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Practice_Mid-Semester_Test_Organised_for_2011_with_Answers

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Practice_Mid-Semester_Test_Organised_for_2011_with_Answers

    Page 1 of 9

     UNIVERSITY OF SOUTH AUSTRALIA

    DIVISION OF BUSINESS

    SCHOOL OF COMMERCE

    ACCT 2006

    Management Accounting

    Practice Mid-Semester Test 2011

    Name of candidate:..................................................Student No:...................

Total Mark:..........

    INSTRUCTIONS TO CANDIDATES

    1. Time = 70 minutes (inclusive of reading time) + 10 minutes Entext (all students). 2. Attempt all questions.

    3. This test is to be conducted under closed book conditions. Only writing implements and

    non-programmable calculators are permitted in the examination room. No other papers or

    books are permitted.

    4. All pages of this test paper must be handed up intact including the last page which is

    supplied as a note sheet should the candidate require it. Papers that are not handed up intact

    will be void and count for zero.

    5. It is believed that ample room is provided for the types of answers required, however if

    candidates require more room for answer writing than is provided, please use the back of the

    pages.

    6. This test has a weighting of 15% as outlined in your course information booklet.

    Page 2 of 9

    ANSWERS IN BOLD LETTERING *

    Part I MULTIPLE CHOICE

For each question, circle the letter of the most appropriate answer.

Question (i)

    Direct Labour is:

A. The cost of the wages of the staff when not working directly on manufacturing a product.

    B. Not traceable to the product.

    C. Manufacturing overhead.

    *D. The cost of the wages of the staff when working directly on manufacturing a product.

    E. A fixed cost.

Question (ii)

    Conversion cost is defined as:

    A. Manufacturing Overhead + Direct Material purchases. B. Direct Labour + Direct Material issues.

    *C. Direct Labour + Manufacturing Overhead.

    D. Manufacturing Overhead + Direct Material + Direct Labour. E. Direct Labour + Direct Material purchases.

Question (iii)

    The value chain consists of:

A. Manufacturing costs only.

    B. Research and development and marketing costs only. *C. All costs.

    D. Prime costs.

    E. Direct material, direct labour and manufacturing overhead.

Question (iv)

    Overtime premium paid to a machine operator should be accounted for as:

A. A period cost.

    B. Part of direct labour.

    *C. A manufacturing overhead cost.

    D. Part of indirect material.

    E. Wastage.

Question (v)

    An example of a fixed cost is:

*A. A cost accountant’s or supervisor’s salary.

    B. Wages paid to factory workers.

    C. Direct Material & Indirect Material.

    D. Overtime costs.

    E. Prime cost.

    Page 3 of 9

    Question (vi)

    The flow of manufacturing costs is:

*A. Raw materials to work in process to finished goods to cost of goods sold.

    B. Raw materials to work in process inventory to cost of goods sold to finished goods. C. Work in process to raw materials to finished goods to cost of goods sold. D. Work in process to finished goods to raw materials to cost of goods sold. E. Raw materials to finished goods to work in process to cost of goods sold.

Question (vii)

    A manufacturer plans to increase production within the relevant range of activity. What behaviour can

    the company expect for each of the following?

    Fixed cost per unit Variable cost per unit

    A. No change No change

    B. No change Increase

    C. Increase No change

    D. Decrease Increase

    *E. Decrease No change

Question (viii)

    Which of the following types of information are used in management accounting?

A) information focused on the long term

    B) financial information

    C) nonfinancial information

    *D) All of these answers are correct.

Question (ix)

    The cost of renting a car for the sales force should be accounted for as: *A. A period cost.

    B. Manufacturing overhead.

    C. A prime cost.

    D. Conversion costs.

    E. An upstream cost.

Question (x)

    Control measures should:

    A) be kept confidential from employees so that competitors don't have an opportunity to gain a

    competitive advantage

    *B) be linked back to planning

    C) be flexible to allow for employees who are slackers

    D) be set and not changed until the next budget cycle

    Page 4 of 9

    Part II

QUESTION 2

Supply the missing data in the following cases. Each case is independent of the others.

