ACC 102 BY MUMPRAYERS

Modified by: LEGACY and LITTLE DOVE

Massive Success is the Goal
NOTE: This material is a compilation of testable questions for ACC102 and hence, should not be seen
as a substitute for notes or as exam questions. Readers are hereby encouraged to go through their
notes to fully understand the course. BEST OF LUCK

1. Any cost that is expedient for the purpose of decision making is often referred to as
_______

2. The method of selecting the highest and lowest activity levels and comparison of the
changes in the costs that result from the two levels is known as ________

3. The cost which represents the loss of alternative income as a result of acceptance of a
particular decision is known as _______

4. The cost behavioral pattern which has attributes of fixed and variable elements is ______

5. The sum of all indirect costs is called _______

6. Cost centres are broadly classified into ________ and ______

7. The costing method applicable in hotels, airlines, transportation and school businesses is
called______

8. Which of the following is NOT part of material costs? A. Cleaning materials B. Raw
materials C. Fixed assets D. Work in progress E. Packing materials

9. The cost of providing service is known as ______

10. A production or service function activity or item of equipment whose costs may be
attributed to cost units is ____

11. The value of a budget sacrificed in favour of an alternative course of action is referred to
as ……………

12. A unit of product or service in relation to which costs are ascertained is called ………

13. The arrangement of items in logical groups having regards to their nature or purpose is
……
14. A form of specific order costing which applies where work is undertaken according to
customer’s specifications is ___________

15. The process of charging the proportion of common items of cost to two or more cost
centres on some equitable basis is called _______

16. Absorption costing is concerned with which of the following? A. Direct labourcost B.
Direct material cost C. Variable and fixed costs D. Fixed costs E. Semi-fixed costs

17. Costs which have already been incurred and are irrelevant to a decision are known as
______

18. The expenditure incurred on a particular set of activity or project over a specified period
of time is called _____

19. The process which is concerned with the ascertainment and control of costs is known as
_____

20. A cost containing both fixed and variable elements, which is partly affected by
fluctuations in the volume of output is called _____

21. The process of grouping costs according to their common characteristics is called, cost
______

22. The wages paid to those workers who are not directly engaged in converting raw
materials into finished product is called ______

23. The process by which all cost items are charged to a cost unit is referred to as _______

24. A company manufactures two products A & B using the same equipment and similar
processes.

Extract from the production of these products is shown below:

A B

Quantity produced

in units 5,000 7,000

Direct Labour

hours per unit 1 2

Total overhead cost for the period is N285,000

What is overhead absorption rate using Directlabour hours______

25. A group of employees or machines dedicated to performing a specific manufacturing

task, or group of related tasks to which cost may be ascertained is known as ________

26. The process involved in the ascertainment of the cost of producing a product or
providing a service is termed ________

27. A cost which is not normally incurred at a given level of output in the conditions in
which that level of output is normally attained is known as _______

28. The aggregate of indirect material cost, indirect labour cost and indirect expenses which
cannot be conveniently identified with and directly allocated to a particular cost centre is
called _______

29. The costs relating to the product or service that are computed in advance of production
or rendering service, on the basis of a specification of all the factors affecting the cost is
called.....

30. If Westminster Clinic requires an additional nurse for every ten patients, then this is an
example of A. Fixed cost B. Total cost C. Variable cost D. Mixed cost E. Step cost

31. Good cost accounting information system must give room for comparative analysis with
those provided in the previous periods, this is known as _____

32. The sum of all indirect costs is called ______

33. What's the basis of apportionment for rent and rates _______

34. Grouping costs to production costs, administrative costs, selling and distribution costs
etc, is classification of cost by ________

35. Canteen expenses is best apportioned using ______

36. Depreciation of non-current assets is best apportioned using ______

37. ______ is the assignment of costs to a particular cost centre

38. ______ is the process of assigning cost to products or services produced

Use the following data to answer question 39 to 41

 Blending Grinding

Budgeted Overhead N7, 238, 000 N10, 880,000

Budgeted Direct Labour hour 800 hours 500 hours

Budgeted Direct wages N20, 500, 000 N15, 000, 000

Units produced 361,900 units 272,000 units

39. Calculate the OAR for BLENDING if the overhead is absorbed using direct wages a)
0.35 % b) N35.31 c) 35.31% of direct wages d) N0. 35

40. Calculate the OAR for GRINDING if overhead is absorbed using units produced a) 40 %
b) 20% c) N40/units d) N20/ units e) 40 units

41 . Calculate the OAR for GRINDING if overhead is absorbed using direct labour hour a)
14,476 hours b) 14.476% c) N14,476 /direct labour hour d) 14,476 units e) N14, 476

42. Actual labour hour worked x OAR is ____ a) over absorption b) under absorption c)
production overhead absorbed d) Budgeted overhead

43. Marginal costing technique treats fixed production overhead as ______ @period cost
while absorption costing technique treats it as ________

44. If actual overheads for a period exceeds the pre-determined overheads, we'll have
_______

Use the following data from Ceecee LTD to answer the questions that follow

Cost (N) Activity level ( %)

10,000 80

25,000 75

30,500 70

45,000 85
33500 90

45. Calculate the Variable cost per unit _______

46. Calculate the fixed cost _____

47. Calculate the cost for activity level of 60% _____

If the fixed production overhead cost is N5, 000,000 and the output produced is 250,000. If
the budgeted output is 200,000 units.

