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TEST CODE OO1073
F'ORM TP 2l.1fi4 MAYIJUNE 2OO1

CARIBEAN EXAMINATIONS COUN CIL

B

ADVAN CED PRCFI CIEN CY EXA1VIINATION

ACCOUNTING
UNIT2 - Paper0L
9G minutes

READ T}IE FOLLOWING DIRECTICINS CAREFULLY

1. This paper cornprises TWO sections - 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.
3. 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.
A
+. 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 Sample Answer

(A)
(B)
adding direct factory expenses to cost of materials used
adding indjsect factory expenses to cost of materials used
@@oe
(C) subtracting di:ect factory expenses from cost of materials used
P) sub*acting indirect factory expenses from cost of materials used
The best answer to this item is "adding direct factory expenses to cost of materials used," so
answer space (A) has been blaekened.
Ifyou \Pant lo change your an$wsr, be sure to erase your oid answer completely and frll in your
new choice
sHqRTANSwErui
6. 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.
L You will have 90 minutes to answer the questions on tbis papar,

Copyrieht @ ?000 Caribbean Examinatioas Councii

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Bayshore Investrnent Corporation employs a cost of capitai rate of. LZVa for all cdpital
5.
invest-
year:
rnent and has prepared the following analysis for four projects for the upcoming

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

6. Lashley's Pine Products L,td had the following information on its books:
Finished Bopds inventory Jan 1,2000 $ i 200 000
Finished goods inventory Dec 31,2000 $ 86 000
Cost of goods sold $ 500 000
Sales l $? 000 000
Operating expenses $ 32s 00s

What was the cost of goods manufactsred for 2000?

(A) $286 000
(B) $386 oo0
(c) $414 000
0) $614 000

7, Storebay Industries Ltd had the follcwing activities during 2000:

Direct materiats
Inventory Jan 1,2000 $ ?0 000
Purchases 215 600
Inventory Dec 31, 2000 36 4CI0
Direc t manufacturing labour 60 000
Indirect materials 80 000
Work in process inventory Jan 1 14 000
Work in process inventorY Dec 31 2 800
Firrished goods inventory fan 1 70 000
Finished goods inventory Dec 3l 105 000

What was Storebay's eost of direct materials used dwing 2000?

(A) $117 600
(B) 5169 200
(c) $21s 600
(D) S249 200
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Which of the follcwing statemenis are 15. Tlansportalion costs incun'edby a manu-
true regarding financial and managerial facturing company to ship its producr to
accounting? its customers would be classified as
I. Both are mandatory. (A) product cost
tr. Both rely on the same underlying (B) manufacturing overhead
financial data. (Ci period cost
uI. Both emphasize the segrnents of (D) adminislrative cost
an organisation, rather than jusl
looking at the organisati,on as a
whole. Kodle Company sells a single product.
Tv 1S.
Both are geared to the future, The product has a selling price of $60 per
raLher than the past. unit a:rd variable cost is 707o of sales. If
(A) tr only the company's fixed expenses total
(B) II and Itr only ir will have a
$120 000 per year, then
(c) II, III and fV only break-even of
(D) I, [, III, and fV
{A) $ 84 000
(B) $i20 000
Use the following information to answer
(c) $r70 348
items 13 and 1.4. (D) $400 000

Kadobment Furniture had 60 000 chairs

in process at June i, 2000 {7ATa con- 17. Staddards represent the best expected
verted), and 40 000 chairs in process at level of performance. They are usually
June 30, 2000 (507o converted). All di- developed f,rom a careful study and are
rect materials are added at the beginning expressed
of the production prccess. During the
month, 140 0O0 chairs were transferred (A) on a per unit basis
to finished goods. F) by a management team
(C) through an organization's goals
What wererhe equivaleni rnits formarerials (D) througtr an organizarion's policies
cosl for June using the weighted ayerage and procedures
method?

(A) 1i8 000 chairs 18. Dolene Company's fixed manufacturing

iB) 140 000 chairs
overhead casts totalled $100 000 and
{C) 160 000 chairs
va.:riable seiling costs toralled $80 000.
(D) 180 000 chairs
Under variable costing how would these
costs be classified?
L4. What were the equivalent units for con-
Periad costs Product costs
version costs for lune using the r,veighted
average method?
iA)$0 $180 000
(B)
(c) $$ro0 o0o
(A) 118 000 chairs 80 000 $100 000
(B) i40 000 chairs $ 80 000
(c) 160 000 chairs
(D) $i80 000 $0
(D) i80 000 chairs

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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 7 500 kilcgrams

Achral cost of material purchased $14i 3?5
Aetual materials used in produetion 7 700 kiiograms
Asfiral outllut 700 units

What is the matarial grice variance for the month?

(A) $ 22s0F
G)
(c)
$ 7 s40u
$ 766OU
(D) $24 31? U

Which of tle following would NOT be 25. ,- Iilhicb of tbs foiiowing variances is MOST
considered an indirect cost of serviag a cantollable by a production supervisor?
particular custoner at a fast food cutlec?
(Ai lvlaterials pice variance
(A) Csst af a hamburgel patry in the {g) Mabrials quantity variance
burger tlry order (C) Fixed overhead volurna variance
(B) S/agesoftlreemployeewhotakes (D) Veriableoverheadspendingvari-
tlre eustomer's order arae
(C) Cost of heating aad lighdng rhe
kitchen
@) Salary of fl:e outlet's manager

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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 500 barrels at $7.0S each

Purchases, July I 850 barrels at $7.50 each
Purchases, July 18 i00 barrels at $7.70 each
Ending inventory 460 barrels

29- The valne assigned to ending inventory The value assigned to csst of goods sold
if Smi& uses LIFO is if Smith uses FIFO is
(A) 5224A (A) $6 e30
(B) $2 560 fB) $7:?s
(c) $2 800 (c) $7 s2s
(D) fi3 220 (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 $24 000

Nur€es' salaries far Janrrary 8 400
Medical sopplies purchased in January 3 600
Utilities (80% reiateu tt patient t'eakuent) 1 800
Office salaries (50% relates ro patient beatmenr) 5 200
Medical supplies inve.rtory fanuary 31 I 60S
Depreciaiion (medical equiprnent January) I ?00
Building rental (80% related to patieat treabnent) t 400

During the manth of lanuary 66 patients were treated-

(a) Compule &a csst of services rendered. [5marks]

(b) Compute the average cost lrer patienl [lmark ]

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