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TEST CODE OO1073
MAYIJUNE 2OO1
CARIB B EAN EXAMINATIONS COUN CIL
ACCOUNTING
UNIT2
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Paper0L
9G minutes
READ T}IE FOLLOWING DIRECTICINS CAREFULLY
This paper cornprises TWO sections
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SECTiON A and SECTION B. SECTION A comprises
30 multipie-choice items. SECTION B comprises 6 short answer items.
MUITIPLE-CHOICE
In addition to this test booklet, you should have an answer sheet.
Each ilem in the multiple-choice test has four suggested aaswers lettered (A), (B), (C), (D). Read
each item you are aboulto answer and decide which choice is best.
On your answet sheet, find the number which correspogds to your item and blacken the space
having t}re same ietter as the answer you have chosen. Look at the sample item below.
Sample ltem
Prime cost is calculated by
(A) adding direct factory expenses to cost of materials used
(B)
adding indjsect factory expenses to cost of materials used
(C)
subtracting di:ect factory expenses from cost of materials used
P)
sub*acting indirect factory expenses from cost of materials used
Sample Answer
The best answer to this item is "adding direct factory expenses to cost of materials used," so
answer space (A) has been blaekened.
If you \Pant lo change your an$wsr, be sure to erase your oid answer completely and frll in your
new choice
sHqRTANSwErui
In the case of the short answsr quastioas, each question is followed Ay u ni*Ier of lines or a
space in which ycu are expected to write ycur answer. YOU MUST.R-ETURN THE SHORT-
ANSS/ER SECTION OF TI{E PAPER ATONG WITH YOUR MUITIPLE-CHOICE PAPER
AND ANSWER SI{EET.
When you are toid to begin, tum the page and work as quickiy and as ca:efully as you can. If you
cannot answer an icem or question, omit it and go on to the next one. You cafl eome back to the
harder item iater.
You will have 90 minutes to answer the questions on tbis papar,
F'ORM TP 2l.1fi4
ADVAN CED PRCFI CIEN CY EXA1VIINATION
@@oe
Copyrieht @ ?000 Caribbean Examinatioas Councii
5.
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Bayshore Investrnent Corporation employs a cost of capitai rate of. LZVa for all cdpital invest-
rnent and has prepared the following analysis for four projects for the upcoming year:
Project i Project 2 Project 3' Project 4
Initiai Investrnent s400 06d':
r"S5i6tbo"'
$496
000 $s44
000
Net Present Value {$
7 596) $ 8552 $ 28 128 5 29324
Internal Rate of Return 11Vo 13% L4% 15Td
Which project(s) should Bayshore Inveslr*ent Corporation undertake during th'e upcoming year
based on a budget of $1
200 000?
(A) Projects 1 and 3
(B) h'ojects 2 and 3
(C) Projecls 3 and 4
(D) Projects 2, 3, and 4
Lashley's Pine Products L,td had the following information on its books:
6.
Finished
Bopds
inventory Jan 1,2000
Finished
goods inventory Dec 31,2000
Cost of goods sold
Sales
l
Operating expenses
What was the cost of goods manufactsred for 2000?
(A)
$286
000
(B) $386 oo0
(c)
$414
000
0) $614
000
$
i 200 000
$ 86 000
$ 500 000
$? 000 000
$ 32s 00s
7, Storebay Industries Ltd had the follcwing activities during 2000:
Direct materiats
Inventory Jan 1,2000
Purchases
Inventory Dec 31, 2000
Direc t manufacturing labour
Indirect materials
Work in process inventory Jan 1
Work in process inventorY Dec 31
Firrished goods inventory fan 1
Finished goods inventory Dec 3l
What was Storebay's eost of direct materials used dwing 2000?
(A)
$117 600
(B)
5169 200
(c)
$21s 600
(D)
S249 200
nnl n-?? /fr ,t D1f /tnn1
$ ?0 000
215 600
36 4CI0
60 000
80 000
14 000
2 800
70 000
105 000
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-5
I.
tr.
uI.
Which of the follcwing statemenis are
true regarding financial and managerial
accounting?
Tlansportalion costs incun'edby a manu-
facturing company to ship its producr to
its customers would be classified as
(A) product cost
(B)
manufacturing overhead
(Ci period cost
(D) adminislrative cost
Kodle Company sells a single product.
The product has a selling price of $60
per
unit a:rd variable cost is 707o of sales. If
the company's fixed expenses total
$120 000 per year, then ir will have a
break-even of
{A) $ 84 000
(B)
$i20 000
(c)
$r70 348
(D)
$400 000
Staddards represent the best expected
level of performance. They are usually
developed f,rom a careful study and are
expressed
(A)
on a per unit basis
F)
by a management team
(C)
through an organization's goals
(D)
througtr an organizarion's policies
and procedures
Dolene Company's fixed manufacturing
overhead casts totalled
$100 000 and
va.:riable seiling costs toralled
$80 000.
