Rev 1(2) (MA)
Content
FMAF - Revision 1
1.Employers National insurance contributions constitute: a) A statutory additional payment made by the employer c) A voluntary additional payment made by the employer
b) A voluntary deduction from wages d) A statutory deduction from wages
2. Dinith pays 60% of invoices for goods purchased on credit, in the month after purchase. The remaining 40% are paid a month later. Invoices are received on the last day of each month. Invoices paid in the month following purchases attract a prompt payment discount of 5%, whilst those paid in the second month attract only 3% discount. Credit purchases for April to June are budgeted as follows. April May June £35000 £40000 £55000 Calculate the amount budgeted to be paid for credit purchases in June 3.A master budget is: a) The cash budget b) The profit and loss account c) He budget for the principal budget factor d) The budgeted profit & loss account, balance sheet and cash budget 4.Mihindra Ltd. Expects to have machine time constraint for December, which will result in the following production levels: Data December Production output 12000 units It is anticipated that there will be 1250 units of opening stock and the company wishes to hold a minimum of 850 units of closing stock at the end of December. How many units will be available for sale during December? 5.The following standard cost information relates to the production department of Shezard Ltd. Data Quantity Standard labour rate per (£) 10 Standard labour hours per unit of 1.25 Output (hours) The actual data for the month of December was as follows: Data: Quantity Production (units of output) 8500 Labour cost (£) 102500 Actual hours worked (hours) 10000 (i) What is the direct labour rate variance (to the nearest whole number)? a) £2500 favorable b) £2500 adverse c) £2656 adverse (ii) What is the direct labour efficiency variance (to the nearest whole number)? a) £6,250 adverse b) £6,406 favorable c) £6,406 adverse
d) £2656 favorable d) £6,250 favorable
6. In an integrated cost and financial accounting system, the accounting entries for the payment of net wages to indirect production workers would be a) Debit: Wages control account Credit: Bank account b) Debit: Work in progress control account Credit: Bank Account c) Debit: Production overhead control account Credit: Bank Account d) Debit: Bank account Credit: Wages control account
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7. The overheads included in the valuation of each unit of Product “Lavanya” are as follows: Production overheads £ Variable 3.00 Fixed 5.00 During December, the production was 100 units more than sales. The profit calculated by marginal costing principles, when compared to the profit Calculated by absorption costing principles, would be: a) £500 lower b) The same c) £300 lower d) £800 lower
8. The budgeted sales revenues for a Niruban & Co are as follows: Month: £ October 150000 November 160000 December 180000 The payment patterns of customers are expected to be as follows: Payment pattern: Cash sales 30% Pay 1 month after purchase 20% Pay 2 months after purchase 40% A discount of 20% is given on cash purchases. What is the total income in December expected to be?
9. In an integrated cost and financial accounting system, the accounting entries for PAYE deducted from gross wages would be: a) Debit: Production overhead control account Credit: Bank account b) Debit: Wages control account Credit: Bank account c) Debit Wages control account Credit: PAYE creditor account d) Debit : PAYE creditor account Credit : Bank account 10. A product has a break even point 40000 units and margin of safety of 20%. The contribution per unit is £3. What is the budgeted profit? a) £30000 b) £24000 c) £8000 d) £40000 11. The following costs apply to batch 325, which consists of 20,000 units of identical products: Data: £ Direct material 20,600 Direct labour 45,200 Production overhead 32,600 Total 98,400 The company charges selling and administration costs at a rate of 10% of production costs and wishes to achieve a profit margin of 30% of sales. What is the required selling price per unit of product? 13. A company manufactures a single product, and the relevant data is as follows: Standard costs: £ per unit Fixed production overhead 250 The fixed production overhead absorption rate is based on budgeted Monthly expenditure of £250,000 and budgeted machine hours of 10,000. The actual results for the last month were as follows: Data: Quantity Production 850 Fixed production overheads (£) 230,500
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(i) What is the fixed production overhead expenditure variance? a) £19,500 adverse b) £19,500favourable c) £18,000 adverse (ii) What is the fixed production cvcmead volume variance? a) £37,500 favorable b) £37,500 adverse c) £3,750 favorable
d) £18,000 favorable d) £3,750 adverse
14. In an integrated cost and financial accounting system, the accounting entries for factory overhead absorbed would be: A Debit Work-in-progress control account Credit Overhead control account B Debit Overhead control account Credit Work-in-progress control account; C Debit Overhead control account Credit Cost of sales account D Debit Cost of sales account Credit Overhead control account The answer is: a) A b) B c) C d) D
15. An abnormal loss in a process occurs when: a) Actual losses are greater than the normal loss level c) Production level are below budget
b) Actual losses are less than the normal level d) Cost are increased a result of defective materials
16. When sales and output have passed the break-even point, the contribution per unit, for each unit then sold, be comes: a) Larger b) The margin of safety c) The profit per unit d) Smaller 17. A product sells for £20 per unit and has a break-even volume of 50000 units. The annual fixed costs are £1000000. What is the variable cost per unit? 18. Fixed overheads are absorbed when: a) b) c) d) The actual overheads are less than the budgeted overhead The budgeted overheads are more than the absorbed overhead The budgeted overheads are less than the absorbed overhead. The actual overheads are more than the absorbed overhead
19. A company uses an integrated accounting system. a) b) c) d) The accounting entries for an issue of indirect materials to production would be: Debit: Production overhead control account Credit: Raw material control account Debit: Raw material control account Credit: Work in progress control account Debit: Finished goods control account Credit: Raw material control account Debit: Work in progress control account Credit: Raw material control account.
