9.16 Last month, when a company had an opening inventory of 16,500 units and a closing

inventory of 18,000 units, the profit using absorption costing was $40,000. The fixed production overhead rate was $10 per unit.

What would the profit for last month have been using marginal costing ?

A $15,000

B $25,000 C $55,000

D $65,000 Answer：B

9.17 Last month a manufacturing company?s profit was $2,000, calculated using absorption

costing principles. If marginal costing priciples has been used, a loss of $3,000 would have occurred. The company?s fixed production cost is $2 per unit. Sales last month were 10,000 units.

What was last month?s production (in units) ?

A 7,500 B 9,500 C 10,500 D 12,500 Answer：D

9.18 HMF Co produces a single product. The budgeted fixed production overheads for the period

are $500,000. The budgeted output for the period is 2,500 units. Opening inventory at the start of the period consisted of 900 units and closing inventory at the end of the period consisted of 300 units. If absorption costing principles were applied, the profit for the period compared to the marginal costing profit would be :

A $ 125,000 higher B $ 125,000 lower C $ 120,000 higher D $ 120,000 lower Answer：D

10、Job, batch and service costing

10.1 Which of the following costing methods is most likely to be used by a company involved in

the manufacture of liquid soap ?

A Batch costing B Service costing C Job costing D Process costing Answer：D

10.2 A company calculates the prices of jobs by adding overheads to the prime cost and adding

30% to total costs as a mark up. Job number Y256 was sold for $1,690 and incurred overheads of $694. What was the prime cost of the job ? A $489

B $606 C $996

D $1,300 Answer：B

10.3 A company operates a job costing system. The estimated costs for job 173 are as follows.

Direct materials 5 metres @ $20 per metre Direct labour 14 hours @ $8 per hour

Variable production overheads are recovered at the rate of $3 per direct labour hour.

Fixed production overheads for the year are budgeted to be $200,000 and are to be recovered

on the basis of the total of 40,000 direct labour hours for the years.

Other overheads, in ralation to selling, distribution and daministretion, are recovered at the rate

of $80 per job.

The total cost of job 173 is

A $404 B $300 C $254 D $324 Answer：A

The following information relates to questions 10.4 and 10.5

A firm makes special assemblies to customers? orders and uses job costing. The data for a period are: Job number Job number Job number AA10 BB15 CC20 $ $ $ Opening WIP 26,800 42,790 0 Material added in period 17,275 0 18,500 Labour for period 14,500 3,500 24,600 The budgeted overheads for the period were $126,000. 10.4 What overhead should be added to job number CC20 for the period ?

A $65,157

B $69,290 C $72,761

D $126,000 Answer：C

10.5 What was the approximate value of closing work-in-progerss at the end of the period ?

A $58,575

B $101,675 C $217,323

D $227,675 Answer：C

10.6 The following items may be used in costing batches. 1 Actual material cost

2 Actual manufacturing overheads 3 Absorbed manufacturing overheads 4 Actual labour cost

Which of the above are contained in a typacil batch cost ? A 1,2 and 4 only B 1 and 4 only C 1,3 and 4 only D 1,2,3 and 4 Answer：C

10.7 What would be the most appropriate cost unit for a cake manufacturer ? Cost per : A Cake B Batch C Kg

D Piece of cake Answer：B

10.8 Which of the following would be appropriate cost units for a passenger coach company ? (i) Vehicle cost per passenger-kilometre (ii) Fuel cost for each vehicle per kilometre (iii) Fixed cost per kilometre

A (i) only B (i) and (ii) only C (i) and (iii) only D (ii) and (iii)only Answer：B

10.9 The following information is available for a hotel company for the latest thirty day period. Number of rooms available per night 40 Percentage occupancy achieved 65% Room servicing cost incurred $3,900

The room servicing cost per occupied room-night last period, to the nearest penny, was: A $3.25 B $5.00 C $97.50 D $150.00 Answer：B

10.10 Annie is to set up a small hairdressing business at home. She anticipates working a 35-hour

week and taking four week?s holiday per day. Her expenses for materials and overheads are expected to be $3,000 per year, and she has set herself a target profit of $18,000 for the first year.

Assuming that only 90% of her working time will be chargeable to clients, what price should

she charge for a ?colour and cut? which would take 3 hours ? A $13.89

B $35.71 C $37.50

D $41.67 Answer：D

10.11 Which of the following is not a characteristic of service costing ? A High levels of direct costs as a proportion of total costs B Intangibility of output

C Use of composite cost units

D Can be used for internal services as well as external services Answer：A

10.12 Which of the following are likely to use service costing ? (i) A college (ii) A hotel (iii) A plumber A (i),(ii) and (iii) B (i) and (ii) C (ii) only

D (ii) and (iii) only Answer：B

10.13 Which of the following would be considered a service industry ? (i) An airline company (ii) An railway company (iii) A firm of accountants A (i) and (ii) only B (i) and (iii) only C (i),(ii) and (iii) D (ii) and (iii) only

Answer：C

10.14 The following information relates to a management consultancy organisation: Salary cost per hour for senior consultants $ Salary cost per hour for junior consultants 40 Overhead absorption rate per hour applied to all hours 20

The organisation adds 40% to total cost to arrive at the final fee to be changed to a client Assignment number 789 took 54 hours of a senior consultant?s time and 110 hours of junior

consultants? time

What is the final fee to be charged for Assignment 789 ? A $6,874 C $11,466 B $10,696 D $12,642 Answer：C

10.15 A company operates a job costing system. Job number 1012 requires $45 of direct material

and $30 of direct labour. Direct labour is paid at the rate of $7.50 per hour. Production

overheads are absorbed at a rate of $12.50 per labour hour and non-production overhead are absorbed at a rate of 60% of prime cost.

What is the total cost of job number 1012 ?

A $170

B $195 C $200

D $240 Answer：A 11 Process costing

11.1 A chemical process has a normal wastage of 10% of input. In a period, 2,500 kgs of material were input and there was an abnormal loss of 75 kgs. What quantity of good production was achieved?

A 2,175 kgs B 2,250 kgs C 2,325 kgs D 2,425 kgs Answer：A

The following information relates to questions 11.2 and 11.3

A company manufactures Chemical X, in a single process. At the start of the month there was no work-in-progress. During the month 300 litres of raw material were input into the process at a total cost of $6,000. Conversion costs during the month amounted to $4,500. At the end of the month 250 litres of Chemical X were transferred to finished goods inventory. The remaining work-in-progress was 100% complete with respect to materials and 50% complete with respect to conversion costs. There were no losses in the process.

11.2 The equivalent units for closing work-in-progress at the end of the month would have been: Material Conversion costs A 25 litres 25 litres B 25 litres 50 litres C 50 litres 25 litres D 50 litres 50 litres Answer：C

11.3 If there had been a normal process loss of 10% of input during the month the value of this loss would have been: A Nil B $450 C $600