C Cost accounting techniques

Annual demand is 10,000 units, the cost of placing an order is $50 and holding one unit for a year costs $4. What is the economic order quantity?

• 1 250 units
• 2 1,000 units
• 3 500 units
• 4 5,000 units

Usage is 40 units a day, the lead time is 6 days and demand is constant. What is the reorder level?

• 1 46 units
• 2 40 units
• 3 240 units
• 4 6 units

In a period of rising prices, which inventory method gives the highest profit?

• 1 FIFO
• 2 They all give the same profit
• 3 Weighted average cost
• 4 LIFO

8 employees left during the year and the average number of employees was 160. What is the labour turnover rate?

• 1 20%
• 2 0.05%
• 3 8%
• 4 5%

Standard hours produced were 900 and the actual hours worked were 1,000. What is the efficiency ratio?

• 1 100%
• 2 111%
• 3 90%
• 4 10%

Budgeted overheads are $120,000 for 40,000 machine hours. Actual hours were 38,000 and actual overheads were $118,000. What is the result?

• 1 $6,000 under-absorbed
• 2 $4,000 over-absorbed
• 3 $4,000 under-absorbed
• 4 $2,000 over-absorbed

Which is the most suitable basis for apportioning a factory's rent between cost centres?

• 1 Number of employees
• 2 Machine hours
• 3 Floor area
• 4 Direct material cost

Production was 10,000 units, sales 8,000 units, and there was no opening inventory. Fixed overhead absorbed is $5 a unit. By how much does the absorption costing profit exceed the marginal costing profit?

• 1 $0
• 2 $10,000
• 3 $40,000
• 4 $50,000

When closing inventory is lower than opening inventory, which statement is correct?

• 1 The profits are equal
• 2 Absorption costing gives a higher profit
• 3 Marginal costing gives a loss
• 4 Absorption costing gives a lower profit than marginal costing

The selling price is $20 and the variable cost is $12. What is the contribution per unit?

• 1 $12
• 2 $32
• 3 $20
• 4 $8

Input of 1,000 units costs $9,000. The normal loss is 10 percent of input and the actual output is 880 units. What is the cost of the abnormal loss?

• 1 $1,000
• 2 $200
• 3 $0
• 4 $900

Further processing of a joint product is worthwhile if:

• 1 The extra revenue equals the joint cost
• 2 The product has a large share of total sales
• 3 The joint cost is high
• 4 The extra revenue exceeds the extra processing cost

Which method is most suitable for a one-off order made to a customer's own specification?

• 1 Service costing
• 2 Job costing
• 3 Process costing
• 4 Batch costing

Activity-based costing assigns overheads to products using:

• 1 Direct labour hours only
• 2 The activities that cause the costs
• 3 The selling price
• 4 An equal share for each product

A product's target selling price is $50 and the required profit margin is 20 percent of the selling price. What is the target cost?

• 1 $30
• 2 $10
• 3 $40
• 4 $60