Cima C01 Exam Question No 45

Question No 45:

What is Apportioned costs?
(Total overhead cost/total value of apportionment base)*value of apportionment base of cost centre being calculated

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Cima C01 Exam Question No 44

Question No 44:

The incomplete process account relating to period 4 for a company which manufactures paper is shown below:
 

 There was no opening work in process (WIP). Closing WIP, consisting of 700 units, was complete as shown:

Material 100%
Labour 50%
Production overhead 40%

Losses are recognised at the end of the production process and are sold for $1.75 per unit.
The total value of the units transferred to finished goods was

A. $21,052.50
B. $21,587.50
C. $22,122.50
D. $22,656.50

Answer:  B

Cima C01 Exam Question No 43

Question No 43:

The following data have been collected for four cost types; W, X, Y, and Z at two activity levels?
 

Where V = variable, SV = semi-variable and F = fixed, assuming linearity, the four cost types W, X, Y and Z are respectively

 Answer: B

Cima C01 Exam Question No 42

Question No 42:

XYZ operates an integrated accounting system. The material control account at 31 March 2011 shows the following information?
 

 The $125,000 credit entry represents the value of the transfer to the


A. Cost of sales account
B. Finished goods account
C. Profit and loss account
D. Work-in-progress account

Answer: D

Cima C01 Exam Question No 41

Question No 41:

Which THREE of the following statements are advantages of the internal rate of return (IRR) method of investment appraisal?

A. It is a measure of absolute profitability
B. It considers the time value of money
C. It is an easy to understand percentage measure
D. It is based on accounting profits
E. It considers the whole life of a project
F. It is a simple measure of risk

Answer: B, C, E

Cima C01 Exam Question No 40

Question No 40:

A project requires an initial investment of $300,000. The following cash inflows have been estimated for the life of the project:

Year	$
1	50,000
2	120,000
3	200,000

Using a discount rate of 8%, the net present value of the project to the nearest $’000 is $

Yr 0: 300,000 X 1 =	(300,000)
Yr 1: 50,000 x .926 =	46,300
Yr 2: 120,000 x .857 =	102,840
Yr 3: 200,000 x .794 =	158,800
	7,940 rounds to $8,000

Answer: 8,000

Cima C01 Exam Question No 39

Question No 39:

For decision-making purposes, which of the following are relevant costs?
(i) Avoidable cost
(ii) Future cost
(iii) Opportunity cost
(iv) Differential cost

A. (i), (ii), (iii) and (iv)
B. (i) and (ii) only
C. (ii) and (iii) only
D. (i) and (iv) only

Answer: A

Cima C01 Exam Question No 38

Question No 38:

ZK has been asked to quote a price for a special job that must be completed within one week.
The job requires a total of 100 skilled labour hours and 50 unskilled labour hours. The current employees are paid a guaranteed minimum wage of $525 for skilled workers and $280 for unskilled workers for a 35-hour week.

Currently, skilled labour has spare capacity amounting to 75 labour hours each week and unskilled labour has spare capacity amounting to 100 labour hours each week. Additional skilled workers and unskilled workers can be employed and paid by the hour at rates based on the wages paid to the current workers.
The materials required for the job are currently held in inventory at a book value of $5,000. The materials are regularly used by ZK and the current replacement cost for the materials is $4,500. The total scrap value of the materials is $1,000.

What is the relevant cost to ZK of using the materials in inventory on this job?

A. $1,000
B. $3,500
C. $4,500
D. $5,000

Answer: C

Cima C01 Exam Question No 37

Question No 37:

ZK has been asked to quote a price for a special job that must be completed within one week.
The job requires a total of 100 skilled labour hours and 50 unskilled labour hours. The current employees are paid a guaranteed minimum wage of $525 for skilled workers and $280 for unskilled workers for a 35-hour week.
Currently, skilled labour has spare capacity amounting to 75 labour hours each week and unskilled labour has spare capacity amounting to 100 labour hours each week. Additional skilled workers and unskilled workers can be employed and paid by the hour at rates based on the wages paid to the current workers.
The materials required for the job are currently held in inventory at a book value of $5,000. The materials are regularly used by ZK and the current replacement cost for the materials is $4,500. The total scrap value of the materials is $1,000.
What is the total relevant cost to ZK of using skilled and unskilled labour on this job?

