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| Section | Objectives |
|---|---|
| Introduction to Cost Accounting | - Cost units and cost centers
|
| Budgeting and Forecasting | - Budgetary control
|
| Costing Methods | - Marginal costing
|
| Decision Making Techniques | - Short-term decision making
|
| Accounting for Materials, Labour and Overheads | - Material control
|
1. A management accountant has forecast the following cash inflows from four potential projects.
All four projects require the same initial investment and will last for four years. They all result in a positive net present value but only one of the projects can be undertaken.
Which project should be selected?
A) Project C
B) Project D
C) Project B
D) Project A
2. The following data are available for a company that produces and sells a single product.
The company's opening finished goods inventory was 2,500 units.
The fixed overhead absorption rate is $8.00 per unit.
The profit calculated using marginal costing is $16,000.
The profit calculated using absorption costing and valuing its inventory at standard cost is $22,400.
The company's closing finished goods inventory is:
A) 8,900 units
B) 3,900 units
C) 3,300 units
D) 1,700 units
3. Which of the following would NOT be an appropriate performance measure for a profit centre manager?
A) Return on capital employed
B) Gross margin
C) Contribution per unit
D) Sales price variance
4. In a company that manufactures many different products on the same production line, which TWO of the following would NOT be classified as indirect production costs? (Choose two.)
A) Commissions paid to the sales team.
B) Salary paid to the factory manager.
C) Factory rent.
D) Maintenance costs for the company's only production line.
E) Royalties paid to the designers of the products.
5. Assume that a unit of output is the cost object. Which of the following statements is valid?
A) Royalties paid on per unit basis are an example of an indirect expense.
B) Materials consumed in the maintenance of machinery used to manufacture several different products are an example of a direct material cost.
C) The salaries of supervisors who oversee the manufacture of several different products are an example of a direct labour cost.
D) Rent paid for a factory in which several different products are produced is an example of an indirect expense.
Solutions:
| Question # 1 Answer: D | Question # 2 Answer: C | Question # 3 Answer: C | Question # 4 Answer: B,C | Question # 5 Answer: C |
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