1.Which of the following BEST describes the Items 18-19 refers to the following information.

purpose of cost and management

accounting? Selera Manufacturing Co. makes two products-
A) Monitoring performance with established the lunch and the pin. The company uses
goals. activity based costing.
B) Establishment of strategic goals of the Lynch. Pin
organization. No. Of units produced 12400 13600
C) Planning, controlling, organizing and No. Of purchase orders. 4000. 6000
decision making. No. Of inspections. 3500. 3500
D) Reporting on the performance and
position of the business. Overheard information:
Activity Total cost. Cost Driver
2.Financial accounting provides a historical Purchasing. $90000. No. Of purchase
perspective, whereas management Orders Orders
accounting
A) allows the use of a budget Quality control. $49000. No. Of inspections
B) emphasizes a current perspective
C) enables only managers to make 18. What is the total overhead cost charged to
decisions the lynch?
D) emphasizes the future in addition to A)$23 369
historical reports B)$42 923
C)$60 500
3.Wages paid to machine operators on an D)65 500
assembly line are classified as a
A)period cost 19. What is the total overhead cost charged to
B)direct material cost the pin?
C)manufacturing overhead cost A) $78 500
D)direct manufacturing labour cost B) $79 500
C) $88 500
4.Keystone Ltd produces a product under a D) 95 500
license from Xango Ltd. At the end of each
year, Keystone Ltd has to pay Xango Ltd the 20. Young Corporation has the following costs
license fee as follows: associated with the manufacture of one of its
products.
For the first 60 000 litrrs $ 30 000 and for Variable manu. cost. $7.30 per unit
every litte THEREAFTER $0.30 Fixed manu. overhead. $4.00 per unit
Variable selling expenses. $0.25 per unit
How is the license fee classified? Fixed sales, general and. $75 000 per year
A)Step administrative expense
B)Mixed
C)Fixed During 2016, young manufactured 50 000 unitd
D)Variable and sold 48 000. Under absorption costing, the
standard production cost per unit for 2016 was
5.A firm’s product has an annual demand of A) $7.30
20 000 units. The cost of placing one order B) $11.30
is $800 and there is a holding cost of $8 per C) $11.55
unit. What is the firm’s economic order D) $13.05
quantity(EOQ) ?
A)$800 21. Big display ltd uses a job order costing
B)$2000
C)$6400
D)$8000
6.Which of the following is an advantage of
the piece rate method of paying wages?
A)It helps to reduce production rejects
B)It can help to reduce monotony at the
workplace.
C)It is guaranteed to lead to an increase in
product quality.
D)It is an incentive to produce more within a
given time.
7.Gibson Manufacturing uses machine
hours to allocate manufacturing overhead to 22. Which of the following is a similarity
all jobs. For a particular job the budgeted
manufacturing overhead cost is $30 000 and costing?
the budgeted labour hours are 60 000 and
100 000 respectively. The predetermined
overhead rate per machine hour is
A)$0.30
B)$0.50
C)$0.60
D)$3.33
8.In July 2016, the beginning balance of the method of establishing the costs of
raw materials inventory account for Kyla Inc.
was $46 000. The ending inventory balance
for July was $47 000. Raw materials used
during the month totaled $127 120. The cost
of raw materials purchased during the
month was
A)$125 320
B)$126 120
C)$128 120
D)$174 120
9.Barry operates a guest house, Which of
the following cost items would be classified
as variables in the costing of the guest
room?
A)Water
B)Building
C)Furniture
D)Salary of front desk manager
10.A firm’s product has an annual demand
of 2000 units. The cost of placing one order 24. What was the total cost of Job 890?
is $800 and there is a holding cost of $8 per
system. The job cost information related to
Client D, windmill is as follows
Direct materials. 2500kg at $12.50 per kg
Direct labor. 600 hours at $18 per hour
Manufacturing overhead$7.50 per direct labour
What is the total cost of the job for client D
windmill?
A) $42 050
B) $46 550
C) $52 850
D) $60 800
between job order costing and process
A) both utilize the job cost sheet
B) Cost are accumulated by departments
C) Costs are accumulated by individual
jobs
D) Both are used to collect the cost of
production
23. A costing system can be best defined as a
A) designing production schedules and
assigning roles
B) Manufacturing goods and/or services
C) Production per unit only
D) Services rendered only
Item 24 refers to the following information
Graphics by design is an advertising agency
that produces jobs to customer specifications.
Overheads are applied at the rate of $50 per
computer hour.
The following information is available for Job
890.
Direct materials used. $3000
Direct labour hours worked. 24
Direct labor rate per hour. $20
Computer hours worked. 13
A) $3000
unit. What is the firm’s annual carrying cost? B) $4130
A)$8 000 C) $4680
B)$9 000 D) $4850
C)$10 000
D)$11 000 Item 25 refers to the following information

11.How are the wages of factory Panday Inc. uses job order costing system.
maintenance personnel usually classified? The company had the following jobs in
process:numbers 5,8 and 12. Direct labour
Indirect Manufacturing hours per job are 2500,3100 and 4200
labour cost overhead cost respectively.

