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Management Accounting
Management Accounting
A cost which:
A. ? Fixed cost
B. ? Stepped fixed cost
C. ? Semi-variable cost
D. ? Variable cost
3. The total production cost for making 20,000 units was £21,000 & total
production cost for making 50,000 was £34,000. When production goes
over 25,000 units, more fixed costs of £4,000 occur. So full production
cost per unit for making 30,000 units is:
A. ? £0.30
B. ? £0.68
C. ? £0.84
D. ? £0.93
Solution: 50,000 units £34,000 Less step costs £4,000 Gives £30,000
Less 20,000 units £21,000 Gives: Var. Cost for 30,000 extra units
£9,000 (30p ea) Fixed cost = £21,000 - £6,000 (20,000 x 30p) =
£15,000 Total Cost for 30,000 units = Variable cost £9,000 Fixed cost
£15,000 Step cost £4,000 Total cost £28,000 Cost per unit =
£28,000/30,000 units = 93p
4. There are 40,000 units of Part Number LC36 on order from suppliers and
28,000 units outstanding on existing customers' orders. If the free stock is
16,000 units, what is the physical stock of units?
A. ? 12,000
B. ? 4,000
C. ? 24,000
D. ? 44,000
5. A business has high stock turnover and uses the FIFO method of pricing
stock issues. If our supplier purchase prices are currently, generally rising,
the valuation of closing stock will be:
Yes FIFO means issues to production are valued at the oldest prices
leaving those in stock valued at current prices.
Your score is 100%.
A. ? £26,000
B. ? £37,500
C. ? £50,000
D. ? £42,000
A. ? overhead apportionment
B. ? overhead allocation
C. ? overhead analyis
D. ? overhead absorption
It all about the closing stock which has fixed production costs within it
while marginal costing closing stocks do not. In absorption costing we
get - Closing stock - opening stock x fixed OAR (7,000 units - 0) x
((£26/4) = £6.50) = £45,500 more profit as the ohd this represents
goes into the next period costs in the opening stock value. With M.C.
the fixed costs for the period (22,500 x £6.50) are treated as a period
fixed cost and deducted from the total contribution earned.
10. ACG Plc makes a single product with the following values - all per unit
Selling price £15.00; Direct Materials cost £3.50; Direct Labour £4.00
Variable Overhead £2.00; Budgeted fixed production overhead costs are
£60,000 per annum charged evenly across each month of the year.
Budgeted production costs are 30,000 units per annum. In July when
actual production was 2,400 units and exceed sales by 180 units the profit
reported under absorption costing was:
A. ? £8,200
B. ? £7,770
C. ? £6,660
D. ? £7,570
The firm adds 50% to total cost to arrive at a selling price for invoicing
purposes.
A consultancy job CY 3987 took 120 hours using a senior consultant and
430 hours using a junior consultant. What will be the invoice price charged
to the client for CY 3987.
A. ? £36,000
B. ? £54,000
C. ? £13,750
D. ? £20,625
It is calculated thus: Senior £60 x 120 hrs = £7,200 Junior £35 x 430
hrs = £15,050 Ohds (120 + 430) x £25 = £13,750 ------------ Total Cost
£36,000 Plus 50% margin £18,000 -------------- Client Invoice price
£54,000 ======
Fixed costs are £350,000 per month. What is the variable cost per patient
consultation in June and July? Is it?
15. In process costing, the value attributed to any abnormal gain is:
16. Process Beta had no opening stock. 13,500 units of raw material were
transferred in £4.50 per unit. Additional material at £1.25 per unit was
added into process. Labour & overheads were £6.25 per completed unit
and £2.50 per unit incomplete.
If 11,750 completed units were transferred out, what was the value of the
closing stock of Process Beta?
A. ? £24,000
B. ? £89, 450
C. ? £14,437.50
D. ? £152,000.00
A. ? current costs
B. ? estimated future costs
C. ? notional costs
D. ? costs already incurred which are
known with certainity
18. Acclerate Ltd has fixed costs of £72,000 per annum. It makes one product
which it sells for £32 per unit. Its contribution to sales ratio is 45%.
A. ? 5,000 units
B. ? 7,000 units
C. ? 2,250 units
D. ? 2,750 units
19. Good Job Plc makes one product which sells for £80 per unit. Fixed costs
are £28,000 per month and marginal costs are £42 a unit. What sales
level in units will provide a profit of £10,000?
A. ? 1,350 units
B. ? 350 units
C. ? 1,000 units
D. ? 667 units
Spot on! Unit contribution = £80 - £42 = £38 Unit sales for £10,000
profit = £28,000 + £10,000 --------------------------- = 1,000 units £38
20. Railway Product Ltd makes one product that sells for £72 per unit. Fixed
costs are £81,000 per month & the product has a contribution to sales
ratio of 37.5%. In a period when actual sales were £684,000 the
company's unit margin of safety was :
A. ? 4,000 units
B. ? 6,500 units
C. ? 5,500 units
D. ? 4,800 units
22. In Creative Products Ltd the actual output was 200,000 units and the
actual fixed costs of £94,000 were as budgeted. However, the actual total
expenditure of £440,000 was £26,000 over budget. What was the
budgeted variable cost per unit for Creative Products Ltd?
A. ? £2.20
B. ? £1.60
C. ? £2.07
D. ? £1.86
A. ? £3.10
B. ? £0.80
C. ? £2.80
D. ? £3.40
24. In the 10th period 22,600 labour hours were worked at a standard cost of
£8.00 per hour. The labour efficiency variance was £11,200 favourable,
How many standard hours were produced?
A. ? 24,000 hours
B. ? 22,600 hours
C. ? 20,800 hours
D. ? 21,600 hours
Yes Labour Efficiency Variance = (Std Hrs - Actual hrs) x Std rate
Favourable eff. var. gives a time saving of: £11,200 / £8.00 = 1,400
hours Std hrs must = 22,600 hrs + 1,400 hrs = 24,000 hrs
Your score is 66%.