Q1: Budgeted sales of a company's single product in a period are 20,000 units

producing a total contribution of $180,000 at a selling price of $24 per unit. Fixed costs
are $6 per unit based on the budgeted sales quantity.
What is the budgeted variable cost per unit?
$
Q2: Holding costs are included in the Economic Order Quantity formula.
Which of the following are examples of holding costs?
(1) Warehouse rent
(2) Interest on inventory investment
(3) Carriage inwards
(4) Inventory theft
1 and 3
1 and 2 only
3 and 4
1, 2 and 4
Q3: Costs for job 123 are as follows:
Direct materials

$460

Direct labour

$600

Overheads

120% of direct labour cost

A profit margin of 20% of selling price is required.

What is the selling price of job 123?
$2,136
$2,225
$2,975
$2,856
Q4 A single-product business has the following results for a period:
$

Sales revenue

268,000 (at $25 per unit)

less: Variable costs

139,360

Contribution

128,640

less: Fixed costs

87,480

Net profit

41,160

What is the break-even point in units?

8,645
3,499
7,290
9,074
Q5: A company uses time series analysis and the additive model when preparing its
cash budgets.
(1) The latest trend figure for sales calculated for January 20X1 was $2,135,000
(2) On average the trend is increasing by $17,000 each month
(3) Season variations are estimated to be:
February - $162,000, March + $135,000 and April + $181,000
What should the company's budgeted sales figure be for April?
$2,340,000
$2,186,000
$2,289,000
$2,367,000
Q6: Which of the following would MOST likely be a responsibility of a trainee
accountant?
Producing a schedule of budgeted and actual costs to calculate variances
Approving employee recruitment
Authorising a contract for a new computerised accounting system
Deciding on procedures for the authorisation of invoices
Q7: Which form of communication would be MOST appropriate to send to a customer

who regularly fails to meet agreed payment dates?

Report
Letter
Memo
Note
Q8: Which of the following could be the cause of a favourable materials cost variance?
Purchase of higher priced materials of standard quality
Use of untrained labour
Use of a higher grade of labour
Inefficient use of materials
Q9: In which of the following industries would process costing be appropriate?
Manufacturing chemicals
Manufacturing components
Fitting bathrooms
Building offices
Q10 Which of the following are likely characteristics of the working capital cycle of a
large retailing business such as a supermarket chain?
(1) Receipts of cash are likely to precede payments
(2) Most cash income is received at the time of sale
(3) The majority of sales will be on credit
1 and 2 only
2 only
1, 2 and 3
1 and 3 only
Q11: Cash budgets and forecasts can provide an early warning of liquidity problems by
estimating which of the following?
(1) How much cash is required

(2) The cost of borrowing any funds

(3) When cash is likely to be required
(4) How long cash is likely to be required for
3 and 4 only
1, 3 and 4 only
1, 2, 3 and 4
1 and 2 only
Q12: Which TWO of the following are relevant in capital investment decision-making
using discounted cash flow methods of appraisal?
Annual depreciation
Sunk costs
Cost of capital
Timing of future cash flows
Q13:The gross wages of the direct operatives in a production cost centre for a period
are analysed as follows:
Direct operatives
($)
Productive hours at basic rate
Overtime premium
Idle time
Group bonuses

37,640
2,440
590
3,130

How much of the gross wages would normally be accounted for as direct labour?
$

Q14:Machine parts are assembled in a factory. One of the components used in

assembling machine part MP7 is component C6.
Which one of the following is an example of a cost unit in the factory?

A unit of component C6
A unit of machine part MP7
The cost per unit of component C6
The cost per unit of machine part MP7
Q15: The standard time for the production of one unit of product X is 15 minutes. 2,600
units of the product were manufactured. This was 200 units more than budget. 630
hours were worked.
What was the efficiency ratio?
96.9%
105.0%
103.2%
108.3%
Q16: Which of the following are affected by the separation of the losses in a process
into normal and abnormal?
(1) The cost per unit of production
(2) The total cost of resource inputs to the process
(3) The valuation of completed output
1 and 2 only
1 and 3 only
1, 2 and 3
2 and 3 only
Q17: A capital investment project requires expenditure of $90,000 in year 0 followed by
cash inflows of $30,000 at the end of each of the four years of the project's life. The
project will have a terminal value of $60,000.
What is the payback period of the investment project?
1 year
2 years