A) No Yes ● Cost of raw materials used:$120 000

B) Yes No ● Direct labour:$8.50 per hour
C) Yes Yes ● Factory overhead applied: $10.20 per
D) No No direct labour hour
25. At the end of the ccounting period, the
Item 12 refers to the the following actual overhead costs totalled $93 000. The
information on overheads, amount of over or under applied overhead is
A) $6960 over applied
Your client has decided to change her B) $6960 under applied
costing system to a total absorption costing C) $9700 over rapplied
basis. Use the information below to calculate D) $9700 under applied
the assembly department’s budget
production overhead cost. 26. Which of the following are characteristics of
activity based costing?
Cost Item Total Overhead Cost ($) I.Eachactivity generates a cost
Rent & Rates 1700 II. Volume is used as the basis for cost
Light & Heat. 5400 allocation
III.cost pools accumulate cost as they are
Floor Area Occupied by each Department incurred
(square feet)
A) I and II only
Cutting 2000 B) II and III only
Assembly 1300 C) I and III only
Finishing 1700 D) I, II and III

27. Which of the following is not an advantage

12.The budgeted overhead cost for the associated with service sector costing?
cutting department is A) it provides more accurate information
A)$6 840 on resource inflows and outflows
B)$4 680 B) It assists in assigning employees to
C)$4 446 tasks they perform with the greatest
D)$2 160 efficiency
C) There is increased accuracy in cost
13.Which of the following support allocation
department allocation methods is MOST D) It generates higher costs of services
widely used because of its simplicity?
A)Step down Item 28 refers to the following information
B)Direct allocation
C)Sequential allocation Suzy operates a beauty salon and has
D)Reciprocal allocation provided the following cost data pertaining to
two customers, jacklyn and jowelle.
Item 14 refers to the following information. Jacklyn Jowelle
Direct materials $250. $190
Purchases and sales for the past year for a Direct labour hours 3. 2
firm are shown in the table below. Assume
purchases are made at the start of each Overheads are charged to customers based on
month, whilst sales occur at the end of each a predetermined rate of 75% per labour hour.
month. The direct labour cost per hour is $120.

28. The total cost of providing the service to

Jacklyn is
purchas purch sales sales
A) $440
es ases
B) $450
quantity unit quantity unit C) $610
price price D) $880

jan 6000 2.00 29. A service organization would most likely

use a predetermined overhead rate based on
feb 4000 2.10 A) direct labour
B) Machine hours
mar 7000 3.20 C) The number of complaints
D) Standard material cost
apr 2000 2.15
30. Which of the following statements about a
may 3000 2.20 5000 3.15 company thT employs absorption costing
procedures is TRUE?
A) the company cannot use the
14.If the firm uses a LiFO basis for its procedures for external reporting
inventory valuation, what is the value of its B) The company treats fixed
closing inventory at 31 May? manufacturing overhead costs as
A)$ 3 000 period costs
B)$6 000 C) The company applies only variable
C)$6 600 production costs to determine cost per
D)$9 600 unit
D) The company applies both bariable and
15)The following information was extracted fixed production costs to determine cost
from the books of James Inc. per unit

Cost of goods sold $ 107 000 31. The role of the budget committee is to
Ending balance of finished goods inventory. A) prepare budgets for any period of time
$ 20 000 B) Give advice on preparing final reports
Cost of goods manufactured $ 57 000 C) Coordinate the preparation of budgets
D) Prepare departmental financial reports
What is the beginning balance of the
finished goods inventory for the period? 32. Which of the following budgets shows
anticipated cash flows?
A)$ 70 000 A) cash
B)$ 77 000 B) Purchases
C)$ 127 000 C) Schedules of collections
D)$ 157 000 D) Schedules of disbursements

