1.

A system in which all costs of production determined in advance is known as:

A. Historical cost system
B. Standard cost system
C. Actual cost system
D. None above

2. The term “variable costs” refers to:

A. All costs which are likely to respond to the amount of attention devoted to them by a
specified manager.
B. All costs which are associated with
3. The term “conversion costs” refers to:
A. Manufacturing costs incurred to produce units of output.
B. All costs associated with manufacturing other than direct labor costs and raw material
costs.
C. The sum of direct labor costs and all factory overhead costs.
D. The sum of raw material costs and direct labor costs.

4. The term “prime costs” refers to:

A. Manufacturing costs incurred to produce units of output.
B. All costs associated with manufacturing other than direct labor costs and raw material
costs.
C. The sum of direct labor costs and all factory overhead costs.
D. The sum of raw material costs and direct labor costs.

5. If the cost of maintenance department in a factory at production level of 7,000 units was
Rs84,000 and for production of 10,000 units increased to Rs99,000. Assuming that there
has been no inflation, the cost at production level of 8,000 units will be:
A. Rs96,000
B. Rs79,200
C. Rs89,000
D. Rs86,118

6. Job number 84 incurs the following costs during its completion:

Direct materials £980
Direct labour(15 hours) 690
Hire of special machine 330
Overheads are absorbed at the rate of £30 per direct labour hours
Prime cost of Job # 84 is:
A. £2450
B. £2000
C. £1760
D. £1670
7. Which item would most likely be treated as an indirect cost by a furniture
manufacturer?
A Fabric to cover the seat of a chair
B Metal used for the legs of a chair
C Staples to fit the fabric to the seat of a chair
D Wood used to make the frame of a chair

8. What is most likely to occur when suppliers cannot deliver goods on time?
A Customer demand will rise accordingly
B Customer orders will not be satisfied
C Stock levels will become too high
D Suppliers’ delivery quantities will be lowered

9. What is the sequential flow of documents to complete the purchase of

goods on credit?
A Goods received note, purchase order, cheque requisition, invoice, delivery
note
B Purchase order, delivery note, goods received note, invoice, cheque requisition
C Purchase order, goods received note, delivery note, cheque requisition, invoice
D Purchase order, invoice, goods received note, cheque requisition, delivery note

10. Which member of staff is most likely to raise a goods received note?
A Delivery driver
B Finance director
C Sales ledger clerk
D Store clerk

11. Which of the following is most likely to be treated as an indirect cost by a

house builder?
A Nails and screws
B Windows
C Bricks
D Electricity cables

12. Which of the following is in the correct chronological sequence for sales documents?
A. Enquiry – Order – Invoice – Payment
B. Order – Enquiry – Invoice – Payment
C. Enquiry – Order Payment – Invoice
D. Enquiry – Invoice – Order – Payment

13. Which one of the following is least likely to be carried out by the accounts
department?
A. Collecting money receivable from credit customers
B. Receiving goods from the suppliers into store
 C. Processing expenses claims
D. Arranging payments of tax to the tax authorities.

14. Which of the following individuals is usually responsible for preparing a delivery
note?
E. Buyer
F. Supplier
G. Store manager
H. Accountant

15. Which of the following documents should be checked before a purchase invoice is
paid, to confirm that the price and quantities are correct.
Price check Quantity check
I. Purchase order Purchase order
J. Goods received note Delivery note
K. Purchase invoice Goods received notes
L. Purchase order Goods received notes

16. Who is usually responsible for authorizing the purchase requisitions?

M. Purchase manager
N. Stores manager
O. Production manager
P. Management accountant

17. An organisation has the following total costs at three activity levels:
Activity level (units) 8,000 12,000 15,000
Total cost £204,000 £250,000 £274,000

Variable cost per unit is constant within this activity range and there is a step up of 10%
in the total fixed costs when the activity level exceeds 11,000 units.

What is the total cost at an activity level of 10,000 units?

