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Sir, please check my answer for each question. If there are any wrong answer please correct me sir.
1) Last month the total sales for XYZ Co were $960,000. A pie chart is used to show the breakdown of sales by region for the month. South region is represented by 60 degrees on the pie chart.
What are the sales for the month for the south region?
*My answer : $160,000
( 60/360 ) * 960000 =160000
2) A company uses standard marginal costing. Last month the standard contribution on actual sales was $10,000 and the following variances arose:
Total variable costs variance 2,000 Adv
Sales price variance 500 Fav
Sales volume contribution variance 1,000 AdvWhat was the actual contribution for last month?
*My answer: $8,500
$10,000 + $500 – $1,000 = $8,500
3) In the last period an organisation on budgeted to work 116,000 hours manufacturing 29,000 units. Actual output last period was 26,000 unit which took 108,000 hours to manufacture.
What was the labour efficiency ratio for the last period (expressed as a % correct to one decimal place)?
*My answer: 96.3%
E=S/A
Std =116,000/29,000
=104,000Efficiency = (104,000/108,000) * 100%
= 96.3%4) Trend : Y = 5,000 + 4,000X
Where Y = quarterly sales volume in units.
X = the quarter number (where the first quarter of 20×1=quarter 17, the second quater of 20×1=quarter 18, etc)Quarter Seasonal variation
(units)
First +3,000
Second +1,000
Third -1,500
Fourth -2,500What would be the time series forecast of sales units for the third quarter of 20×2?
*My answer: 98,500
y= 5000+4000x
= 5000+4000(23)
= 97000A=T+S
97000= T+(-1500)
T=985005) One material used in the manufacture of product X. The total cost of the material (purchased and used) in a period was $4,000 in the direct material price and usage variances were $200 adverse and $300 favourable respectively and 1,000 units were manufactured.
What is the standard direct material cost per unit for product X?
*My answer : $3.80
200(A) = (4000/1000 + x) * 1000
x = $3.80Sir, here some question that i cannot solve. Please help me sir. Please explain. Thank you sir.
1) A company manufactures two main products. J and K, and the by-product has a net realisable value of $2 per litre. The following information relates to last month , when there were no opening inventories.
J litres —– Production : 50,000 Sales : 45,000
K litres —- Production : 40,000 Sales : 30,000
L litres —- Production : 10,000 Sales : 10,000Joint costs last month were $290,000. Company policy is to apportion joint costs on a physical measure basis and to treat the net realisable value of the by-product as a deduction from the cost of the main products.
What was the cost value of last month’s closing inventory of product J?
2) A business operates a job costing system and has the aim of making a net profit sales.
The cost estimates for one particular job are as follows:
Direct materials : 80kg at $5 per kg
Direct labour : 40hours at $6 per hour
The total overhead are budgeted at $120,000 and are absorbed on the basis of labour hours. The budgeted labour hours are 50,000.What price should be quoted for this job (to the nearest $)?
3) T Co usually has a quaterly labour of $2,500,000. Material costs (mainly cooper) were $3,000,000 in January to march. The worldwide cost of copper has increased in the second quarter by 15%. Overheads were $45,000,000 in January to March.
Which TWO of the following variances for April to June are worth investigating as the reason for the variance are unknown?
A- Total direct labour variance of $400 adverse
B- Overhead expenditure variance of $4,000,000 adverse
C- Materials price variance of $450,000 adverse
D- Sales volume variance of $3,000,.000 favourable4) Last month the opening was 6,000 units and the closing inventory was 4,000 units. Using absorption costing this closing inventory was valued at $33,000. Using marginal costing last month’s profit was $50,000 and using absorption costing it was $41,000.
What was the variable production cost per unit last month?
Where did these questions come from? Were you not supplied with answers to the questions??
Q1 is correct
Q2 is wrong – you are given the standard contribution on actual sales (not budget) and so the volume variance is irrelevant. Also, what about the variable costs variance? That affects the contribution as well.
Q3 is correct
Q4 is wrong. Forecast should be 97000 – 1500. (Actual is less than trend in quarter 3)
Q5 is wrong. The standard cost of the material is 4,000 – 200 + 300 = 4,100.
