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