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MA1 First Test

1. The document provides information on pay rates for employees under a piecework scheme and asks the pay for an employee who produced 163 units in week 48. 2. It also provides multiple choice questions regarding management accounting terms like overhead absorption, direct vs indirect costs, purchase order process, and more. 3. The questions cover topics like calculating pay under piecework schemes, identifying direct vs indirect costs, determining the correct chronological order of sales documents, and calculating overhead absorption rates.

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100% found this document useful (1 vote)
985 views14 pages

MA1 First Test

1. The document provides information on pay rates for employees under a piecework scheme and asks the pay for an employee who produced 163 units in week 48. 2. It also provides multiple choice questions regarding management accounting terms like overhead absorption, direct vs indirect costs, purchase order process, and more. 3. The questions cover topics like calculating pay under piecework schemes, identifying direct vs indirect costs, determining the correct chronological order of sales documents, and calculating overhead absorption rates.

Uploaded by

Mishael MAKE-UP
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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MA1 Management

Information
Question Bank
MA1 Management Information
1 A company pays its employees using a piecework scheme. The rates are as follows:

0-100 units per week $4 per unit


101-150 units per week $4.50 per unit
151-200 units per week $5 per unit
201 + units per week $5.50 per unit

If an employee produces 163 units in week 48, what would their pay be for that week?

$________

2 Which of the following will be completed by a production department requiring newmaterials to be


obtained from suppliers?

A A purchase order

B A delivery note

C A goods requisition note

D A goods received note

3 Which of the following is a direct expense?

A Material used in production


B Special tools for job 21
C Power
D Depreciation

4 Which of the following is in the correct chronological sequence for sales documents?

A Enquiry – Order – Invoice – Payment

B Order – Enquiry – Invoice – Payment

C Enquiry – Order – Payment – Invoice

D Enquiry – Invoice – Order – Payment

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

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MA1 Management Information
6Employee A is a carpenter and normally works 36 hours per week. The standard rate of pay is $3.60 per
hour. A premium of 50% of the basic hourly rate is paid for all overtime hours worked. During the last week of
October, Employee A worked for 42 hours.

How much of Employee A's earnings for the last week of October would have been treated as labour cost?

$________

7 Production overhead comprises:

A Variable overhead only


B Indirect labour indirect material and indirect expense relating to production
C Indirect expense only
D Indirect material and indirect labour only

8Canberra has established the following information regarding fixed overheads for the coming
month:

Budgeted information:

Fixed overheads £180,000


Labour hours 3,000 hours
Machine hours 10,000 hours
Units of production 5,000 units

Actual fixed costs for the last month were £160,000.

Canberra produces many different products using highly automated manufacturing processes and absorbs overheads
on the most appropriate basis.

What will be the pre-determined overhead absorption rate?

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?

A Nails and screw


B Windows
C Bricks
D Electricity cables

10 Which of the following is most likely to be treated as an indirect cost by a car manufacturer?

A Sheet metal for car body


B Wages for factory worker
C Lubricant for machinery
D Fabric for car seats

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MA1 Management Information
11A jobbing company operates a premium bonus scheme for its employees of 75% of the time saved
compared with the standard time allowance for a job, at the normal hourly rate. The data relating to Job
1206 completed by an employee is as follows:

Allowed time for Job 1206 4 hours


Time taken to complete Job 1206 3 hours
Normal hourly rate of pay £8

What is the total pay of the employee for Job 1206?


A £24
B £30
C £32
D £38

12 Which of the following best describes a period cost?

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?

A Invoice from supplier

B Purchase order

C purchase requisition

D Stores requisition

14 An employee is paid according the following differential piecework scheme,

Weekly output Rate of pay per unit

Units $

1–25 2.30

26–40 2.40

41 and above 2.60

He receives a guaranteed weekly wage of $420. In a week when he produces 28 units, his gross wage will be

$________

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MA1 Management Information
15 Which one of the following would be classified as indirect labour?

AAssembly workers on a car production line


B Bricklayers in a house building company
C Machinists in a factory producing clothes
D Forklift truck drivers in the stores of an engineering company

16 Which TWO of the following statements describe the information a Goods Received Note(GRN) provides?

A Information used to update inventory records

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

D Information to record any unused materials which are returned to stores

17Cost type Cost @ Cost @


100 units 140 units
W 8,000 10,560
X 5,000 5,000
Y 6,500 9,100
Z 6,700 8,580

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.

Hours worked by team 8 hours


Team production achieved 80 units
Standard time allowed producing one unit 9 minutes
Group bonus payable at $6 per hour 70% of time saved

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.

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MA1 Management Information
Overtime hours are paid at a basic rate plus 50%. During a week all employees worked for 44 hours to meet the
company’s general production requirements.

What amount should be charged as direct labour cost?


$________

20. Budgeted labour hours 8,500


Budgeted overheads $148,750
Actual labour hours 7,928
Actual overheads $146,200

Based on the data given above, what is the labour hour overhead absorption rate?

A $17.20 per hour


B $17.50 per hour
C $18.44 per hour
D $18.76 per hour

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?