48. Calculate the FOAR _____

49. Calculate the production overhead absorbed _____

50. Calculate the over / under absorption value a) N1,500,000 over absorbed b) N1,
500,000 under absorbed c) 1,500,000 units over absorbed d) 1,500,000 units under
absorbed

51. The costs identified with goods produced or purchased for resale is known as _____

52. The stock valuation method that assumes that stocks are issued in reverse order of
receipts is called ______

53. When issues of materials are priced at the average cost price of materials in hand, this
is known as _____

54. If economic order quantity is 600 units, cost of placing an order N50, carrying cost per
unit is 8% and purchase price per unit is N200. The annual demand is _____

55. The level of stock below which quantities are not expected to fall in the store is known
as _____

Annual consumption 80,000 units

Cost to place one order N1,200

Cost per unit N50

Carrying cost 6% of the unit cost

56. Calculate the EOQ ______ a) 8000 units b) N8, 000 c) N1960 d) 1960 units
57. Calculate the number of order a) N10 b) 10 units c) 10 times d) 10%

58. Calculate for the length of inventory in weeks _____

59. Calculate the total cost ______

60. ____ is needed to produce a finished product

61. ____ refers to semi-produced raw materials or a processed raw material at a given
point in time.

62. ___ are simple record of receipts, issues and balances of stock in hand kept by
storekeeper

63. __ involves counting the physically inventory at hand at a particular date, then checking
this against the balance shown in the inventory records

64 ___ is used to request for material to be issued from stores to production department or
the other department

ACC 102 BY MUMPRAYERS

Modified by: LEGACY and LITTLE DOVE
Massive Success is the Goal
 Answers

1. Relevant Cost.

2. High-Low method

3. Opportunity cost

4. Mixed Cost.

5. overhead cost.

6. Production cost centre and Service cost centre

7. Service Costing

8.D - fixed assets

9. Service Cost

10. Cost Centre

11. Opportunity Cost

12. Cost Unit

13. Classification of costs or cost classification.

14. Job costing

15. overhead apportionment.

16. C - Variable and Fixed Costs.

17. Sunk cost.

18. Fixed cost or Period cost

19. Cost Accounting

20. Mixed cost

21. Cost classification

22. Indirect Labour Costs

23. Costing.

24. OAR = Budgeted Overhead / budgeted level of activity.

Our budgeted OH is N285, 000

Direct labour hours for A = 1 * 5000 = 5000 labour hrs

Direct labour hours for B = 2 * 7000 = 14000

Total direct labour hours = 5000 + 14000= 19000

NB: 1* 5000 and 2 * 7000 must used cos the labour must given per unit, so to get the total
labour hours, it has to be multiplied with the units produced.

So OAR = N285,000/ 19000 labour hours

OAR = N15 / direct labour hours

25. Cost Centre.

26. Costing

27. Abnormal costs.

28. Overhead costs

29. Pre determined costs

30. E - Stepped cost

31. Comparability

32. Overhead

33. Floor/space area covered

34. Function

35 Number of employees

36. Book value of assets

37 Overhead Allocation
38. Overhead absorption

39. C - 35.31% of direct wages ( when the basis of apportionment is in naira or in any
currency, the OAR will be multiplied by 100)

40. N40/units

41. N14,476 /direct labour hour

42 Production overhead absorbed

43 Product cost

44 Over absorption ( whenever the actual production overhead is greater than the budgeted
overhead, there will be over absorption, and vice versa)

45. 150

46. N20,000

47. N29,000

48. N25

49. N6,500,000

50. N1,500,000 over absorbed

51. Product costs

52. LIFO

53. moving average method

54. N57, 600

55. Minimum stock level

56. 8000 units (E0Q = √ 2 * Annual demand * cost of order / holding cost)

57 10 times ( number of order = Annual demand / EOQ (quantity)

58. 5.2/weeks (length of inventory = EOQ (quantity) / annual demand * 52 weeks)

59. N24, 000 (Total cost = Total ordering cost + total holding cost)
Total ordering cost = number of order * cost of order per unit

Total holding cost = average stock * holding cost per unit i.e E0Q/ 2 * holding cost per
unit

60.Raw materials

61. Work in progress

62. Bin card

63.Stock taking

64.Material Requisition Note

ACC 102 BY MUMPRAYERS

Modified by: LEGACY and LITTLE DOVE
Massive Success is the Goal