A. Nil
B. $375
C. $775
D. $1,540

Answer: B

Cima C01 Exam Question No 36

Question No 36:

W Ltd makes leather purses. It has drawn up the following budget for its next financial period:

Selling price per unit $11.60
Variable production cost per unit $3.40
Sales commission 5% of selling price
Fixed production costs $430,500
Fixed selling and administration costs $198,150
Sales 90,000 units

The margin of safety represents

A. 5.6% of budgeted sales
B. 8.3% of budgeted sales
C. 11.6% of budgeted sales
D. 14.8% of budgeted sales

Answer: B

Cima C01 Exam Question No 35

Question No 35:

This graph is known as a

A. Conventional breakeven chart
B. Contribution breakeven chart
C. Semi-variable cost chart
D. Profit volume chart

Answer: D

Cima C01 Exam Question No 34

Question No 34:

 Point K on the graph indicates the value of

A. Semi-variable cost
B. Total cost
C. Variable cost
D. Fixed cost

Answer: D

Cima C01 Exam Question No 33

Question No33:

A company has been asked to quote for a job. The company aims to make a net profit of
30% on sales. The estimated cost for the job is as follows:

Direct materials 10 kg @ £10 per kg
Direct labour 20 hours @ £5 per hour

Variable production overheads are recovered at the rate of £2 per labour hour.
Fixed production overheads for the company are budgeted to be £100,000 each year and
are recovered on the basis of labour hours.

There are 10,000 budgeted labour hours each year. Other costs in relation to selling, distribution and administration are recovered at the rate of £50 per job.
The company quote for the job should be

A. £572
B. £637
C. £700
D. £833

Answer: C

Cima C01 Exam Question No 32

Question No 32:

A company produces a single product that passes through two processes. The details for process 1 are as follows:

Materials input                        20,000 kg at $2·50 per kg
Direct labour                            $15,000
Production overheads             150% of direct labour

Normal losses are 15% of input in process 1 and without further processing any losses can be sold as scrap for $1 per kg.
The output for the period was 18,500 kg from process 1. There was no work-in-progress at the beginning or end of the period.
What value (to the nearest $) will be credited to the process 1 account in respect of the normal loss?

A. Nil
B. $3,000
C. $4,070
D. $5,250

Answer: B

Cima C01 Exam Question No 31

Question No 31:

In a standard cost bookkeeping system, when the actual material usage has been greater than the standard material usage, the double entry to record this is:

A. Debit the material usage variance account, Credit the raw material control account
B. Credit the material usage variance account, Debit the raw material control account
C. Debit the material usage variance account, Credit the work-in-progress account
D. Credit the material usage variance account, Debit the work-in-progress account

Answer: A

Cima C01 Exam Question No 30

Question No 30:

P operates a standard marginal costing system. The following budgeted and standard cost information is available:

Budgeted production and sales                               10,000 units
Variable production overheads – 5 hours x $4 $    20 per unit

Actual results for the period were as follows:

Production and sales                                                11,500 units
Variable production overheads – 52,000 hours      $195,000

The variable production overhead expenditure variance is

A. $35,000 adverse
B. $13,000 adverse
C. $13,000 favourable
D. $35,000 favourable

Answer: C

Cima C01 Exam Question No 29

Question No 29:

G repairs electronic calculators. The wages budget for the last period was based on a standard repair time of 24 minutes per calculator and a standard wage rate of $10.60 per hour.
Following the end of the budget period, it was reported that:

Number of repairs                         31,000
Labour rate variance                     $3,100 (A)
Labour efficiency variance             Nil

Based on the above information, the actual wage rate during the period was:
A. $10.35 per hour
B. $10.60 per hour
C. $10.85 per hour
D. $11.10 per hour

Answer: A

Cima C01 Exam Question No 28

Question No 28:

Which ONE of the following factors could explain a favourable direct material usage variance?

A. More staff were recruited to inspect for quality, resulting in a higher rejection rate.
B. When estimating the standard product cost, usage of material had been set using ideal standards.
C. The company had reduced training of production workers as part of a cost reduction exercise.
D. The material price variance was adverse.

Answer: D

Cima C01 Exam Question No 27

Question No 27:

X operates a standard marginal costing system. The following budgeted and standard cost information is available:

• Budgeted production and sales          10,000 units
• Direct material cost –                         3 kg x $10 $30 per unit

Actual results for the period were as follows:

• Production and sales                           11,500 units
• Direct material –                                 36,000 kg $342,000

The direct material price variance is

A. $18,000 adverse
B. $3,000 adverse
C. $3,000 favourable
D. $18,000 favourable

Answer: D