Q1: Budgeted sales of a company's single product in a period are 20,000 units
producing a total contribution of $180,000 at a selling price of $24 per unit. Fixed costs
are $6 per unit based on the budgeted sales quantity.
What is the budgeted variable cost per unit?  
$

Q2: Holding costs are included in the Economic Order Quantity formula.
Which of the following are examples of holding costs?  
(1) Warehouse rent
(2) Interest on inventory investment
(3) Carriage inwards
(4) Inventory theft
1 and 3

1 and 2 only

3 and 4

1, 2 and 4

Q3: Costs for job 123 are as follows:

Direct materials $460

Direct labour $600
Overheads 120% of direct labour cost

 A profit margin of 20% of selling price is required.

What is the selling price of job 123?
$2,136

$2,225

$2,975

$2,856

Q4 A single-product business has the following results for a period:

$ 
 

Sales revenue 268,000 (at $25 per unit)

less: Variable costs 139,360  
Contribution 128,640
less: Fixed costs 87,480  
 Net profit 41,160  

What is the break-even point in units?

8,645

3,499

7,290

9,074

Q5: A company uses time series analysis and the additive model when preparing its
cash budgets.

(1) The latest trend figure for sales calculated for January 20X1 was $2,135,000
(2) On average the trend is increasing by $17,000 each month
(3) Season variations are estimated to be:
February - $162,000, March + $135,000 and April + $181,000
What should the company's budgeted sales figure be for April?
$2,340,000

$2,186,000

$2,289,000

$2,367,000

Q6: Which of the following would MOST likely be a responsibility of a trainee

accountant?
Producing a schedule of budgeted and actual costs to calculate variances

Approving employee recruitment

Authorising a contract for a new computerised accounting system

Deciding on procedures for the authorisation of invoices

Q7: Which form of communication would be MOST appropriate to send to a customer

 

who regularly fails to meet agreed payment dates?

Report

Letter

Memo

 Note

Q8: Which of the following could be the cause of a favourable materials cost variance?
Purchase of higher priced materials of standard quality

Use of untrained labour

Use of a higher grade of labour

Inefficient use of materials

Q9: In which of the following industries would process costing be appropriate?

Manufacturing chemicals

Manufacturing components

Fitting bathrooms

Building offices

Q10” Which of the following are likely characteristics of the working capital cycle of a
large retailing business such as a supermarket chain?
(1) Receipts of cash are likely to precede payments
(2) Most cash income is received at the time of sale
(3) The majority of sales will be on credit

1 and 2 only

2 only

1, 2 and 3

1 and 3 only

Q11: Cash budgets and forecasts can provide an early warning of liquidity problems by
estimating which of the following?
(1) How much cash is required
 

(2) The cost of borrowing any funds

(3) When cash is likely to be required
(4) How long cash is likely to be required for

3 and 4 only

1, 3 and 4 only

1, 2, 3 and 4

1 and 2 only

Q12: Which TWO of the following are relevant in capital investment decision-making
using discounted cash flow methods of appraisal?

Annual depreciation

Sunk costs

Cost of capital

Timing of future cash flows

Q13:The gross wages of the direct operatives in a production cost centre for a period
are analysed as follows:

Direct operatives
($) 
Productive hours at basic rate 37,640
Overtime premium 2,440
Idle time 590
Group bonuses 3,130

How much of the gross wages would normally be accounted for as direct labour?
;
$  

Q14:Machine parts are assembled in a factory. One of the components used in

assembling machine part MP7 is component C6.
Which one of the following is an example of a cost unit in the factory?
 

 
A unit of component C6

A unit of machine part MP7

The cost per unit of component C6

The cost per unit of machine part MP7

Q15: The standard time for the production of one unit of product X is 15 minutes. 2,600
units of the product were manufactured. This was 200 units more than budget. 630
hours were worked.
What was the efficiency ratio?
96.9%

105.0%

103.2%

108.3%

Q16: Which of the following are affected by the separation of the losses in a process
into normal and abnormal?
(1) The cost per unit of production
(2) The total cost of resource inputs to the process
(3) The valuation of completed output

1 and 2 only

1 and 3 only

1, 2 and 3

2 and 3 only

Q17: A capital investment project requires expenditure of $90,000 in year 0 followed by

cash inflows of $30,000 at the end of each of the four years of the project's life. The
project will have a terminal value of $60,000.
What is the payback period of the investment project?

1 year

2 years
 

  3 years
4 years

Q18:Which of the following is MOST likely to be the cause of an increased cash surplus
in a business?

Purchasing new non-current assets

Increasing inventories

Giving more credit to customers

Taking more credit from suppliers

Q19: A product has a budgeted labour cost of $12 per unit and budgeted output of
25,000 units in a period. Actual costs and output in the period were $304,640 and
25,600 units respectively.
What was the total labour cost variance using the flexed budget?
$4,640 Adv

$2,560 Adv

$2,560 Fav

$4,640 Fav

Q20: What is exception reporting?

