CAT T2: MOCK EXAM 2010

1. Six direct workers work 8 hours a day on a 5 day week. Owing to general production requirement,
each of them worked an extra 8 hours every week for 4 weeks. Their basic rate is $7.50 and the
overtime rate is $9.50. PAYE and NIC deductions for an employee are 20% and 12% respectively. The
employer contributes 15% of the gross pay. For the 4 weeks, idle time is recorded as 120 hours.

What would be the total hours used to be calculating basic pay for each worker?

A 160 B 192 C 960 D 1,152

2. Continue question 1. The total direct labour cost would be:

A $7,740 B $8,124 C $8,640 D $9,024

3. Continue question 1. The total overtime premium would be:

A $384 B $1,284 C $1,440 D $1,824

4. Continue question 1. What would be the total net pay be?

A $2,887.68 B $5,263.20 C $5,875.00 D $6,136.32

5. Which of the following statements about password is incorrect?

A The password should be known only to those authorized to use the relevant system.

B The password should be changed frequently

C The password should not be written down

D The password should be brief to improve the speed of access to data

6. The following statement relate to operating system software.

I It provides an interface between the user and the computer hardware

II Graphical user interfaces are not as popular as other menu driver interfaces

III The BIOS is something considered to be part of the systems software

IV It manages the computer’s resource by handling multitasking and interruptions to the system

Which of the above are correct?

A I & III B I & IV C I, III & IV D II & IV

7. The following could be relates to optical mark readers.

I Specialist pens are always required for use

II Data entry is quick

III Computers carry out most of the work

Which of the above would be considered to be advantages of using optical mark readers?

A I & III B II & III C I & III D I, II & III

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8. Singer Sewing Ltd had the following entries in its materials control account.

Opening stock $13,000

Closing stock $ 18,000

Deliveries from supplier $250,000

Returns to supplier $25,000

The value of the issue of direct materials to productions is:

A $220,000 B $225,000 C $230,000 D $270,000

9. Which of the following statements about CPU and memory are correct?

I The CPU interacts closely with primary storage main memory referring to it for both instructions
and data

II The control unit of the CPU contains circuitry that uses electrical signal to direct the entire
computer system to execute stored program instructions

III The application software sends data signals from memory to arithmetic logic unit for processing

IV The ALU can discern (recognize) six logical relationships: equal to, less than, greater than, less
than or equal to, greater than or equal to and not equal

A I, IV & V B I & III C I, II & III D I & II

10. The following classification may be applied to costs.

I Direct II Fixed

III Period IV Production

Which of the above classification could be applied to the cost of raw materials used by a company in
the manufacture of its range of products?

A I only B I & IV C II & III D II, III & IV

The following information relates to question 11 to 13.

11. A company manufactures a single product which it sells for $35 per unit.
The planned output for 20X6 was 6,000 units. Te unit product cost comprises:

Direct labour $8.50

Direct material $2.50

Variable production ohd $3.75

Fixed production ohd $12.00

What would be the budgeted profit for the year based on the marginal costing technique (assuming
production is 6,000 units and closing stock is 360 units)?

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A $42,210 B $72,680 C $108,900 D $150,870

12. If the company uses a marginal costing approach to prepare its profit
statement, what would be t amount of total contribution shown in the budget statement for 20X6
(assuming no closing stock and opening stock will be held)?

A $75,000 B $121,500 C $49,500 D $144,000

13. If forecast inventory level at 31 December was 360 units and it’s was valued
on the basis of absorption cost. What would be the value of stock held on this date?

A $3,960 B $5,310 C $9,630 D $12,600

14. Consider the following activities:

I Cash flow forecast

II Job cost estimate

III Writing letters

IV Budgeting for the next year

Which of the following activities above are suit to the use of spreadsheet software?

A I, II & III B II & III C I & IV D I, II & IV

15. Where would be a user normally store an active word processing file?

A In a folder B In a mailbox C In an archive D In a back up

16. A company manufacture three products (X, Y & Z), all of which pass through
the same finishing process. For the coming month t number of hours available in the finishing process
is 6,000.

Data relating to each product are as follow:

X Y Z
Selling price per unit ($) 30 36 41
Variable cost per unit ($) 20 27 35
Minutes in the finishing process per unit 45 36 25
Maximum monthly demand (unit) 4,500 4,500 4,500
Determine the production plan that will maximize profits for coming month.

X Y Z (units)
(units) (units)
A 4,500 4,375 Nil
B 4,500 1,250 4,500
C 4,400 4,500 Nil
D 1,900 4,500 4,500

17. If both the selling price per unit and variable cost per unit of a company rise
by 10%, the breakeven point will:

A remain constant B increase

C fail D be impossible to determine without further information

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18. A company weekly total cost (C) was plotted against production level (P) for
the last. 50 weeks and a regressions line calculated to be C=1,000+250P. Which statement about the
breakdown of weekly costs is true?