20. Anuththara Ltd. manufactures three products, which require the same type of machine. The following fixed cost and profit per unit is available. Data Product A Product B Product C Fixed cost £30 £30 £40 Profit £110 £125 £110 Machine hours 5 Hours 7 Hours 6 Hours
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In a period in which machine hours are in short supply, which of the following options is the rank order of production? Option: Product A Product B Product C A 1st 3rd 2nd B 3rd 1st 2nd C 1st 2nd 3rd D 2nd 3rd 1st The answer is: a) A b) B c) C d) D 21. A company operates a flexible budget system. A budget for direct material cost is set at £12500 for 2500 kgs of material. It is budgeted that all materials will be obtained at a 5% discount when total production is in excess of 2700 kgs. What variance is reported if actual material usage is 3000 kgs and actual cost is £13500? a) £1250 favorable b) £750 favorable c) £1000 adverse d) £1500 favorable
22. Which of the following is not relevant cost? a) Sunk cost b) Incremental cost
c) Differential cost
d) Avoidable cost
23. The standard material content of I unit of Ruvini is £200 (8 Kg at £25 per kg). During period 5, 1300 kg of materials were purchased at a total cost of £35,500 and were used to produce 150 units of Ruvini What was the materials usage variance for period 5? a) £500 adverse b) £2500 favorable c) £2500 adverse d) £3000 adverse 24. It is a company policy that the closing stock of finished gods must be equal to 25%of the following months budgeted sales The budget sales for November and December are 8,000 and 9 000 units respectively. What will be the budgeted production for November? 25. Prime cost is, a) The cost of operating a cost center c) The material cost of the product 27. The standard labour cost per unit of product “Thilina” is £36 (6 hours @ £6 per hour). During December the following details were recorded: Data: Quantity Hours worked 2920hours Actual paid rate £5 per hour Labour efficiency variance £1380 Favorable What was the output of product “Thilina” during December? 28. A company manufactures a single product, and relevant data is as follows: Standard Costs: £ per unit Direct labour (2 hours at £10 per hour) 20 Variable production overhead 12 Note: Overheads are assumed to be related to direct labour hours. The actual results for the period were as follows: ‘Results Data: Quantity Production 2,500 Direct wage paid 6,250 hours (£) 66,250 Variable production overheads (£) 32,500
b) Total production cost minus overheads d) All costs incurred in making a product
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(i) What is the variable overhead efficiency variance? a) £6,250 favourable b) £6,500 adverse (ii) What is the variable overhead expenditure variance? a) £5,000 favourable b) £5,000 adverse 29. Which type of cost do the following figures represent? ‘Output (units) 500 1000 Cost per unit (£) a) Variable 30. 50 b) Curve-linear 50
c) £7,500 adverse c) £4,000 favourable
d) £750 favourable d) £4,000 adverse
1500 50
2000 50
c) Fixed
d) Semi-variable
In a period of rising costs, if the stock valuation method was changed from LIFO to FIFO it would cause the profit to: a) Increase b) Fall by 75% c) Decrease d) Stay the same 31. The stock card for raw material “Naushadhi” shows the following data: Date Record: 01/02/01 Opening balance = NIL 01/02/01 Bought 600 units @ £6.80 each 02/02/01 issued 300 units 08/02/0 1 Bought 400 units @ £8.00 each 12/02/01 Issued 250 units 18/02/01 Bought 400 units @ £7.90 each 25/01/02 issued 300 units (i) What is the closing stock value using a FIFO stock valuation system? (ii) What is the value of stock issued to production using a LIFO stock valuation system? 32. In a stock control system which of the following is an action point? a) Maximum level b) Re-order level c) Minimum Level
d) Re-order Quantity
33. Shifara Ltd. has opening stock of 6000 units and a closing stock of 3500 units. The profit generated in the period amounted to £125000 using marginal costing. If the fixed overhead absorption rate is £15 per unit, what would be the profit using absorption costing? 34. A company currently allows a discount of 10% to customers who pay at the time of purchase. If 20% of the customers pay immediately, what are the extra sales needed in July to increase the cash receipts in that month by £9,000? 35. Under absorpti0n of fixed production overheads arises because: a) b) c) d) Budgeted activity levels were lower then actual Actual overhead expenditure incurred was lower than budgeted Budgeted activity levels were higher than actual Absorbed overheads were higher then budgeted overheads
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36. The principle budget factor can be defined as: a) b) c) d) The factor which limits the activities of the organization The factor which is most likely to result in an adverse variance The factor which has the highest value in the budget The factor which is least likely to change in the future.