The reporting of adverse variances only

The reporting of variances as and when required by management

The reporting of variances that exceed a certain limit

The reporting of the results of variance investigation

Q21: Which of the following correctly describes the margin of safety?

The difference between budgeted sales and breakeven sales as a percentage of breakeven
sales

The difference between sales revenue and variable costs as a percentage of sales revenue

Budgeted profit as a percentage of budgeted fixed costs

The difference between budgeted sales and breakeven sales as a percentage of budgeted
sales
 

Q22: Which of the following functions is LEAST likely to be carried out by the treasury
department?
 Negotiating funding arrangements with banks

Assembling financial information for management

Managing exchange dealing including futures and options

Preparing the annual business plan

Q23: Which TWO of the following items would appear on the stores ledger account but
NOT on the bin card?
Inventory value

Receipts and issues

Inventory quantity

Unit price

Q24:An extract from the accounts of Z Co is shown below:

$
Non-current assets 228,000
Inventory 11,460
Trade receivables 18,520
Bank overdraft 2,100
Trade payables 6,440
What is Z Co's working capital?
$
Q25: A company manufactures a variety of components which are sold to the
automotive industry. Machine hours is the limiting factor, which prevents production of
all component requirements, but this can be overcome by buying in any quantity of any
component.
What should be the basis for deciding which component would be the best to buy in to
minimise costs?

Saving per unit by manufacturing rather than buying in

Saving per machine hour by manufacturing rather than buying in

 

  Contribution per unit

Profit per machine hour

Q26: The costs incurred in the manufacture of 1,000 units of a product are:

$ 
Direct materials 4,000
Direct labour 6,000
Variable overheads 2,000
Fixed overheads 8,000
If output increases by 25% what will be the effect, if any, on the total cost per unit?

Decrease by $2.00 per unit

Decrease by $1.60 per unit

Decrease by $5.00 per unit

 No effect

Q27: A company has two production cost centres (PC1 and PC2) and two service cost
centres (SC1 and SC2). Overhead allocation and apportionment is as follows for a
period:

PC1  PC2  SC1  SC2 

Overheads $460,200 $520,800 $122,000 $96,600
Reapportionment of SC1 35% 45% 20%
Reapportionment of SC2 30% 70%
What are the total overheads in PC2 after reapportionment of the service cost centre
overheads?
$643,320

$660,400

$605,500

$667,720
 

Q28: What is a flexible budget?

A budget that includes high, low and mid-range estimates

A budget that is adjusted for uncontrollable events

A budget that is adjusted for control purposes according to the actual level of activity

A budget that results from participation of budget holders

Q29: Which of the following methods of bank financing have agreed time periods?
(1) Bank overdraft
(2) Revolving credit facility
(3) Term loan

1 and 2

3 only

2 and 3

1 and 3

Q30:Consider the following statements about business emails:

(1) They can be used in the same way as internal memos

(2) They can be used for all external communications
(3) They are messages sent electronically
(4) They can be used both within organisations and between them
Which of the statements are correct?
2, 3 and 4 only

1, 3 and 4 only

1 and 2 only

1, 2, 3 and 4

Q31: Which of the following correctly describes the concept of contribution?

The difference between sales value and the marginal cost of sales

The difference between sales value and total costs

 

The cost of a unit of a product or service which would be avoided if that unit were not
 
 provided or produced

The difference between the expected sales volume and the breakeven sales volume

Q32: A company buys and sells three products. The labour hours available for
manufacture are restricted but any quantities of the products can be bought-in from
other suppliers to satisfy sales demand. The following information is provided:

Product Product Product

A  B  C 
per unit  per unit  per unit 
Selling price ($) 6.00 7.50 9.00
Variable manufacturing costs ($) 3.00 4.00 4.50
Bought-in price ($) 5.50 5.75 6.50
Labour (hours) 1.5 4 2
Which is the best product to buy-in in order to maximise profit?
Product B

Product A

It is not possible to tell from the information provided

Product C

Q33: Which TWO of the following may result in fixed overheads being over absorbed?
Expenditure above budget

Activity above budget

Activity below budget

Expenditure below budget

Q34: Which TWO of the following cash management policies are businesses likely to
adopt when economic conditions are unfavourable?

Enter into long-term funding arrangements with banks

Offer shorter credit periods to customers

Make a concerted effort to maintain current cash balances

 

Pay all suppliers as soon as the respective invoice is received.

 
Q35: A manufacturer of beauty products has carried out a time series analysis on sun
tan lotion and has decided to use the data below to estimate sales figures for the next
five months.

