Accounting Question

(Answer all questions from this section. All questions carry the same mark. Total in this section is 30 Marks.) Please answer the questions of PART A in the table provided in the answer section. Any answers you indicate or give here in the question section will be disregarded and you will not receive marks for them.

• If an assembly line supervisor is paid a salary of £250 each week regardless of output, this wage could be described as a:

1. semi-variable cost
2. fixed cost
3. variable cost
4. step cost

• An engineering company has hired some specialized equipment for a particular job. Which of the following options has the correct classification of the hire cost?

1. Variable production overhead
2. Fixed production overhead
3. Indirect expense
4. Direct expense

• Which of the following statements is true?

1. Total indirect costs are always greater than total direct costs
2. An indirect cost will always be a fixed cost
3. A particular cost can be a direct cost of one cost object and an indirect cost of a different cost object
4. Fixed costs per unit are not affected by the level of activity

• A purchasing agent has two potential firms from which to buy materials for production. If both firms charge the same price, the material cost is a(n)
  1. irrelevant cost
  2. relevant cost
  3. sunk cost
  4. opportunity cost

• When there is one scarce resource, the product that should be produced first is the product with the highest

1. contribution margin per unit of the scarce resource.
2. sales price per unit of the scarce resource.
4. contribution margin per unit.

• GardenRite Ltd manufactures wheelbarrows with a selling price of £100 per wheelbarrow. Budgeted production and sales volume is 2,000 wheelbarrows per month. During January 20X8 2,000 wheelbarrows were made of which 1,400 were sold. There was no opening inventory.

The variable cost per wheelbarrow is £55. Fixed costs in January were, as budgeted, £50,000.

Using marginal costing calculate the contribution for January.

1. £63,000
2. £13,000
3. £90,000
4. £28,000

• Sudan plc makes a single product and incurs fixed costs of £125,000 per month. Variable cost per unit is £55 and each unit sells for £105. Monthly sales demand is 6,000 units.

The breakeven point in terms of monthly sales units is:

1. 1,190 units
2. 2,273 units
3. 2,500 units
4. 3,500 units

• Fixed costs are conventionally deemed to:

1. be constant in total when production volume changes
2. be constant per unit of output
3. be constant per unit of output as production volume changes
4. vary substantially, in total, from period to period when production is constant

• A manufacturing company makes a single product, which it sells for £40 per unit. Fixed costs are £184,320 per month and the product has a contribution ratio of 30%.

In a period when actual sales were £737,600, the company’s margin of safety, in units, was:

1. 123,200
2. 18,440
3. 15,360
4. 3,080

• Delivo plc makes a numbers of deliveries per week of perishable goods to its customers.

The cost of these deliveries each week is a:

1. fixed selling overhead
2. variable prime cost
3. variable production overhead
4. variable selling and distribution overhead