37. The fixed overhead volume variance is: a) b) c) d) Budgeted fixed overheads divided by the absorption base The same as the under or over absorbed overhead The difference between the budgeted fixed overhead and the fixed overhead absorbed The difference between the actual fixed overhead and the fixed overhead absorbed.
38. A profit margin of 20% on sales revenue is equivalent to a mark up cost of what percentage? 39. Absorption costing: (i) Is useful for decision making (ii) Is necessary for stock valuations to comply with SSAP 9 (iii) Avoids arbitrary cost allocations (iv) Ignored fixed production overheads Which of the above statements are true? a) (i) and (iii) b) (ii) and (iii) c) (ii), (iii) and (iv) d) (ii) only
40. The following budgetary information is available for a manufacturing company. Data: Machining Assembly Finishing Production overheads cost (£) 30,000 22,580 9,248 Number of 18,000 machine hours Number of 5,000 12,000 Labour hours A particular cost unit takes 4 machine hours in the machining department and 3 labour hours n each of the assembly and finishing departments. What is the overhead cost absorbed per unit?
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1.Employers National insurance contributions constitute: a) A statutory additional payment made by the employer c) A voluntary additional payment made by the employer
b) A voluntary deduction from wages d) A statutory deduction from wages
2. Dinith pays 60% of invoices for goods purchased on credit, in the month after purchase. The remaining 40% are paid a month later. Invoices are received on the last day of each month. Invoices paid in the month following purchases attract a prompt payment discount of 5%, whilst those paid in the second month attract only 3% discount. Credit purchases for April to June are budgeted as follows. April May June £35000 £40000 £55000 Calculate the amount budgeted to be paid for credit purchases in June 3.A master budget is: a) The cash budget b) The profit and loss account c) He budget for the principal budget factor d) The budgeted profit & loss account, balance sheet and cash budget 4.Mihindra Ltd. Expects to have machine time constraint for December, which will result in the following production levels: Data December Production output 12000 units It is anticipated that there will be 1250 units of opening stock and the company wishes to hold a minimum of 850 units of closing stock at the end of December. How many units will be available for sale during December? 5.The following standard cost information relates to the production department of Shezard Ltd. Data Quantity Standard labour rate per (£) 10 Standard labour hours per unit of 1.25 Output (hours) The actual data for the month of December was as follows: Data: Quantity Production (units of output) 8500 Labour cost (£) 102500 Actual hours worked (hours) 10000 (i) What is the direct labour rate variance (to the nearest whole number)? a) £2500 favorable b) £2500 adverse c) £2656 adverse (ii) What is the direct labour efficiency variance (to the nearest whole number)? a) £6,250 adverse b) £6,406 favorable c) £6,406 adverse
d) £2656 favorable d) £6,250 favorable
6. In an integrated cost and financial accounting system, the accounting entries for the payment of net wages to indirect production workers would be a) Debit: Wages control account Credit: Bank account b) Debit: Work in progress control account Credit: Bank Account c) Debit: Production overhead control account Credit: Bank Account d) Debit: Bank account Credit: Wages control account
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7. The overheads included in the valuation of each unit of Product “Lavanya” are as follows: Production overheads £ Variable 3.00 Fixed 5.00 During December, the production was 100 units more than sales. The profit calculated by marginal costing principles, when compared to the profit Calculated by absorption costing principles, would be: a) £500 lower b) The same c) £300 lower d) £800 lower
8. The budgeted sales revenues for a Niruban & Co are as follows: Month: £ October 150000 November 160000 December 180000 The payment patterns of customers are expected to be as follows: Payment pattern: Cash sales 30% Pay 1 month after purchase 20% Pay 2 months after purchase 40% A discount of 20% is given on cash purchases. What is the total income in December expected to be?