So standard cost per unit is 4100/1000 = $4.10Have you watched me free lectures for Paper F2?
These topics are covered in detail in the lectures.Q1 Net joint costs are $290,000 – (10000 x $2) = $270,000.
The total joint cost for J is 50/(50+40) x 270,000 = 150,000.
Cost per unit for J is 150,000 / 50,000 = $3.
There are 5,000 units of J in inventoryQ2 If the overheads are 120,000 for 50,000 hours then they are $2.40 per hour.
You know there are 40 hours of labour.
So all you have to do is add up the costs.Q3 B and C ($400 is not worth bothering about). D is favourable
Q4 Difference in profit is 9,000. This is due to change in inventory x fixed costs per unit. So fixed costs per unit are $9,000 / 2,000 = $4.50 per unit.
Total cost per unit is $33,000 / 4,000 = $8.25 per unit.
So variable cost is the difference.Sir, for your information. These question came from myacca web practice test that i purchase last two week. they do not provide any answer for any wrong question. And i also do not knew which question that i wrong and correct. As i told you, this practice test just like we sit for the real CBE exam. we only knew our result pass or fail after we submit the test.
Sir, for this question i already redo, and got $7500. Please correct me if im wrong.
1) A company uses standard marginal costing. Last month the standard contribution on actual sales was $10,000 and the following variances arose:
Total variable costs variance 2,000 Adv
Sales price variance 500 Fav
Sales volume contribution variance 1,000 AdvWhat was the actual contribution for last month?
My answer:
10,000
(2,000)
500
(1,000)
______
7,500_________________________________________________________
Sir, i don’t understand why my friend get $1051 while i got $736. Can you explain which answer is correct.
2) If the overheads are 120,000 for 50,000 hours then they are $2.40 per hour.
You know there are 40 hours of labour.
So all you have to do is add up the costs.
_________________________________________________________Sir, for this question i really need your detail explanation. i cannot understand what is the requirements of the question.
3) T Co usually has a quaterly labour of $2,500,000. Material costs (mainly cooper) were $3,000,000 in January to march. The worldwide cost of copper has increased in the second quarter by 15%. Overheads were $45,000,000 in January to March.
Which TWO of the following variances for April to June are worth investigating as the reason for the variance are unknown?
A- Total direct labour variance of $400 adverse
B- Overhead expenditure variance of $4,000,000 adverse
C- Materials price variance of $450,000 adverse
D- Sales volume variance of $3,000,.000 favourable*Sir, i know i had trouble you a lot. i’m really sorry. i just want to prepare myself before sit for CBE exam. Your help will be so meaningful to me.
I think you should complain to the ACCA if you had to pay for the test and they did not give you feedback!
Have you watched my free lectures on this website?
Q1 – You are wrong. The question gives you the standard contribution on actual sales (not the budget contribution). So the sales volume variance is not relevant. (I wrote that in my reply before.)
Q2 – The total cost is indeed $736. But the question asks you what selling price should be quoted. They will add on a profit to get the selling price (but you have not typed all of the question so I cannot calculate what profit they add on).
Q3 – Sorry – my answer was wrong before (I read it too quickly). We know the reason for the material price variance (cost went up 15%) so not much point in investigating.
Labour is only $400 – so not worth investigating.
So we will investigate B and D – they are large amounts and the question does not tell us why they occurred.Sir, for question no 2. i miss to add the information of net profit 30% of sales.
A business operates a job costing system and has the aim of making a net profit 30% of sales.
The cost estimates for one particular job are as follows:
Direct materials : 80kg at $5 per kg
Direct labour : 40hours at $6 per hour
The total overhead are budgeted at $120,000 and are absorbed on the basis of labour hours. The budgeted labour hours are 50,000.What price should be quoted for this job (to the nearest $)?
Hope sir can tell me how to get the correct answer for this question.
Sir, i need your help to check my answer for some question are wrong or right. if i was wrong please correct it for me sir.
Q1. The following statement refer to documents used in the material procurement procedures of XYZ Co. is each of these statements true of false?
– A purchase requisition is prepared in the purchasing department of XYZ Co and then sent to the supplier ( True )
– A goods received note is prepared by the supplier and sent with the material to XYZ Co. ( False )
_________________________________________________________Q2. A company uses absorption costing with a predetermined hourly fixed overhead rate.