Under variable costing how would these
costs be classified?
Periad costs
iA)$0
(B)
$ 80 000
(c)
$ro0 o0o
(D)
$i80 000
Product costs
$180 000
$100 000
$ 80 000
$0
Both are mandatory.
Both rely on the same underlying
financial data.
Both emphasize the segrnents of
an organisation, rather than
jusl
looking at the organisati,on as a
whole.
Both are geared to the future,
raLher than the past.
tr only
II and Itr only
II, III and fV only
I, [, III, and fV
15.
1S.
Tv
(A)
(B)
(c)
(D)
Use the following information to answer
items 13 and 1.4.
Kadobment Furniture had 60 000 chairs
in process at June i, 2000
{7ATa
con-
verted), and 40 000 chairs in process at
June 30, 2000 (507o converted). All di-
rect materials are added at the beginning
of the production prccess. During the
month, 140 0O0 chairs were transferred
to finished goods.
What wererhe equivaleni rnits formarerials
cosl for June using the weighted ayerage
method?
(A)
1i8 000 chairs
iB) 140 000 chairs
{C) 160 000 chairs
(D)
180 000 chairs
What were the equivalent units for con-
version costs for lune using the r,veighted
average method?
118 000 chairs
i40 000 chairs
160 000 chairs
i80 000 chairs
17.
18.
L4.
(A)
(B)
(c)
(D)
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-7 -
The Chemtile Cornpany has a stasdard cost sysfate The following $randard$ have been estab-
lished fu a particular
lxoduct
Standard quantity per unit of ouqrut 8.3 kilograms
Standard price
$19.15
The following data p*tain to opaations concerning the product
for the last month:
Acfual materials purchased
Achral cost of material purchased
Aetual materials used in produetion
Asfiral outllut
7 500 kilcgrams
$14i 3?5
7 700 kiiograms
700 units
What is the matarial grice variance for the month?
(A)
$ 22s0F
G) $ 7 s40u
(c)
$ 766OU
(D)
$24 31? U
Which of tle following would NOT be
considered an indirect cost of serviag a
particular custoner at a fast food cutlec?
(A)
Csst af a hamburgel patry in the
burger tlry order
(B)
S/agesoftlreemployeewhotakes
tlre eustomer's order
(C)
Cost of heating aad lighdng rhe
kitchen
@) Salary of fl:e outlet's manager
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Iilhicb of tbs foiiowing variances is MOST
cantollable by a production supervisor?
(Ai lvlaterials pice variance
{g)
Mabrials quantity variance
(C)
Fixed overhead volurna variance
(D) Veriableoverheadspendingvari-
arae
25.
nn10??LApFJ?nn1
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Use the folloxing information to answer items 29 and 3t
Smith Company has'the following data related to an itern of inventory during July ?000:
Beginning inventory
Purchases, July I
Purchases, July 18
Ending inventory
500 barrels at $7.0S each
850 barrels at $7.50 each
i00 barrels at $7.70 each
460 barrels
29- The valne assigned to ending inventory
if Smi& uses LIFO is
(A)
5224A
(B)
$2 560
(c)
$2 800
(D)
fi3 220
The value assigned to csst of goods sold
if Smith uses FIFO is
(A)
$6 e30
fB) $7:?s
(c)
$7 s2s
(D) '
$7 s95
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2. Barrington Company has been crdering 125 u&its of !figets per month based on tbe recammen-
datioa of the salesman who visi'.s fhe company monthly. Aaew purchasing managerhas decided
to use tlre *onomic ordering quantity model to asmrtain the mon&ly purchases. The nanager
collected the followirg datr
Anaual demand 500 units
Days open 25O per yex
I-ead tirne 10 days
Ordering costs $150
Annual unit carrying cos* $20
Calculate:
(a) ThSEOQ
O)
The number of orders per
Year
(c) ?he annual ordering costs
(d) The annual carryiag coss [6marks]
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4. The following informalion is related to Hnmkirx Mediql Associates Practiee for January 200L,
the firm's first month of aperatiaa.
Doctors' salaries for January
Nures' salaries far Janrrary
Medical sopplies purchased in January
Utilities (80% reiateu tt patient t'eakuent)
Office salaries (50% relates ro patient beatmenr)
Medical supplies inve.rtory fanuary 31
Depreciaiion (medical equiprnent January)
Building rental (80% related to patieat treabnent)
During the manth of lanuary 66 patients were treated-
(a)
Compule &a csst of services rendered.
(b) Compute the average cost
lrer
patienl
$24 000
8 400
3 600
1 800
5 200
I 60S
I ?00
t 400
[5marks]
[lmark ]
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