practice exam Costs and Revenues

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Try this practice exam Costs and Revenues. To succeed in the Intermediate Diploma in Accounting you need plenty of practice.

Question 1

Which of the following may be a cost centre?
A.  The total depreciation expense of a company
B.  The accountancy department in a business
C.  The direct material cost of a product
D.  One of the hotels owned by a travel company

Question 2

You are a trainee accountant and the manufacturing company you work for has no work-in-progress in a manufacturing process at the start of a period. 19,000 units of a product commenced processing in the period during which completed output was 18,100 units. The work-in-progress was
75% complete for conversion costs which were £5·60 per equivalent unit. There were no losses or gains in the process.
What amount was included in the closing work-in-progress for conversion costs?

Question 3

Which of the following statements is true?
A Information consists of data which has been processed in a predefined way
B Data consists of information
C Data consists of processed information
D Information consists of raw facts that have not been processed

Question 4
A computer spreadsheet would be most useful for the following tasks?

A Cost analysis
B Product listing
C Staff appraisal
D Expense coding structure

Question 5

Issues and receipts of a raw material for a period were:

units £ per unit cumulative total £
Day 1 balance 160 3.70 592
Day 3 receipt 230 3.60 1420
Day 5 issue 110 3.60
Day 8 issue 150

Using the LIFO inventory pricing method, what is the total cost of the issue on Day 8?

Question 6

XYZ Ltd manufactures Product Y. Direct materials cost £5·10 and prime costs total £10.00 per unit of product.
Production overheads are absorbed at a rate of £20.00 per machine hour. Four units of Product Y are manufactured per machine hour.
Using absorption costing, what is the total production cost per unit of Product Y?

Question 7
Product Y requires 18 kg of a raw material per finished unit. The material has a weight loss of 10% in preparation for manufacture. Inventory of the material is currently 4200 kg but needs to be increased to 5000 kg. 20,000 units of Product Y are to be manufactured.
How many kg of the raw material need to be purchased to satisfy the above requirements?

Question 8

You are  revising for your practice exam Costs and Revenues  when your boss says that at  the end of a period the percentage completion of the work-in-progress in a continuous manufacturing process was over estimated.
What effect would correction of the error have on the cost per equivalent unit and the total cost of output completed in the period?

Unit cost Cost of output
A Decrease Decrease
B Decrease Increase
C Increase Decrease
D Increase Increase