The following situation arose last year. Would each of these situations cause overheads to be under absorbed or over absorbed?
– Actual hours worked were less than budgeted hours used to set the predetermined overhead absorption rate (over absorbed)
-Actual overhead expenditure was less than the budgeted expenditure (under absorbed)
_________________________________________________________Q3. Each of these statements about spreadsheets true or false?
-A spreadsheet is the most suitable software for the long term storage of large volumes of data. (false)
– A spreadsheet could be used for preparing flexible budgets for different activity levels. (true)
_________________________________________________________Q4. Last month an organisation’s direct workers were paid $40,000 for normal working. In addition they were paid a total of $12,000 for overtime working. Overtime hours which were required due to a general shortage of labour were paid at time and a half.
What was the total direct labour cost for last month?
12000 x 1/2 = 6000
direct labour cost = 40000 – 6000
= 34000.
_________________________________________________________Q5. The budgeted costs for X Co for June are as follows:
Sales 20,000 units
Materials $120,000
Labour $200,000
Fixed overheads $350,000
Total cost $670,000If the budget is flexed for 30,000 units what will be the budgeted total cost?
My answer : $830,000
_________________________________________________________Q6. Which two of the following about fixed and flexible are true?
i- Comparison of a fixed budget with the actual results is useful for budgetary control purposes.
ii- Flexible budgeting assumes that most costs are semi-variable.
iii- Fixed budget are useful for monitoring fixed costs.
iv- Flexible budgets are prepared using marginal costing techniques.My answer: i and ii.
________________________________________________________Q7. A company operates a job costing system. Job number 1207 requires $80 of direct material and $120 of direct labour. Direct labour is paid at rate of $12 per hour. Direct expenses for the job are $50. Production overheads are absorbed at rate of $40 per direct labour hour and non-production overheads are absorbed at a rate 110% of prime cost.
What is the total cost of the job number 1207?
My answer:
DM = 80
DL = 120
DE = 50
_______
Prime cost = 250
Prod. ovrhead = 400
Non.Production = 275
___________________
Total cost = $925.
_________________________________________________________
Q8. Which of the following about mission statements are true?i-They are stated in a standard format.
ii-They play an important role in the planning process.
iii-They help ensure consistency in decision making.My answer: ii and iii.
_________________________________________________________
Q9. A company manufactures and sells a single product. next year the budgeted total fixed production costs are $480,000. budgeted sales are 24,000 units and budgeted production is 25,000 units. The budgeted profit for next year using absorption costing principles is $57,500What is the budgeted profit for next year using marginal costing principles?
My answer: $38,300.
_________________________________________________________
Q10. Which of the following statements about standard costing are true?i- A standard cost is a predetermined estimated unit cost.
ii- A standard cost can be used as a control device to help improve performance.
iii- A standard cost card shows the unit cost details only of each product.My answer: i and ii.
_________________________________________________________ sir, i have 2 question that i can’t solve. Please help me.1. The following data relate to process for last month:
Opening inventory 200 units (70% complete)
Completed ouput 2450 units
Closing inventory 300 units (40% complete)What were the equivalent units of production last month?
_________________________________________________________
2. A company manufactures and sells a single product. At the end of the manufacturing process all units are inspected and 20% are rejected and scrapped. Next year the budgeted sales are 192,000 units and the inventory of finished units will increase by 2,000 units.What is next year’s budgeted production (in units) which will be subject to inspection?
Q1 Purchase requisition is false (it is sent internally to the purchasing department who then create a purchase order to send to the supplier).
Goods received note is falseQ2 Wrong.
If actual hours are less than budget hours then overheads will be under absorbed.
If actual hours are more than budget hours then will be over absorbed.
(Amount absorbed is actual hours x absorption rate – best to watch my lecture on this)Q3 Correct
Q4 Wrong. Why have you subtracted 6000 from 40000? 40000 was the amount paid for normal working. The 12000 was extra.
Q5 Correct
Q6 Wrong
(i) is not correct – it is pointless to compare actual with original fixed budget because the level of activity will be different.
