1. Budgeted production in a factory for the next period is 480 units.

Each unit
requires 2 labour hours. Labour is paid $30 per hour. 10% of total labour time is
idle time.
What is the factory’s budgeted labour cost for the next period?
A.$28,800
B.$25,920
C.$16,000
D.$32,000
2. The budgeted absorption rate for a product is $6/machine hour. This is based
on 200,000 budgeted machine hours. Each unit will require 4 machine hours.
During the last period, the factory manufactured 40,000 units. Each unit was
made in the standard machine time.
Which statement best describes the factory’s position concerning absorbed
overhead?
A.The factory has over-absorbed the budgeted overhead because it has produced
more units than expected.
B.The factory has absorbed the correct amount of overhead.
C.The factory has under-absorbed because it has produced more units than
expected.
D.The factory has under-absorbed because it has produced fewer units than
expected.
3. A company uses batch costing when pricing a unit of clothing.
Batch 1 Batch 2 Batch 3
$ $ $
Opening work in progress 15,800 NA 1,780
Direct materials 6,150 4,250 8,750
Direct labour 8,500 9,200 7,300
Overheads for the period were $27,200 and are absorbed based on direct labour
costs. Batches 1 and 3 were completed during the period. Batch 1 comprised
12,000 units and batch 3 15,000 units.
Calculate the unit cost of an item in batch 3.
A.$1.60
B.$2.08
C.$1.07
D.$1.72
4. What document is issued to a customer to charge them for products or services
received?
A.Credit Note
B.Invoice
C.Debit Note
D.Remittance Advice
5. What is meant by ‘responsibility accounting’?
A.A manager must take responsibility for all costs allocated to their department
B.A manager should only be held accountable for costs that they can control
C.A manager should share responsibility for costs which were incurred for the
benefit of the whole organisation
D.A manager must be held responsible for the actions of all staff in their
department
6. The following work was carried out by Employee 1 during the third week of January
20X5.
Standard number of hours 35
Actual hours worked 42
Basic hourly rate $6
Overtime rate $9
Income tax $40
 Employer benefit contributions $22
Employee benefit
contributions $20
What is the labour cost incurred by the employer concerning the work carried out
by Employee 1 during the third week of January 20X5?
A.$293
B.$295
C.$213
D.$255
7. Which individual is MOST likely to be paid using a piecemeal rate?
A.An individual working in a factory on a production line producing motor vehicles
B.An individual working in an accountancy practice producing financial statements
and analysis
C.An individual working in a restaurant serving meals
D.An individual operating a sewing machine producing jeans
8. Which option gives the correct order for charging indirect costs to cost units?
A.Absorption, Reapportionment, Allocation, Apportionment
B.Allocation, Apportionment, Reapportionment, Absorption
C.Reapportionment, Allocation, Absorption, Apportionment
D.Apportionment, Absorption, Reapportionment, Allocation
9. A company has two cost centres, A and B, with total apportioned indirect costs of
$450,000 and $600,000.
Cost centre A is machine orientated, whereas cost centre B is labour orientated. The
cost centres use the following labour and machine hours:
A B
Labour hours 2,500 30,000
Machine hours 90,000 3,000
What absorption rates would be most appropriate for cost centres A and B?
Cost centre A Cost centre B
$180/labour
A. hour $20/labour hour
 B. $5/labour hour $20/machine hour
C. $5/machine hour $20/labour hour
D. $5/machine hour $200/labour hour
10. Which department would NOT be treated as a service centre in a factory
producing tables?
A.Goods Inwards department
B.Maintenance department
C.Assembly department
D.Goods Outwards department
11.A factory worker is paid a basic wage of $1,000 per week based on working 40
hours. Overtime is paid at the following rates
Weekly total less than 50 hours: 10% premium on all overtime hours
Weekly total 50 hours or more: 20% premium on all overtime hours
An income tax of $175 is deducted. Benefit contribution payments are as follows:
Employee 10% of gross pay
Employer 5% of gross pay
Assuming the factory worker worked 55 hours last week, what was the gross and
net pay of the factory worker?
Gross pay Net pay
($) ($)
A. 1,425.00 1,036.25
B. 1,425.00 1,107.50
C. 1,450.00 1,057.50
D. 1,450.00 1,130.00
12. Which statement about job costing is FALSE?
A.Job costing is appropriate for a company which manufactures items to
customer specifications.
B.Job costing is used where unique orders from customers are received.
C.Job costing is a type of specific order costing method.
D.Job costing is used only in manufacturing organisations.
13. X Furniture (XF) manufactures furniture for specific customer orders.
XF calculates the price to charge a customer for a particular job by taking the total
of the job’s prime cost plus overheads and then adding 40%.
The customer for job number XF772 paid $1,400. The job incurred overheads of
$120.
What was the prime cost of job XF772?
A.$1,280
B.$1,120
C.$880
D.$1,000
14. What is NOT a cause of losses in a production process?
A.Waste
B.Spoilage
C.Evaporation
D.Depreciation
15. Consider the following statements:
1.Process costing is most suitable when output units vary significantly from other
output units.
2.When the actual output exceeds the expected output, an abnormal gain occurs.
Which statements are true?
A.1 only
B.2 only
C.Both 1 and 2
D.None
16. Sanjay is adding a cost associated with a specific customer order to a record
containing other costs associated with fulfilling this order.
What document has Sanjay added to?
A.Job card
B.Payroll
C.Timesheet
D.Invoice
17. 33. A manager’s performance is assessed based on residual income.
What type of centre is this manager responsible for?
A. Revenue centre
B. Cost centre
C. Profit centre
D. Investment centre
18. If a profit centre generates $50,750 of sales for $45,000 of costs, what is the
gross profit percentage?
A.11.33%
B.88.67%
C.12.78%
D.87.22%