Items 16-17 refers to the following 33. When inferior materials are purchased for
information. production at a price lower than the standard,
the result may be
Adam’s Company uses a job order costing A) favourable material price variance or
system. The company has three jobs in favourable labour efficiency
process; Job numbers 5, 8 and 12. B) Unfavourable material price variance or
favourable labour efficiency
Raw materials used $120 000.00 C) Favourable material price variance or
Direct labour per hour $ 8.50 unfavourable labour efficiency
Overhead applied based on direct 120% D) UnFavourable material price variance
labour cost or unfavourable labour efficiency

Direct material was requisited as follows; 34 the margin of safety in cost volume profit
analysis is defined as the difference between
budgeted
A) sales and breakeven sales
Job Number % Direct
B) Contribution margin and fixed costs
Labour
C) Contribution margin and breakeven
Hours
contribution
5 30 2500 D) Contribution margin and actual
contribution margin
8 25 3100
35. Mary makes home made soap which she
12 25 4200 sells at $100 per case. The variable cost is $40
per case and fixed cost is $600. What is the
contribution margin per case?
The balance of the requisitions were
A) $15
considered indirect.Indirect labour was $ 44
B) $40
000. Other actual overhead costs totaled $
C) $60
36 000.
D) $100
16)What is the total amount of overhead
36. The net present value of a project is
applied to Job number 8? positive, however, the company did not accept
A)$ 18 250
this project. The most likely reason for the
B)$ 26 350
rejection is that
C)$ 30 000 A) A positive net present value os
D)$ 31 260
unacceptable
B) The net initial investment cannot be
17.If Job number 12 is completed and
recovered
transferee and overhead is applied at the
C) The return is greater than that requires
end of the period, what is the balance in
by the company
work- in- process inventory at the end of the
D) The qualitative factors outweigh the
period? benefit of the investment
A)$ 96 700 37. Which of the following statements about
B)$ 99 020
atandard cost is true?
C)$ 139 540
A) it is used to reduce tax liability
D)$ 170 720 B) It is always greater than the actual cost
C) It refers to the average cost of
production in the cost period
D) It is a target for the period ahead

Item 38 refers to the following information 43. A large unanticipated reduction in

property taxes in a company’s factory
Deluxe cabinet makers produces the executive would, all other things being equal,
kitchen cabinet. The following information is provided most likely cause
for the month of November when 4000 cabinets were A) A favorable overhead volume
produced variance
B) A favourable overhead
Standards expenditure variance
C) An unfavorable overhead
Direct materials 10 sheets ply per unit @ $100 per volume variance
sheet D) An unfavorable overhead
Direct labour 6 hours per unit @ $50 per hour expenditure variance

Actual 44.items 44-45 refer to the following

information
Materials purchased. 44 000 sheets ply @ $110
per sheet Direct materials used. 4000 pounds
Materials used. 38 500 sheets ply Purchase price of $3.20 per
direct material unit
26 000 direct labour hours at $45 per hour Standard quantity 4300 pounds
direct material unit
38. What is the labour rate variance for November? Standard price of $3.30 per
A) $90 000 favourable direct material unit
B) $130 000 favourable
C) $90 000 unfavorable 44. What was the material price
D) $130 000 unfavorable variance?
A) 400 favourable
39. The net present value and internal rate of return B) 400 unfavorable
methods of decision making in capital budgeting are C) 430 favourable
superior to the payback method. This is because the D) 430 unfavorable
NPV and IRR methods
A) require less input 45. What was the materials quantity
B) Are easire to implement variance?
C) Consider the time value of money A) 990 unfavorable
D) Reflect the effects of sensitivity analysis B) 990 favourable
C) 1390 unfavorable
40. Favourable overhead volume variances most D) 1390 favourable
likely indicate
A) efficient performance
B) Inadequate budgeting
C) Inefficient performance
 D) Fluctuations in the level of production from
period to period

41. The Printing Press is seeking to purchase a

printing machine. The new machine will cost $800
000 and increase cash inflows by $100 000 per year,
and has a useful life of 15 years with zero salvage
value. The company’s cost of capital is 7%. What is
the net present value of this investment (ignoring
inflations and taxes)?
A) $100,000
B) $110,790
C) $900,000
D) $910,790

42.Which of the following is an advantage of the

payback period method of capital budgeting?
A) it considers the time value of money and is
easy for comparing projects
B) It is consistent with other financial measures
and data is readily available
C) It is simple to use and understand, measures
liquidity and allows for risk tolerance
D) It considers the time value of money, uses
realistic discount rates and is useful for
combined projects