(ii) is not correct – some costs might be semi-variable but flexible budgeting does not assume it
(iii) is true
(iv) is trueQ7 Correct
Q8 Correct
Q9 Correct
Q10 Correct
Q11 Number completed in full this month: 2450 – 200 = 2250
Equivalent units: (200 x 30%) (to finish WIP b/f) + 2250 (done completely) + (300 x 40%) (to start WIP c/f) = 2430
(best to watch my lecture on process costing)Q12 If sales are 192,000 and inventory increases by 2,000, then ‘good’ production must be 194,000. But this is after rejecting 20% of actual production – i.e. 194,000 is the 80% not rejected.
So actual production before inspecting must be 194,000 / 80% = 242,500Sir, i cant solve this question. please help me sir.
A business operates a job costing system and has the aim of making a net profit 30% of sales.
The cost estimates for one particular job are as follows:
Direct materials : 80 kg at $5 per kg
Direct labour : 40 hours at $6 per hour
The total overhead are budgeted at $120,000 and are absorbed on the basis of labour hours. The budgeted labour hours are 50,000.What price should be quoted for this job (to the nearest $)?
Hope sir can tell me how to get the correct answer for this question.
Are you not going to say thank you for all the previous answers I spent ages typing??!!
For your latest question, you need to add up all the costs (the overheads will be charged at 120,000/50,000 = $2.40 per labour hour).
When you have the cost you can calculate the selling price to be quoted.
Since the want to make a profit of 30% on sales, it means that the cost will be 70% of the sales price. So when you have calculated the cost, the sales price will be the cost divided by 70%.Sir, i’m so sorry. I have no intention to hurt your feelings. May God bless you sir. Thanks for your help and guidance. I will never forget it. Will you pray for my success sir?
Hi, I have a question here, if you dont mind.
Is this not supposed to be the other way around?
“If actual hours are less than budget hours then overheads will be under absorbed.
If actual hours are more than budget hours then will be over absorbed.”Thank you.
It is not correct whichever way round it is!!
The over or under absorption is not comparing actual with budget.
It is comparing actual cost with standard cost for the actual production.
Thank you for your answer, but I am still confused (Sorry, I am a bit slow).
I was looking the questions on this post and the questions says to chose what happen in which situation (over or under absorbed). And I think that was your answer:
“If actual hours are less than budget hours then overheads will be under absorbed.
If actual hours are more than budget hours then will be over absorbed.”My way of doing it I memorise that if Actual overheads are more than what should be, it was under absorbed. If Actual overheads are less then what it should be, then it’s over absorbed.
That’s why I ask if the answer above should not be the other way around.
I hope I didn’t complicate it more 😉
Now I do agree with you 🙂
If actual overheads are more than what they should be then we have indeed under-absorbed (and vice versa).
If I did say different by mistake then I apologise!
Sir, would you kindly explain to me how this should be worked out please?
A company manufactures and sells a single product. next year the budgeted total fixed production costs are $480,000. budgeted sales are 24,000 units and budgeted production is 25,000 units. The budgeted profit for next year using absorption costing principles is $57,500
What is the budgeted profit for next year using marginal costing principles?
Thanks !
In future you must start a new thread when it is a new topic 🙂
The fixed overhead absorption rate is 480,000 / 25,000 = 19.20 per unit.
The inventory will increase by 1,000 units (25,000 – 24,000) and therefore the marginal profit will be lower than the absorption profit by 1,000 x $19,20 = 19,200.
You really should watch our free lectures on marginal and absorption costing where this is explained – it is a very common question to be asked.
(Our free lectures are a complete course for Paper F2 and cover everything needed to be able to pass the exam well)factory produces a product with a variable cost of Re.0.60 per unit. Fixed costs per quarter are Rs.15,000 including rent of Rs.6,000. If more than 20,000 units are produced per quarter, additional space is required which increases the rent by 50%. What is the total cost per unit of producing 30,000 units in a quarter?
There is no point in simply setting me tests questions and expecting me to produce an answer.
If you have been set this as a test, then we do not do your homework for you.
If you found this question in a book, then you must have an answer in the book and you should ask whatever it is in the answer that you do not understand.
Also, if you watch my free lectures then you should not have a problem with this anyway. The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well 🙂
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