A Fixed costs are $1,000, variable costs per unit are $5

B Fixed costs are $250, variable costs per unit are $1,000

C Fixed costs are $1,000, variable costs per unit are $250

D Fixed costs are $20, variable costs per unit are $5

19. A company has established the following information for the costs and
revenue at an activity level of 500 units.

Direct materials $ 2,500

Direct labour $ 5,000

Production overhead $ 1,000

Selling costs $ 1,250

Total costs $ 9,750

Sales revenue $ 17,500

PROFIT $ 7,750

20% of the selling costs and 50% of the production overheads are variable over all levels of activity.
What would be the profit at an activity level of 1,000 units?
A $15,500 B $16,250 C $17,000 D $17,750

20. Which of the following statements regarding residual income is correct?

A Residual income is calculated by adding beck depreciation and deducting interest charge
B Residual income eliminates the effect of accounting policies from the assessment of performance
C Residual income assesses income based on the book value of investment and deducting interest
charge
D Residual income does not take the risk of specific projects into account

21. Jading Ltd manufactures a single product. The budgeted sales volume for
the next year is 275,000 units. Total cost per unit is $16. This includes $3 per unit of fixed costs. Each
unit sells for $25.
How many units much be sold to achieve a profit of $100,000?
A 33,000 B 64,462 C 77,083 D 91,667

22. A company established budgeted sales revenue for the forth coming period
of $500,000 with an associated contribution of $275,000. Fixed production costs are $137,500 and
fixed selling costs are $27,500.
What is the breakeven sales revenue?
A $75,6265 B $90,750 C $250,000 D $300,000

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23. A company has a budget for two products A & B as follows:

A B
Sales (units) 2,000 4,500
Production (units) 1,750 5,000
Labour:
Skilled at $10/hour 2 hours/unit 2 hours/unit
Unskilled at $7/hour 3 hours/unit 4 hours/unit
What is the budgeted cost for unskilled labour for the period?
A $105,000 B $135,000 C $176,750 D $252,500

24. George is an assembly worker in the main assembly plant of GOTJ Co.
Details of his gross pay of the week were as follow:
Basic pay for normal working hours: 38 hours at $5 per hour $190
Overtime: 8 hours at time and a half $60
Gross pay $250
Although paid for normal hours in full, George had been idle for 10 hours during the week because of
the absence of any output from the machining department.
The indirect labour costs that are included in his total gross pay of $250 are:
A $20 B $50 C $70 D $110

25. A company has the following budgeted information for the coming month.
Budgeted sales revenue $500,000
Budgeted contribution $200,000
Budgeted profit $50,000
What is the budgeted breakeven sales revenue?
A $125,000 B $350,000 C $375,000 D $450,000

26. A company manufactures and sells 2 products ( X & Y) both of which utilize
the same skilled labour. For the coming period, the supply of skilled labour is limited to 2,000 hours.
Data relating to each product are as follows:
X Y
Selling price per unit $20 $40
Variable costs per unit $12 $30
Skilled labour hours/unit 2 4
Maximum demand (units)800 400
In order to maximize profit in the coming period, how many units of each product should the company
manufacture and sell?
A 200 units of X and 400 units of Y
B 400 units of X and 300 units of Y
C 600 units of X and 200 units of Y
D 800 units of X and 100 units of Y

27. Monthly variance reports are an example of which one of the following
types of management information?
A Tactical B Strategic C Planning D Operational

28. An organization manufactures and sells a single product. At the budgeted

level of output of 2,400 units per week, the unit cost and selling price structure is as follows:
$/unit $/unit
Selling price 60
LESS: Variable production cost 15
Other variable costs 5
Fixed costs 30 (50)
PROFIT 10

What is the breakeven point (in units per week)?

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A 1,200 B 1,600 C 1,800 D 2,400

29. Last month a company budgeted to sell 8,000 units at a price of $12.50 per
unit. Actual sales last month were 9,000 units giving total sales revenue of $117,000.

What is the sales price variance for last month?

A $4,000 favorable B $4,000 adverse

C $4,500 favorable D $4,500 adverse

30. A particular cost is classified as being semi-variable.

If activity increases by 10% what will happen to the cost per unit?

A Increase

B Reduce but not in proportion to the change in activity

C Reduce in proportion to the charge in activity

D Remain constant

31. A business has total monthly budgeted direct materials cost of $25,830 at a
unit cost of $8.20 per kg. during the month of September, 3,000kg of material was purchased at a
cost of $25,050. It was used to produce 1,905 units of product Y.

Calculate the variances.