3 years
4 years
Q18:Which of the following is MOST likely to be the cause of an increased cash surplus
in a business?
Purchasing new non-current assets
Increasing inventories
Giving more credit to customers
Taking more credit from suppliers
Q19: A product has a budgeted labour cost of $12 per unit and budgeted output of
25,000 units in a period. Actual costs and output in the period were $304,640 and
25,600 units respectively.
What was the total labour cost variance using the flexed budget?
$4,640 Adv
$2,560 Adv
$2,560 Fav
$4,640 Fav
Q20: What is exception reporting?
The reporting of adverse variances only
The reporting of variances as and when required by management
The reporting of variances that exceed a certain limit
The reporting of the results of variance investigation
Q21: Which of the following correctly describes the margin of safety?
The difference between budgeted sales and breakeven sales as a percentage of breakeven
sales
The difference between sales revenue and variable costs as a percentage of sales revenue
Budgeted profit as a percentage of budgeted fixed costs
The difference between budgeted sales and breakeven sales as a percentage of budgeted
sales

Q22: Which of the following functions is LEAST likely to be carried out by the treasury
department?
Negotiating funding arrangements with banks
Assembling financial information for management
Managing exchange dealing including futures and options
Preparing the annual business plan
Q23: Which TWO of the following items would appear on the stores ledger account but
NOT on the bin card?
Inventory value
Receipts and issues
Inventory quantity
Unit price
Q24:An extract from the accounts of Z Co is shown below:
$
Non-current assets

228,000

Inventory

11,460

Trade receivables

18,520

Bank overdraft

2,100

Trade payables

6,440

What is Z Co's working capital?

$
Q25: A company manufactures a variety of components which are sold to the
automotive industry. Machine hours is the limiting factor, which prevents production of
all component requirements, but this can be overcome by buying in any quantity of any
component.
What should be the basis for deciding which component would be the best to buy in to
minimise costs?
Saving per unit by manufacturing rather than buying in
Saving per machine hour by manufacturing rather than buying in

Contribution per unit

Profit per machine hour
Q26: The costs incurred in the manufacture of 1,000 units of a product are:
$
Direct materials

4,000

Direct labour

6,000

Variable overheads

2,000

Fixed overheads

8,000

If output increases by 25% what will be the effect, if any, on the total cost per unit?
Decrease by $2.00 per unit
Decrease by $1.60 per unit
Decrease by $5.00 per unit
No effect
Q27: A company has two production cost centres (PC1 and PC2) and two service cost
centres (SC1 and SC2). Overhead allocation and apportionment is as follows for a
period:
PC1

PC2

SC1

SC2

$460,200

$520,800

$122,000

$96,600

Reapportionment of SC1

35%

45%

Reapportionment of SC2

30%

70%

Overheads

20%

What are the total overheads in PC2 after reapportionment of the service cost centre
overheads?
$643,320
$660,400
$605,500
$667,720

Q28: What is a flexible budget?

A budget that includes high, low and mid-range estimates
A budget that is adjusted for uncontrollable events
A budget that is adjusted for control purposes according to the actual level of activity
A budget that results from participation of budget holders
Q29: Which of the following methods of bank financing have agreed time periods?
(1) Bank overdraft
(2) Revolving credit facility
(3) Term loan
1 and 2
3 only
2 and 3
1 and 3
Q30:Consider the following statements about business emails:
(1) They can be used in the same way as internal memos
(2) They can be used for all external communications
(3) They are messages sent electronically
(4) They can be used both within organisations and between them
Which of the statements are correct?
2, 3 and 4 only
1, 3 and 4 only
1 and 2 only
1, 2, 3 and 4
Q31: Which of the following correctly describes the concept of contribution?
The difference between sales value and the marginal cost of sales
The difference between sales value and total costs

The cost of a unit of a product or service which would be avoided if that unit were not
provided or produced
The difference between the expected sales volume and the breakeven sales volume
Q32: A company buys and sells three products. The labour hours available for
manufacture are restricted but any quantities of the products can be bought-in from
other suppliers to satisfy sales demand. The following information is provided:
Product
A
per unit

Product
B
per unit

Product
C
per unit

Selling price ($)

6.00

7.50

9.00

Variable manufacturing costs ($)

3.00

4.00

4.50

Bought-in price ($)

5.50

5.75

6.50

1.5

Labour (hours)

Which is the best product to buy-in in order to maximise profit?

Product B
Product A
It is not possible to tell from the information provided
Product C
Q33: Which TWO of the following may result in fixed overheads being over absorbed?
Expenditure above budget
Activity above budget
Activity below budget
Expenditure below budget
Q34: Which TWO of the following cash management policies are businesses likely to
adopt when economic conditions are unfavourable?
Enter into long-term funding arrangements with banks
Offer shorter credit periods to customers
Make a concerted effort to maintain current cash balances

Pay all suppliers as soon as the respective invoice is received.

Q35: A manufacturer of beauty products has carried out a time series analysis on sun
tan lotion and has decided to use the data below to estimate sales figures for the next
five months.
Month

Trend
('000)

Seasonal variation
(%)

March

3,001

85.6

April

3,159

88.2

May

3,343

94.5

June

3,751

99.8

July

4,108

105.4

Using the multiplicative model what are the estimated future sales for July (to the
nearest $'000)?
$

'000

Q36:The following statements are related to the use of different raw material pricing
methods in a period of consistently rising prices. Is each of these statements true or
false?
.

