products. Among its product line the most appreciated product is Megatron. 5 units of Megatron require:  2 units of Iron hide  4 units of Bumblebee  6 units or Ratchet In month just ended Voltron Co. has produced 2000 units of Megatron and actual quantities of raw material used are as follows: Iron hide: 1600 Bumblebee: 2400 Ratchet: 3200 If the standard normal loss is 20% then calculate:

Q41. Mix Variance for Bumblebee Q42. Yield Variance for Iron hide Q43. Usage Variance for Ratchet
[Note: In case of unfavorable variance denote your figure with minus sign e.g. “-xxx”]

Q44

Y = 12

X
A
X = 12

B

C

What will be the appropriate feasible are under the following conditions:

Y

Q44. If X ≥ 12, Y ≤ 12, 8X + 6Y ≥ 48 Q45. If X ≤ 12, Y ≥ 12, 8X + 6Y ≥ 48 Q46. If X ≤ 12, Y ≤ 12, 8X + 6Y ≤ 48 Q47. If X ≤ 12, Y ≤ 12, 8X + 6Y ≥ 48 CLICK HERE to open ANSWER SHEET

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CAT – T4

Accounting for Costs | CBE Based Test

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The following data relates to Question# 48, 49 & 50
M/S Salahuddin Ltd. are publishers of many books on Islamic history are currently operating below capacity. One of its managers is of the view that we must engage this vacant capacity too. One of the customers has approached the company with an order to produce 10,000 copies of a book titled: “The Drawn Sword of ALLAH” – Hazrat Khalid Bin Waleed (R.A.). Publishing of this book requires 2 kinds of papers; Green and White. To publish one book it requires 200 green pages and 500 white papers. M/S Salahuddin Ltd’s position of stock regarding Green and White is as follows: Historic Cost per unit (cents) 30 20 Replacement price per unit (cents) 35 25 Disposal value (cents) 24 18

Stock Green White

Units 150, 000 400,000

Green paper is currently used by the company to produce other books while White paper is no longer used and it is now a surplus. Calculate:

Q48. Relevant cost of Green paper Q49. Relevant cost of White paper Q50. Minimum price per unit that would be quoted to customer for “The Drawn Sword of ALLAH” –
Hazrat Khalid Bin Waleed (R.A.)