Cima C01 Exam Question No 13

Question No 13

A hospital’s records show that the cost of carrying out health checks in the last five accounting periods have been as follows:
Period         Number of patients seen            Total cost ($)
1            650                                                        17,125
2            940                                                        17,800
3            1260                                                      18,650
4            990                                                        17,980
5            1150                                                      18,360
Using the high-low method and ignoring inflation, the estimated cost of carrying out health checks on 850 patients in period 6 is:

A. $17,515
B. $17,570
C. $17,625
D. $17,680

Answer: C

Cima C01 Exam Question No 12

Question No 12:

The diagram represents the behavior of a cost item as the level of output changes.



Which ONE of the following situations is described by the graph?

A. Discounts are received on additional purchases of material when certain quantities are purchased.
B. Employees are paid a guaranteed weekly wage, together with bonuses for higher levels of production.
C. A license is purchased from the government which allows unlimited production.
D. Additional space is rented to cope with the need to increase production.

Answer: A

Cima C01 Exam Question No 11

Question No 11:

An engineering firm operates a job costing system. Production overhead is absorbed at the rate of $8.50 per machine hour. In order to allow for non-production overhead costs and profit, a mark up of 60% of prime cost is added to the production cost when preparing price estimates.
The estimated requirements of job number 808 are as follows:
Direct materials             $10,650
Direct labor                 $3,260
Machine hours                 140
The estimated price notified to the customer for job number 808 will be

A. $22,256
B. $22,851
C. $23,446
D. $24,160

Answer: C

Cima C01 Exam Question No 10

Question No 10:

Which ONE of the following costs would NOT be classified as a production overhead cost in a food processing company?

A. The cost of renting the factory building
B. The salary of the factory manager
C. The depreciation of equipment located in the materials store
D. The cost of ingredients

Answer: D

Cima C01 Exam Question No 9

Question No 9:

A company uses the repeated distribution method to reapportion service department costs. The use of this method suggests

A. The company’s overhead rates are based on estimates of cost and activity levels, rather than actual amounts
B. There are more service departments than production cost centres
C. The company wishes to avoid under- or over-absorption of overheads in its production cost centres
D. The service departments carry out work for each other

Answer: D

Cima C01 Exam Question No 8

Question No 8:

Cost centres are?

A. Units of output or service for which costs are ascertained.
B. Functions or locations for which costs are ascertained.
C. A segment of the organisation for which budgets are prepared.
D. Amounts of expenditure attributable to various activities.

Answer: B

Cima C01 Exam Question No 7

Question No 7:

The audit fee paid by a manufacturing company would be classified by that company as:

A. A production overhead cost
B. A selling and distribution cost
C. A research and development cost
D. An administration cost

Answer: D