Month  Trend  Seasonal variation  

('000)  (%) 
March 3,001 85.6
April 3,159 88.2
May 3,343 94.5
June 3,751 99.8
July 4,108 105.4
Using the multiplicative model what are the estimated future sales for July (to the
nearest $'000)?
$ '000

Q36:The following statements are related to the use of different raw material pricing
methods in a period of consistently rising prices. Is each of these statements true or
false?

.  True  False 
Raw material inventory values will be lower using LIFO rather than weighted
average
Production costs will be higher using LIFO rather than FIFO

Q37:
Does each of the following descriptions relate to a by-product?
.  Yes  No 
A product which is incidental to the main purpose of a process

A product which has an insignificant value relative to other products from a process

Q38:
Machine parts are assembled in a factory. One of the components used to assemble
machine part MP12 is component C26.
Which of the following could be an example of a cost centre in the factory?
 

  The assembly department

The cost per unit of machine part MP12

A unit of machine part MP12

A unit of component C26

Q39:When is service costing used?

When overhead absorption is straightforward

When the output is intangible

When indirect costs are a small proportion of total costs

When the absence of a physical product makes it impossible to determine unit costs

Q40:
Which TWO of the following are relevant costs?
Unavoidable costs

Differential costs

Sunk costs

Future costs

Q41:
 A monthly cash budget has been drawn up as follows:

March ($)  April ($) 

Receipts  
Credit sales 20,000 22,000
Cash sales 10,000 9,000

Payments  
Suppliers 13,000 8,400
Wages 4,600 4,600
Overheads 3,000 3,500

The opening cash balance for March was $1,000.

 

What is the budgeted closing cash balance for April?

$
Q42: An incentive scheme is in operation for each direct worker in a factory. The basic
rate of pay is $8 per hour for an 8-hour day with a bonus if hours worked are less than
the standard hours for the output achieved. The bonus is 50% of the time saved against
standard, paid at the basic rate. A single product is manufactured and the standard time
is 10 minutes per unit.
What is the bonus for a worker who manufactures 60 units in an 8 hour day?
$
Q43: A delivery vehicle made two journeys in a week during which associated costs
were $18,600.

Journey 1 was 400 kilometres and the weight of the load was 12 tonnes
Journey 2 was 750 kilometres and the weight of the load was 14 tonnes
What was the cost per tonne-kilometre (to two decimal places)?
$
Q44:A company is considering whether to agree to do a job for a customer. The job
would require 1,000 units of material Z.

The company has 800 units of material Z in inventory which originally cost $6,000 per
unit but it no longer uses the material. These 800 units could be sold off for just $2.00
per unit.

However, the 800 units of material Z could also be used in a process as a substitute for
the same quantity of a different material that costs $3.00 per unit. The cost of buying
material Z from a supplier is $7.00 per unit.
In making a decision about whether or not to agree to do the job for the customer what
is the relevant cost of material Z required for the job?
$
Q46:A new fixed asset costing $10,000 has a four year life with an estimated value at
the end of its life of 20% of the original investment amount. Two alternative depreciation
methods are being considered for the asset:

(1) Reducing balance at 30% per annum

(2) Machine hour utilisation based on :
Year 1 1,500 hours
 

  Year 2 1,000 hours

Year 3 1,000 hours
Year 4 500 hours
Is each of the following statements about the above data true or false?
.  True  False 
The depreciation charge in year 3 would be lower using the reducing balance
method
The depreciation charge in year 1 would be higher using the machine hour
method
Q47:A company sold 10,000 units of its single product in a period during which finished
goods inventory increased by 2,000 units.
Based on absorption costing how would the profit in the period and the inventory value
at the end of the period compare with those calculated using marginal costing (MC)?
.  Higher than MC  Lower than MC 
Profit

Inventory value

Q48:Are each of the following production overheads included in product costs using
absorption costing?

.  Yes  No 
Fixed overhead costs

Variable overhead costs

Q49: 25,000 units of a company's single product are produced in a period during which
28,000 units are sold. Opening inventory was 7,000 units. Unit costs of the product are:

$ per
unit
Direct costs 16.20
Fixed production overhead 7.60
Fixed non-production overhead 2.90

What is the difference in profit between absorption and marginal costing?

$
 

Q50: XY Co makes and sells a single product for which variable costs are as follows:

$
Direct labour 5
Direct materials 4
Variable production 2
overhead
11

The sales price is $15 per unit and fixed costs per annum are $56,000. The company
wishes to make a profit of $8,000 per annum.
How many units need to be sold to achieve the target profit?
units
S&P Co makes two products, A and B. A sells for $25 per unit, B for $35 per unit. The
variable cost per unit of A is $17.50, that of B $20. Each unit of A uses 2 kg of raw
material. Each unit of B uses 3 kg of material.

The availability of raw material is limited to 2,000 kg. S&P Co is contracted to supply
500 units of A.

Maximum demand for the B is 250 units. Demand for the A is unlimited.
How many units of A will be produced in the profit-maximising product mix?
units