2. Equivalent units of production (A) will always be greater than or equal to the physical units (B) are a measure of the number of complete units that could have been manufactured from start to finish using the costs incurred during the period (C) are calculated for materials but not for conversion costs (D) are units of a new product that are essentially the same as the units of an existing product
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Answer ALL the questions in this section. Shade the letter that corresponds to the most appropriate
answer on the answer sheet provided.
2. Equivalent units of production
(A) will always be greater than or equal to the physical units
(B) are a measure of the number of complete units that could have been manufactured
from start to finish using the costs incurred during the period
(C) are calculated for materials but not for conversion costs
(D) are units of a new product that are essentially the same as the units of an existing
product
5. The
(A) Revenue budget
(B) Operating budget
(C) Financial budget
(D) Budgeted
6. Under variable costing, which manufacturing cost is expensed as a period cost?
(A) Direct materials
(B) Variable manufacturing overhead
(C) Fixed manufacturing overhead
(D) Direct labour
7. Under variable costing, which of the following costs are assigned to inventory?
Variable Selling &
Administrative
Variable Factory
Overhead Costs
(A) Yes No
(B) No Yes
(C) Yes Yes
(D) No No
8. Which of the following would appear on both the
schedule of expected cash disbursements for operating expenses?
(A)
(B) Rent expense
(C) Sales commission expense
(D) Both B and C
9. Which of the following is not an underlying assumption of the cost-volume-profit graph?
(A) Expenses are categorized into fixed and variable
(B) Revenues and expenses are linear over the relevant range
(C) Efficiency and productivity will be unchanged
(D) Sales mix will not be constant
10. If total fixed costs decreases while the sale price per unit and the variable costs per unit remain
constant, the:
(A) contribution margin increases
(B) contribution margin decreases
(C) breakeven point increases
(D) breakeven point decreases
11. A business always absorbs its
worked, actual overheads were $279,000 and there was$36,000 over-absorption. The overhead
absorption rate per hour was:
(A) $15.50
(B) $17.50
(C) $18.00
(D) $13.50
Questions 12 & 13 are based on the following information.
The following cost data relates to Bruno Company for the year 2008:
Estimated manufacturing overhead costs $240,000
Estimated direct labour cost 300,000
Estimated direct labour hours 30,000
Actual direct labour cost 315,000
Actual direct labour hours 33,000
Allocation base: Direct labour cost
Other expenses (Actual):
Factory depreciation on equipment $65,300
Factory rent 51,000
Factory utilities 28,900
Factory property taxes 26,000
Indirect labour 23,800
Indirect materials 32,000
Sales commissions 52,500
12. Manufacturing overhead allocated for 2008 is:
(A) $252,000
(B) $450,450
(C) $210,000
(D) $220,500
13. The entry to dispose of the manufacturing overhead variance is:
(A) Manufacturing Overhead
Cost of Goods Sold
$25,000
$25,000
(B) Cost of Goods Sold
Manufacturing Overhead
$25,000
$25,000
(C) Manufacturing Overhead
Cost of Goods Sold
$17,000
$17,000
(D) Cost of Goods Sold
Manufacturing Overhead
$17,000
$17,000
(2 marks)
Questions 14 – 17 are based on the following
Chen Company produces a product in a two-department process, Assembly and Finishing. The following information is available on their first department, Assembly:
Beginning Work-in-process
Units started
Units completed and transferred to Finishing
Ending Work-in-process
Direct Material Added
Direct Labour
Factory Overhead
Total cost to account for
-0-
200,000
168,000
32,000
$700,000
960,000
480,000
2,140,000
The units still in process are 100% complete with respect to direct materials and 75% complete
with respect to conversion costs.
14. The unit cost of direct materials is:
(A) $3.50 (C) $3.65
(B) $4.17 (D) $0.29
© The University of the West Indies Course Code MS 15B
5
15. The unit cost for conversion costs is:
(A) $5.00
(B) $2.50
(C) $7.20
(D) $7.50
16. The total cost of units completed and transferred to finished goods is:
(A) $2,112,000
(B) $2,140,000
(C) $1,848,000
(D) $352,000
17. The total cost of ending work-in-process is:
(A) $352,000
(B) $292,000
(C) $264,000
(D) $240,000
Questions 18 to 20 are based on the following
Joel Company sells only one product. Managers estimate that the company will sell 35,000 units
of the product each month. The relevant information about the product line of Joel Company
appears below:
Selling price
Variable expenses
Total fixed expenses
$150.00 per unit
$ 90.00 per unit
$240,000 per month
18. The breakeven sales in units would be
(A) 1,600
(B) 1,000
(C) 2,670
(D) 4,000
19. If Joel Company’s fixed expenses could be decreased by $20,000, the new breakeven dollar
sales would be
(A) $88,000
(B) $366,670
(C) $550,000
(D) $132,000
20. Joel Company’s goal for the month is to earn a target operating income of $300,000. How
many units must be sold to achieve this goal?
(A) 5,0000 units
(B) 6,000 units
(C) 3,600 units
(D) 9,000 units
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