MA1 First Test
MA1 First Test
Information
Question Bank
MA1 Management Information
1 A company pays its employees using a piecework scheme. The rates are as follows:
If an employee produces 163 units in week 48, what would their pay be for that week?
$________
A A purchase order
B A delivery note
4 Which of the following is in the correct chronological sequence for sales documents?
5 A method of dealing with overheads involves spreading common costs over cost centres on the basis of
benefit received. This is known as
A overhead absorption
B overhead apportionment
C overhead allocation
D overhead analysis
How much of Employee A's earnings for the last week of October would have been treated as labour cost?
$________
8Canberra has established the following information regarding fixed overheads for the coming
month:
Budgeted information:
Canberra produces many different products using highly automated manufacturing processes and absorbs overheads
on the most appropriate basis.
A £16
B £18
C £36
D £60
9 Which of the following is most likely to be treated as an indirect cost by a house builder?
10 Which of the following is most likely to be treated as an indirect cost by a car manufacturer?
AA cost that relates to a time period which is deducted as expenses for the period and is not included in
the inventory valuation.
B A cost that can be easily allocated to a particular period, without the need for arbitrary apportionment
between periods.
C A cost that is identified with a unit produced during the period, and is included in the value of
Inventory. The cost is treated as an expense for the period when the inventory is actually sold.
D A cost that is incurred regularly every period, eg every month or quarter.
13 Which TWO of these documents are matched with the goods received note in the buying process?
B Purchase order
C purchase requisition
D Stores requisition
Units $
1–25 2.30
26–40 2.40
He receives a guaranteed weekly wage of $420. In a week when he produces 28 units, his gross wage will be
$________
16 Which TWO of the following statements describe the information a Goods Received Note(GRN) provides?
B Information to check that the correct price has been recorded on the supplier’sinvoice
C Information to check that the correct quantity of goods has been recorded on thesupplier’s invoice
Where V = variable, SV = semi-variable and F = fixed, assuming linearity, the four cost types W, X, Y and Z
are respectively
W X Y Z
A V F SV V
B SV F V SV
C V F V V
D SV F SV SV
18 Jane works as a member of a three-person team in the assembly department of a factory. The team is
rewarded by a group bonus scheme whereby the team leader receives 40 per cent of any bonus earned by the
team, and the remaining bonus is shared evenly between Jane and the other team member. Details of output
for one day are given below.
The bonus element of Jane's pay for this particular day will be
A $5.04
B $7.20
C $10.08
D $16.80
19 A company employs 20 direct production operatives and 10 indirect staff in its manufacturing department. The
normal operating hours for all employees is 38 hours per week and all staff are paid a basic rate of $5 per hour.
Based on the data given above, what is the labour hour overhead absorption rate?
21In times of rising prices, the valuation of inventory using the First In First Out method, as opposed to the
Weighted Average Cost method, will result in which ONE of the following combinations?
DHigher HigherLower
22
23 A company employs four supervisors to oversee the factory production of all its products. The salaries
paid to these supervisors are:
24A company uses an overhead absorption rate of £3·50 per machine hour, based on 32,000 budgeted machine
hours for the period. During the same period the actual total overhead expenditure amounted to £108,875 and 30,000
machine hours were recorded on actual production.
By how much was the total overhead under or over absorbed for the period?
25 Job 198 requires 380 active labour hours to complete. It is expected that there will be five per cent idle
time.
The wage rate is $6 per hour. The labour cost of Job 198 is:
A $2,166
B $2,280
C $2,394
D $2,400
27 A cost unit is
C Received together with the materials and compared to the materials received
A Cost which arises from a decision already taken, which cannot, in the short run, be changed.
B A cost for which the behavior pattern can be easily analyzed to facilitate valid budgetary control
Comparisons.
C Cost which can be influenced by its budget holder.
D A specific cost of an activity or business which would be avoided if the activity or business did not
exist.
31A differential piecework scheme has a basic rate of $0.50 per unit. Output in addition to500 units is paid at higher
rates. The premiums over and above the basic rate, which applyonly to additional units over the previous threshold,
are:
501–600 $0.05
A $317
B $318
C $322
D $372
33Inventory movements for product X during the last quarter were as follows:
What would the Gross profit be for the quarter using the weighted average cost method?
34 Which of the following statements about overhead absorption rates are true?
35Inventory movements for product X during the last quarter were as follows:
What would the Gross profit be for the quarter using the FIFO cost method?
36A factory consists of two production cost centres (G and H) and two service cost centres(J and K). The total
overheads allocated and apportioned to each centre are as follows:
The work done by the service cost centres can be represented as follows:
G H J K
The company apportions service cost centre costs to production cost centres using amethod that fully recognises any
work done by one service cost centre for another.
What are the total overheads for production cost centre G after the reapportionment ofall service cost centre
costs?
37Inventory movements for product X during the last quarter were as follows:
What would the Gross profit be for the quarter using the LIFO method?
38 Which of the following would be the most appropriate basis for apportioning machinery insurance coststo
cost centres within a factory?
39 There are 27,500 units of Part Number X35 on order with the suppliers and 16,250 units outstanding on existing
customers' orders.
A 1,750
B 3,250
C 24,250
D 29,250
40Lerna produces hydras in three production departments and needs to apportion budgetedmonthly fixed
costs between those departments. Budgeted costs are as follows:
Rent 2,000
Rates 1,000
–––––––
21,000
Number of employees 34 16 20
What is the total budgeted monthly fixed overhead cost for Department C?
A $1,837.50
B $4,462.50
C $7,000.00
D $10,600.00
41 Which of the following costing methods is most likely to be used by a company involved in the
manufacture of liquid soap?
B Service costing
C Job costing
D Process costing
43 A company operates a job costing system. Job number 1012 requires $45 of direct materials and $30of direct
labour. Direct labour is paid at the rate of $7.50 per hour. Production overheads are absorbedat a rate of $12.50 per
direct labour hour and non-production overheads are absorbed at a rate of 60%of prime cost.
A $170
B $195
C $200
D $240
44 If there are NORMAL losses in a process how is this recorded in a process account?
D credit with the full production cost of the abnormal loss units
45 Duringthe month, 12,000 units were started in a factory. At the end of the month, 3,000 units were in
closingwork in progress. The degree of completion of closing work in progress was 20%.
How many equivalent units of production were achieved during the month?
46 A business operates a job costing system and prices its jobs by adding 20% to the total costof the job. The prime
cost of a job was $6,840 and it had used 156 direct labour hours. Thefixed production overheads are absorbed on the
basis of direct labour hours. The budgetedoverhead absorption rate was $5 per hour.
A $7,620
B $8,382
C $9,144
D $9,525
47A company manufactures Chemical X, in a single process. At the start of the month there was no work in
progress. During the month 1000 litres of raw material were input into the process at a total cost of $6,000.
Conversion costs during the month amounted to $4,500. At the end of the month 750 litres of Chemical X were
transferred to finished goods inventory. The remaining work-in-progress was 50% complete with respect to
materials and 30% complete with respect to conversion costs. There were no losses in the process and there is no
scrap value available during months when losses occur.
What are the equivalent units for closing work-in-progress at the end of the month?
48A business is preparing its production budget for the year ahead for product A998. It isestimated that 100,000
units of A998 can be sold in the year and the opening inventory iscurrently 14,000 units. The inventory level is to be
reduced by 40% by the end of the year.
A Supervisor’s wages
B Raw materials
C Rates
D Telephone
52 Which TWO of the following are included in the prime cost of a product?
A Direct material
B Direct labour
C Administration costs
D Production overheads