     Case

     ________________________________

     1 2 3 4

    Schedule of Cost of Goods Manufactured Direct materials ............................................. $4,500 $6,000 $5,000 $3,000

    Direct labour ................................................. (a) 3,000 7,000 4,000 Manufacturing overhead ............................... 5,000 4,000 (n) 9,000 Total manufacturing costs ............................. 18,500 (g) 20,000 (t) Beginning work in process inventory ............. 2,500 (h) 3,000 (u) Ending work in process inventory .................. (b) 1,000 4,000 3,000 Cost of goods manufactured ......................... $18,000 $14,000 (o) (v)

Income Statement

    Sales ............................................................. $30,000 $21,000 $36,000 $40,000

    Beginning finished goods inventory ............... 1,000 2,500 (p) 2,000 Cost of goods manufactured ......................... (c) (i) (q) 17,500 Goods available for sale ................................ (d) (j) (r) (w) Ending finished goods inventory .................... (e) 1,500 4,000 3,500 Cost of goods sold ........................................ 17,000 (k) 18,500 (x) Gross profit ................................................... 13,000 (l) 17,500 (y) Selling and administrative expenses ............. (f) 3,500 (s) (z) Net operating income .................................... $4,000 (m) $5,000 $9,000

     ANSWER TO QUESTION 2

    n) _______________ a) _______________

    o) _______________ b) _______________

    p) _______________ c) _______________

    q) _______________ d) _______________

    r) _______________ e) _______________

    s) _______________ f) _______________

    t) _______________ g) _______________

    u) _______________ h) _______________

    v) _______________ i) _______________

    w) _______________ j) _______________

    x) _______________ k) _______________

    y) _______________ l) _______________

    z) _______________ m) _______________

    Page 5 of 9

Answers to Question 2

    a) _______$9,000 ___ _______$19,500___ w)b) _______$3,000___ x) _ $16,000

    c) _______$18,000___ y) _ $24,000

    d) _______$19,000_ z) _ $15,000

    e) ___________$2,000 f) _______$9,000___

    g) _______$13,000___

    h) _________ ___$2,000

    i) _______$14,000___

    j) _ $16,500

    k) ______$15,000

    l) _______$6,000__

    m) _ $2,500

    n) _______$8,000___

    o) _______$19,000___

    p) _______$3,500___

    q) _______$19,000

    r) _______$22,500__

    s) _______$12,500___

    t) _______$16,000___

    u) _ $4,500

    v) _______$17,500___

    Page 6 of 9

    QUESTION 3

    Elevators Inc. allocates manufacturing overhead costs using direct

    manufacturing labour hours:

    a. Compute the actual and budgeted manufacturing overhead rates for

    2009.

    SOLUTION:

    BudgetedManufacturing

    Budgeted Manufacturing

    Overhead Costs=Budgeted DirectOverhead RateManufacturing Labor

    $2,700,000= 1.80 or 180%=$1,500,000

    ActualManufacturingOverhead CostsOverhead Rate=Actual DirectActual ManufacturingManufacturing Labor

    $2,755,000=1.90 or 190%$1,450,000? 2009 Pearson Prentice Hall. All rights reserved.4-6

    b. During March, the job-cost record for Job 626 contained the following

    information:

     Direct materials used $40,000

     Direct manufacturing labour costs $30,000

    Compute the cost of Job 626 using (a) actual costing and (b) normal

    costing using the rates calculated in part a.

    SOLUTION:

     Actual Normal

     Cost Cost

    Direct materials $40,000 $40,000

    Direct labour cost 30,000 30,000

    Manufacturing overhead costs

     $30,000 ; 1.90; $30,000 ; 1.80 57,000 54,000

     Total manufacturing costs-Job 626 $127,000 $124,000

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