9. In an integrated cost and financial accounting system, the accounting entries for PAYE deducted from gross wages would be: a) Debit: Production overhead control account Credit: Bank account b) Debit: Wages control account Credit: Bank account c) Debit Wages control account Credit: PAYE creditor account d) Debit : PAYE creditor account Credit : Bank account 10. A product has a break even point 40000 units and margin of safety of 20%. The contribution per unit is £3. What is the budgeted profit? a) £30000 b) £24000 c) £8000 d) £40000 11. The following costs apply to batch 325, which consists of 20,000 units of identical products: Data: £ Direct material 20,600 Direct labour 45,200 Production overhead 32,600 Total 98,400 The company charges selling and administration costs at a rate of 10% of production costs and wishes to achieve a profit margin of 30% of sales. What is the required selling price per unit of product? 13. A company manufactures a single product, and the relevant data is as follows: Standard costs: £ per unit Fixed production overhead 250 The fixed production overhead absorption rate is based on budgeted Monthly expenditure of £250,000 and budgeted machine hours of 10,000. The actual results for the last month were as follows: Data: Quantity Production 850 Fixed production overheads (£) 230,500
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(i) What is the fixed production overhead expenditure variance? a) £19,500 adverse b) £19,500favourable c) £18,000 adverse (ii) What is the fixed production cvcmead volume variance? a) £37,500 favorable b) £37,500 adverse c) £3,750 favorable
d) £18,000 favorable d) £3,750 adverse
14. In an integrated cost and financial accounting system, the accounting entries for factory overhead absorbed would be: A Debit Work-in-progress control account Credit Overhead control account B Debit Overhead control account Credit Work-in-progress control account; C Debit Overhead control account Credit Cost of sales account D Debit Cost of sales account Credit Overhead control account The answer is: a) A b) B c) C d) D
15. An abnormal loss in a process occurs when: a) Actual losses are greater than the normal loss level c) Production level are below budget
b) Actual losses are less than the normal level d) Cost are increased a result of defective materials
16. When sales and output have passed the break-even point, the contribution per unit, for each unit then sold, be comes: a) Larger b) The margin of safety c) The profit per unit d) Smaller 17. A product sells for £20 per unit and has a break-even volume of 50000 units. The annual fixed costs are £1000000. What is the variable cost per unit? 18. Fixed overheads are absorbed when: a) b) c) d) The actual overheads are less than the budgeted overhead The budgeted overheads are more than the absorbed overhead The budgeted overheads are less than the absorbed overhead. The actual overheads are more than the absorbed overhead
19. A company uses an integrated accounting system. a) b) c) d) The accounting entries for an issue of indirect materials to production would be: Debit: Production overhead control account Credit: Raw material control account Debit: Raw material control account Credit: Work in progress control account Debit: Finished goods control account Credit: Raw material control account Debit: Work in progress control account Credit: Raw material control account.
