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

Cima C01 Exam Question No 26

Question No 26:

A standard cost is?

A. The planned unit cost of a product, component or service in a period.
B. The budgeted cost ascribed to the level of activity achieved in a budget centre in a control period.
C. The budgeted production cost ascribed to the level of activity in a budget period.
D. The budgeted non-production cost for a product, component or service in a period.

Answer: A