True False

Raw material inventory values will be lower using LIFO rather than weighted
average
Production costs will be higher using LIFO rather than FIFO
Q37:
Does each of the following descriptions relate to a by-product?
.

Yes No

A product which is incidental to the main purpose of a process

A product which has an insignificant value relative to other products from a process
Q38:
Machine parts are assembled in a factory. One of the components used to assemble
machine part MP12 is component C26.
Which of the following could be an example of a cost centre in the factory?

The assembly department

The cost per unit of machine part MP12
A unit of machine part MP12
A unit of component C26
Q39:When is service costing used?
When overhead absorption is straightforward
When the output is intangible
When indirect costs are a small proportion of total costs
When the absence of a physical product makes it impossible to determine unit costs
Q40:
Which TWO of the following are relevant costs?
Unavoidable costs
Differential costs
Sunk costs
Future costs
Q41:
A monthly cash budget has been drawn up as follows:
March ($)

April ($)

Credit sales

20,000

22,000

Cash sales

10,000

9,000

13,000

8,400

Wages

4,600

4,600

Overheads

3,000

3,500

Receipts

Payments
Suppliers

The opening cash balance for March was $1,000.

What is the budgeted closing cash balance for April?

$
Q42: An incentive scheme is in operation for each direct worker in a factory. The basic
rate of pay is $8 per hour for an 8-hour day with a bonus if hours worked are less than
the standard hours for the output achieved. The bonus is 50% of the time saved against
standard, paid at the basic rate. A single product is manufactured and the standard time
is 10 minutes per unit.
What is the bonus for a worker who manufactures 60 units in an 8 hour day?
$
Q43: A delivery vehicle made two journeys in a week during which associated costs
were $18,600.
Journey 1 was 400 kilometres and the weight of the load was 12 tonnes
Journey 2 was 750 kilometres and the weight of the load was 14 tonnes
What was the cost per tonne-kilometre (to two decimal places)?
$
Q44:A company is considering whether to agree to do a job for a customer. The job
would require 1,000 units of material Z.
The company has 800 units of material Z in inventory which originally cost $6,000 per
unit but it no longer uses the material. These 800 units could be sold off for just $2.00
per unit.
However, the 800 units of material Z could also be used in a process as a substitute for
the same quantity of a different material that costs $3.00 per unit. The cost of buying
material Z from a supplier is $7.00 per unit.
In making a decision about whether or not to agree to do the job for the customer what
is the relevant cost of material Z required for the job?
$
Q46:A new fixed asset costing $10,000 has a four year life with an estimated value at
the end of its life of 20% of the original investment amount. Two alternative depreciation
methods are being considered for the asset:
(1) Reducing balance at 30% per annum
(2) Machine hour utilisation based on :
Year 1

1,500 hours

Year 2

1,000 hours

Year 3

1,000 hours

Year 4

500 hours

Is each of the following statements about the above data true or false?
.

True False

The depreciation charge in year 3 would be lower using the reducing balance
method
The depreciation charge in year 1 would be higher using the machine hour
method
Q47:A company sold 10,000 units of its single product in a period during which finished
goods inventory increased by 2,000 units.
Based on absorption costing how would the profit in the period and the inventory value
at the end of the period compare with those calculated using marginal costing (MC)?
.
Higher than MC
Lower than MC
Profit
Inventory value
Q48:Are each of the following production overheads included in product costs using
absorption costing?
.

Yes

No

Fixed overhead costs

Variable overhead costs
Q49: 25,000 units of a company's single product are produced in a period during which
28,000 units are sold. Opening inventory was 7,000 units. Unit costs of the product are:
$ per
unit
Direct costs

16.20

Fixed production overhead

7.60

Fixed non-production overhead

2.90

What is the difference in profit between absorption and marginal costing?

$

Q50: XY Co makes and sells a single product for which variable costs are as follows:
$
Direct labour

Direct materials

Variable production
overhead

2
11

The sales price is $15 per unit and fixed costs per annum are $56,000. The company
wishes to make a profit of $8,000 per annum.
How many units need to be sold to achieve the target profit?
units
S&P Co makes two products, A and B. A sells for $25 per unit, B for $35 per unit. The
variable cost per unit of A is $17.50, that of B $20. Each unit of A uses 2 kg of raw
material. Each unit of B uses 3 kg of material.
The availability of raw material is limited to 2,000 kg. S&P Co is contracted to supply
500 units of A.
Maximum demand for the B is 250 units. Demand for the A is unlimited.
How many units of A will be produced in the profit-maximising product mix?
units