20. Anuththara Ltd. manufactures three products, which require the same type of machine. The following fixed cost and profit per unit is available. Data Product A Product B Product C Fixed cost £30 £30 £40 Profit £110 £125 £110 Machine hours 5 Hours 7 Hours 6 Hours
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In a period in which machine hours are in short supply, which of the following options is the rank order of production? Option: Product A Product B Product C A 1st 3rd 2nd B 3rd 1st 2nd C 1st 2nd 3rd D 2nd 3rd 1st The answer is: a) A b) B c) C d) D 21. A company operates a flexible budget system. A budget for direct material cost is set at £12500 for 2500 kgs of material. It is budgeted that all materials will be obtained at a 5% discount when total production is in excess of 2700 kgs. What variance is reported if actual material usage is 3000 kgs and actual cost is £13500? a) £1250 favorable b) £750 favorable c) £1000 adverse d) £1500 favorable
22. Which of the following is not relevant cost? a) Sunk cost b) Incremental cost
c) Differential cost
d) Avoidable cost
23. The standard material content of I unit of Ruvini is £200 (8 Kg at £25 per kg). During period 5, 1300 kg of materials were purchased at a total cost of £35,500 and were used to produce 150 units of Ruvini What was the materials usage variance for period 5? a) £500 adverse b) £2500 favorable c) £2500 adverse d) £3000 adverse 24. It is a company policy that the closing stock of finished gods must be equal to 25%of the following months budgeted sales The budget sales for November and December are 8,000 and 9 000 units respectively. What will be the budgeted production for November? 25. Prime cost is, a) The cost of operating a cost center c) The material cost of the product 27. The standard labour cost per unit of product “Thilina” is £36 (6 hours @ £6 per hour). During December the following details were recorded: Data: Quantity Hours worked 2920hours Actual paid rate £5 per hour Labour efficiency variance £1380 Favorable What was the output of product “Thilina” during December? 28. A company manufactures a single product, and relevant data is as follows: Standard Costs: £ per unit Direct labour (2 hours at £10 per hour) 20 Variable production overhead 12 Note: Overheads are assumed to be related to direct labour hours. The actual results for the period were as follows: ‘Results Data: Quantity Production 2,500 Direct wage paid 6,250 hours (£) 66,250 Variable production overheads (£) 32,500
b) Total production cost minus overheads d) All costs incurred in making a product
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(i) What is the variable overhead efficiency variance? a) £6,250 favourable b) £6,500 adverse (ii) What is the variable overhead expenditure variance? a) £5,000 favourable b) £5,000 adverse 29. Which type of cost do the following figures represent? ‘Output (units) 500 1000 Cost per unit (£) a) Variable 30. 50 b) Curve-linear 50
c) £7,500 adverse c) £4,000 favourable
d) £750 favourable d) £4,000 adverse
1500 50
2000 50
c) Fixed
d) Semi-variable
In a period of rising costs, if the stock valuation method was changed from LIFO to FIFO it would cause the profit to: a) Increase b) Fall by 75% c) Decrease d) Stay the same 31. The stock card for raw material “Naushadhi” shows the following data: Date Record: 01/02/01 Opening balance = NIL 01/02/01 Bought 600 units @ £6.80 each 02/02/01 issued 300 units 08/02/0 1 Bought 400 units @ £8.00 each 12/02/01 Issued 250 units 18/02/01 Bought 400 units @ £7.90 each 25/01/02 issued 300 units (i) What is the closing stock value using a FIFO stock valuation system? (ii) What is the value of stock issued to production using a LIFO stock valuation system? 32. In a stock control system which of the following is an action point? a) Maximum level b) Re-order level c) Minimum Level
d) Re-order Quantity
33. Shifara Ltd. has opening stock of 6000 units and a closing stock of 3500 units. The profit generated in the period amounted to £125000 using marginal costing. If the fixed overhead absorption rate is £15 per unit, what would be the profit using absorption costing? 34. A company currently allows a discount of 10% to customers who pay at the time of purchase. If 20% of the customers pay immediately, what are the extra sales needed in July to increase the cash receipts in that month by £9,000? 35. Under absorpti0n of fixed production overheads arises because: a) b) c) d) Budgeted activity levels were lower then actual Actual overhead expenditure incurred was lower than budgeted Budgeted activity levels were higher than actual Absorbed overheads were higher then budgeted overheads
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36. The principle budget factor can be defined as: a) b) c) d) The factor which limits the activities of the organization The factor which is most likely to result in an adverse variance The factor which has the highest value in the budget The factor which is least likely to change in the future.
37. The fixed overhead volume variance is: a) b) c) d) Budgeted fixed overheads divided by the absorption base The same as the under or over absorbed overhead The difference between the budgeted fixed overhead and the fixed overhead absorbed The difference between the actual fixed overhead and the fixed overhead absorbed.
38. A profit margin of 20% on sales revenue is equivalent to a mark up cost of what percentage? 39. Absorption costing: (i) Is useful for decision making (ii) Is necessary for stock valuations to comply with SSAP 9 (iii) Avoids arbitrary cost allocations (iv) Ignored fixed production overheads Which of the above statements are true? a) (i) and (iii) b) (ii) and (iii) c) (ii), (iii) and (iv) d) (ii) only
40. The following budgetary information is available for a manufacturing company. Data: Machining Assembly Finishing Production overheads cost (£) 30,000 22,580 9,248 Number of 18,000 machine hours Number of 5,000 12,000 Labour hours A particular cost unit takes 4 machine hours in the machining department and 3 labour hours n each of the assembly and finishing departments. What is the overhead cost absorbed per unit?
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