A £220,000
B £224,000
C £227,000
D £234,000

18. Which item would most likely be treated as an indirect cost by a furniture manufacturer?
A Fabric to cover the seat of a chair
B Metal used for the legs of a chair
C Staples to fit the fabric to the seat of a chair
D Wood used to make the frame of a chair

19. Aspects of payroll include:

1. Employer’s national insurance contribution
2. Employee’s national insurance contribution
3. Income Tax (PAYE)
 4. Salaries
Which of the above are costs to an employer?
A 1 and 4 only
B 2 and 4 only
C 2, 3 and 4 only
D 1, 2, 3 and 4

20. A manufacturer makes and sells a single product for which the expected direct labour cost is £24 per unit.
This is based on expected labour time of 3 hours per unit, paid at £8per hour.

The manufacturer is considering an incentive scheme for its direct labour employees, whereby if they can
increase the productivity ratio from 100% to 120%, they will receive a bonus of 25% for each hour worked.

What would be the unit labour cost if the incentive scheme is introduced and the efficiency ratio
is improved to exactly 120%
A £18.75
B £22.50
C £23.25
D £25.00

21. What is the sequential flow of documents to complete the purchase of goods on credit?

A Goods received note, purchase order, cheque requisition, invoice, delivery note
B Purchase order, delivery note, goods received note, invoice, cheque requisition
C Purchase order, goods received note, delivery note, cheque requisition, invoice
D Purchase order, invoice, goods received note, cheque requisition, delivery note\

22. Which of the following is most likely to be treated as an indirect cost by a house builder?
A Nails and screws
B Windows
C Bricks
D Electricity cables

23. A manufacturing business is currently extremely busy and overtime is being worked.

The cost of the overtime premium payable to direct labour employee is normally treated as:
A A direct cost
B A production overhead cost
C An administration overhead cost
D A sunk cost

24. A document which records the starting and finishing time for an employee:
A Time sheet
B Job sheet
C Clock card
D Bin card

25. The amount over and above the normal hourly rate that employees are for overtime
hours is:
A Overtime premium
B Overtime payment
C Bonus
D Gross pay
26. Which one of the following would be classed as indirect labour:
A Assembly workers in a firm that manufactures digital video recorders
D A stores assistant in a factory.
C A plasterer in a building construction firm
B An audit clerk in a firm of auditors.

27. A bonus scheme where all employees are paid the same amount of bonus each
regardless of their individual salary:
A Percentage bonus
B Flat rate bonus
C Group bonus
D None of above

28. The following information was recorded on the December payroll:

Salaries paid to employees £ 6,500
Employees NI contribution 650
Income tax 975
Employers NI contribution 680

The employees’ gross pay for the month of December is:

A £6,500
B £8,125
C £8,805
D £8,155

29. Plc Ltd operates a bonus scheme based on time saved against a predetermined time
allowance for actual output. In Week 25, an operative produced 800 units of ‘Reem’ in
36 hours. The standard allowance is 20 units of ‘Reem’ per hour.

The time saved by this employee in Week 25 on ‘Reem’ production was:

A. 4.5
B. 4.0
C. 6.0
D. 6.5

30. A company operates a piecework scheme to pay its staff. The staff receive £0.5 for each
unit produced. However the company guarantees that every member of staff receive at
least £35 per day.

Shown below is the number of units produced by Operator Alex during a recent
week:
Day Units produced
Monday 95
Tuesday 75
Wednesday 80
Thursday 60
 Friday 90
A. £210
B. £205
C. £200
D. £215

31. A company operates an incentive scheme based on differential piecework. Employees are
paid on the following basis:
Weekly output
Up to 500 units £1.00 per unit
501-600 units £1.20 per unit
601-700 units £1.50 per unit
700 + units £1.75 per unit

In week 21, an employee produced 770 units, the gross pay for the week would be:
A. £892.5
B. £829.5
C. £770
D. None of above