Cost of sales Profit Closing inventory

ALower Higher Higher

BLower Higher Lower

CHigher Lower Higher

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:

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MA1 Management Information

A Direct labour cost


B Part of prime cost
C Production overhead
D Administration overhead

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?

A Under absorbed by £3,875


B Under absorbed by £7,000
C Over absorbed by £3,875
D Over absorbed by £7,000

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

26 Which of the following is a characteristic of an investment centre?

A Managers have control over marketing.


B Management have a sales team.
C Management have a sales team and are given a credit control function.
D Managers can purchase capital assets.

27 A cost unit is

A The cost per hour of operating a machine


B The cost per unit of electricity consumed
C A unit of product or service in relation to which costs are ascertained
D A measure of work output in a standard hour

28 Which of the following describes a purchase order?

A Issued by the purchasing department, sent to the supplier requesting materials

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MA1 Management Information
B Issued by the stores department, sent to the purchasing department requestingmaterials

C Received together with the materials and compared to the materials received

D Issued by the production department, sent to the stores department requestingmaterials

29 Factory overheads can be absorbed by which of the following methods?

(i) Direct labour hours


(ii) Machine hours
(iii) As a percentage of prime cost
(iv) $x per unit

A (i), (ii), (iii) and (iv)


B (i) and (ii) only
C (i), (ii) and (iii) only
D (ii), (iii) and (iv) only

30 Which of the following best describes a controllable cost?

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:

Output (units) Premium (per unit)

501–600 $0.05

above 600 $0.10

What is the total amount paid if output is 620 units?

A $317

B $318

C $322

D $372

32 A cost centre is:

A A unit of product and service for which cost are calculated

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MA1 Management Information
B An amount of profit attributable to an activity
C A function or location within an organization for which cost are accumulated
D A section of the organization for which budget are prepared and control is estimated

33Inventory movements for product X during the last quarter were as follows:

January Purchases 10 items at $19.80 each

February Sales 10 items at $30 each

March Purchases 20 items at $24.50

Sales 5 items at $30 each

Opening inventory at 1 January was 6 items valued at $15 each.

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?

(i) They are predetermined in advance for each period


(ii) They are used to charge overheads to products
(iii) They are based on actual data for each period
(iv) They are used to control overhead costs

A (i) and (ii) only


B (i), (ii) and (iv) only
C (ii), (iii) and (iv) only
D (iii) and (iv) only

35Inventory movements for product X during the last quarter were as follows:

January Purchases 10 items at $19.80 each

February Sales 10 items at $30 each

March Purchases 20 items at $24.50

Sales 5 items at $30 each

Opening inventory at 1 January was 6 items valued at $15 each.

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:

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MA1 Management Information
G H J K

$40,000 $50,000 $30,000 $18,000

The work done by the service cost centres can be represented as follows:

G H J K

Percentage of service cost centre J to 30% 70% – –

Percentage of service cost centre K to 50% 40% 10% –

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:

January Purchases 10 items at $19.80 each

February Sales 10 items at $30 each

March Purchases 20 items at $24.50

Sales 5 items at $30 each

Opening inventory at 1 January was 6 items valued at $15 each.

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?

A The number of machines in each cost centre

B The floor area occupied by the machinery in each cost centre

C The value of the machinery in each cost centre

D The operating hours of the machinery in each cost centre

39 There are 27,500 units of Part Number X35 on order with the suppliers and 16,250 units outstanding on existing
customers' orders.

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MA1 Management Information
If the free inventory is 13,000 units, what is the physical inventory?

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

Plant insurance 1,000

Plant depreciation 10,000

Supervisor’s salary 7,000

–––––––

21,000

The following additional information is available.

Department A Department B Department C

Area (square feet) 3,800 3,500 700

Value of machinery ($000) 210 110 80

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?

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MA1 Management Information
A Batch costing

B Service costing

C Job costing

D Process costing

42 The following items may be used in costing batches.

(i) Actual material cost

(ii) Actual manufacturing overheads

(iii) Absorbed manufacturing overheads

(iv) Actuallabour cost

Which of the above are contained in a typical batch cost?

A (i), (ii) and (iv) only

B (i) and (iv) only

C (i), (iii) and (iv) only

D (i), (ii), (iii) and (iv)

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.

What is the total cost of job number 1012?

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?

A debit with the scrap value of the abnormal loss units

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MA1 Management Information
B debit with the full production cost of the abnormal loss units

C credit with the scrap value of the abnormal loss units

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.

What should the job be sold for?

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?

Material Conversion costs

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.

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MA1 Management Information
How many units of A998 need to be produced?

49 What is the formula to calculate the production budget?


A Sales budget + opening inventory – closing inventory
B Sales budget – opening inventory + closing inventory
C Sales budget – opening inventory – closing inventory
D Sales budget + opening inventory + closing inventory

50 What is the formula to calculate the material usage budget?

A Production budget multiplied by the standard material quantity per unit

B Sales budget multiplied by the standard material quantity per unit

C Production budget less opening inventory plus closing inventory

D Production budget plus opening inventory less closing inventory

51 Which of the following is usually classed as a step cost?

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

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