A $450 adverse B $450 favorable

C $780 adverse D $780 favorable

32. A manufacturer produces 3 products Yaba, Daba and Toba. The standard
labour hours allowed for one unit of each product are as follows:

Yaba 1.5hours Daba 0.5hours Toba 1.15 hours

The budgeted outputs for each product for May were as follows:

Yaba 800 units Daba 2,700 units Toba 500 units

During May, 1,000units of Yaba, 2,500 units of Daba and 300 units of Toba were made. Total actual
hours worked for May 3,500 hours. Calculate the total standard hours of output, the labor efficiency
ratio and production volume ratio for May.

A 2,750 hours, 78.6%, 99%

B 3,095 hours, 113%, 101%

C 3,095 hours, 88%, 995

D 3,800 hours, 108.6%, 101%

33. Which of the following statement about information security is false?

A confidential paper files should be only accessible to authorized staff

B Password must never be disclosed to an unauthorized person under any circumstances and
changed regularly

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C Most organizations have an interest policy to restrict internet use

D Backup disks should be locked away safety near the working area

34. Within the relevant range of production,

A Fixed costs per unit increase as output increase

B Total variable costs are assumed to be constant

C Semi variable costs tend to increase as output increase

D Cost behavior tends to be unpredictable

35. A company wished to evaluate a division which has the following profit and
loss account and balance sheet:

Profit and Loss account $’000

Sales 500

Gross profit 200

Other costs 80

Operating profit 120

Balance Sheets $’000

Fixed assets 750

Current assets 350

Current liability 450

Net assets 650

What is the residual income for the division if the company has an interest of 18%?

A $3,000 B $21,600 C $83,000 D $117,000

36. Which of the following would be regarded as cost centre?

I Business rates paid

II An operating theatre in a hospital

III Labour costs

IV Glue for making a chair

V A branch of bank

A I, III & IV B II & V C I, II & V D II, III & IV

Data for question 37 and 38.

In a week, the direct production workers worked for 640 hours including 60 hours of overtime. The
indirect workers worked for 250 hours including 40 hours of overtime.

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Included in the direct worker’s hours were 15 hours of idle time. The direct workers are paid a basic
hourly rate of $8.85 per hour and indirect workers are paid at a basic hourly rate of $6 per hour. All
overtime is paid at a rate of time plus one quarter.

37. What is the amount to be debited to the work in progress?

A $5,000.28 B $5,664 C $5,531.25 D $7,743.75

38. What is the amount to be debited to the production overhead account?

A $1,692.75 B $1,625.50 C $2,018.25 D $1,825.50

39. All the following statements describe the relationship between data and
information except:

A Information is data that has been processed

B Data is input a reporting system to produce information as the output

C Data which is incorrect will not affect the quality of the information produced

D Information from one process can be used as data in a second process

40. Which of the following is incorrect relating to database management

system?

A It is not suitable to use a database to store accounting data

B Each record has a unique identifier

C A database is a collection of data

D Data is stored in database table using specialized database software

41. A ________________will help ensure that all employees follow procedures and
best practice.

A operating system B security system

C policy manual D strict management

42. Which of the following statements is true about batch processing?

A The system cannot be used with database management software

B Suitable for smaller transaction volumes which require immediate response

C Input controls are important to ensure completeness and correctness of data input

D Reporting formats can be easily changed

43. Which of the following is not an advantage of decentralization of

administration and corporate function?

A Allows for better informed and more timely decision making

B Easier to enforce standardized accounting policies and procedures

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C Allows greater flexibility for local managers to take advantages of local opportunities

D Local offices are more self reliant

44. The reason why computerized data processing is preferred to manual data processing is

A ease and efficient processing a large volumes of data

B high speed

C more accuracy

D all of the above

45. The type of information that deals mainly with costs, profits, income and expenses is

A non financial information B general information

C financial information D specific information

46. The user should have confidence in the information made available to him
and hence it should be obtained from:

A Cheap sources B Reliable source

C Primary sources D Internal source

47. In year 1, a company had total production costs of $212,000, when the
price (inflation) index was 103. Year 0 is base year with an index 100. The projected price index for
Year 2 is 104 and for year 3 it is 107.

What will be the projected total production costs for year 3, assuming that prices rise only at the rate
of inflation?

A $218,115 B $220,233 C $220,480 D $226,840

48. Which of the following is an example of routine data collection from

secondary data source?

A A request by the company secretary for legal opinion for the effect of a change in employment
law

B Market research carried out by marketing department

C Discussion on the nature of impending cost cuts at a monthly staff meeting

D Reading trade magazine during lunch break

49. The control process involves

A assessment of the environment, identification of goals and planning

B implementation of decision, setting standards and comparison of results

C recognizing alternatives, evaluation and choosing the best alternative

D none of the above

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50. Which of the following is not a disadvantage of using facsimile?

A its is more expensive than email to send to a large number of recipients

B It will incur normal telephone line charges

C It usually ties up computer resources

D It is not suitable for urgent messages

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