MA1 MOCK 3

(1) Which of the following is not correct?

A. Cost accounting can be used for inventory valuation to meet the requirements of internal
reporting only
B. Management accounting provides appropriate information for decision making, planning,
control and performance evaluation
C. Routine information can be used for both short-term and long-run decisions
D. Financial accounting information can be used for internal reporting purposes
(2) Which one of the following statements is correct?
A. Data is held on computer in digital form whereas information is in a form that is readable to
human beings.
B. Information is obtained by processing data.
C. Data and information mean the same thing.
D. Data consists of numerical or statistical items of information.
(3) Which of the following items of information might be produced by a management accounting
system?
A. Income tax deducted from employees’ wages and salaries
B. Amounts of money owed to suppliers
C. Current bank balance
D. Profitability of product items
(4) Which of the following is not management accounting information?
A. Sales budget
B. Variance report
C. Payroll report
D. Profitability report
(5) Which of the following items would be included in the financial accounting system but not in the
management accounting system?
A. Sales commissions payable to sales representatives
B. Costs of repairs to the office air conditioning system
C. Profits paid out in dividends to the business owners
D. Direct labour costs
(6) Why is management information valuable for decision making?
A. It enables management to make the correct decision
B. It helps management to reach a more informed decision
C. It can be used to allocate blame if a poor decision is made
D. It enables managers to make decisions more quickly
(7) Which of the following statements about office manuals is not correct?
A. They are particularly useful for dealing with out-of-the-ordinary situations
B. They can be used to check on the correct procedures in cases of doubt
C. They can be used to help with the training of new staff
D. They help to maintain standards of performance
(8) What is a prime entry record in an accounting system?
A. A record of an important transaction, usually a high-value transaction
B. An entry in the ledger accounts
C. The first record of a transaction entered into the accounting system
D. A record of direct materials, direct labour and direct expenses costs
(9) Which of the following best describes double entry bookkeeping?
 A. A manual system of recording accounting transactions
B. A system of recording business transactions in ledgers
C. A system of recording an accounting transaction twice in the main ledger
D. A system of management accounting
(10) Which one of the following is an example of internal information for the wages department of a
large company?
A. A Code of Practice issued by the Institute of Directors
B. A new national minimum wage
C. Changes to tax coding arrangements issued by the tax authorities
D. The company’s employees’ schedule of hours worked
(11) Which one of the following would be included in the financial accounts, but may be excluded
from the cost accounts?
A. Bank interest and charges
B. Depreciation of storeroom handling equipment
C. Direct material costs
D. Factory manager’s salary
(12) 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 suppliers into store
C. Processing expenses claims
D. Arranging payments of tax to the tax authorities
(13) A firm uses a unique code to identify each customer – the first four letters of each name are
followed by four digits. Which one of the following will appear first when customers are sorted into
descending order?
A. ADAM0001
B. ADAA0099
C. ADDA0100
D. ABAB0999
(14) Hockey Skill manufactures hockey sticks. A summary of some cost headings include:
(a) wood used as raw material
(b) rubber covers for handles
(c) depreciation
(d) power
(e) sales manager’s salary
(f) labour in assembly department
(g) oils and greases
(h) telephone and postage
(i) insurance of plant
(j) supervisory labour.
Which of the above items would be classified as production overheads?
A. (a), (f), (d) and (e)
B. (c), (d), (g), (i) and (j)
C. (e), (h), (i) and (j)
D. (a), (b), (c), (d) and (f)
(15) When preparing an operating statement based on marginal costing principles, inventory
valuation comprises which of the following costs?
A. Direct labour and material only
B. Prime cost plus production overhead
 C. Prime cost plus variable production overhead
D. Total cost of sales
(16) What is cost apportionment?
A. Charging discrete, identifiable items of cost to cost centres or cost units.
B. The collection of costs attributable to cost centres and cost units using the costing methods
applied by the business.
C. The process of establishing the costs of cost centres or cost units.
D. The division of a cost between two or more cost centres in proportion to the estimated benefit
received by each centre.
(17) The payroll department has produced the following information for the month about the pay for
employees in department X.
Department X $
Payments to employees 7,500
Income tax 2,500
Employees’ state benefit contributions (NI in the UK) 1,200
Employer’s state benefit contributions (NI in the UK) 2,000
What are the gross wages for the department for the month?
A. $7,500
B. $10,000
C. $11,200
D. $13,200
(18) What would be the appropriate basis for apportioning the costs of heating and lighting between
cost centres in a factory building?
A. Number of employees
B. Number of machines
C. Value of machinery
D. Floor area occupied by each department
(19) A business maintains an inventory control database. For each item of inventory, the file contains
the quantity of free inventory for the item. For inventory item 245711, the current quantity held by
the business is 200 units. The stores department has received requisitions from user departments for
620 units, which have yet to be processed and dealt with. An order for a new supply of 450 units has
been placed with the supplier, and delivery is expected in one or two days.
What is the quantity of free inventory for this item?
A. 30
B. 370
C. 400
D. 430
(20) Which costing method would be MOST suitable for an accountancy firm?
A. Contract costing
B. Job costing
C. Batch costing
D. Process costing
(21) A company has two production cost centres, Cutting and Finishing.
The overheads and operating hours for the two cost centres are:
Cutting: $210,000 60,000 machine hours 4,000 labour hours
Finishing: $200,000 5,000 machine hours 14,000 labour hours
From the information given, what should be the basis for overhead absorption?
A. Both cost centres should be based on machine hours
 B. Based on labour hours for Cutting and machine hours for Finishing
C. Both cost centres should be based on labour hours
D. Based on machine hours for Cutting and labour hours for Finishing
(22) 12,000 kg of materials, costing $86,090, were input to a manufacturing process in a period in
which conversion costs totalled $39,320. Losses in the period were 960 kg with no saleable value. The
normal loss is 10% of input. What was the total manufacturing cost per kg of expected output (to two
decimal places of $)?
A. $9.68
B. $10.45
C. $11.36
D. $11.61
(22) Which of the following may be included in the cost accounts but would be excluded from the
financial accounts?
A. Factory manager's salary
B. Distribution expenses
C. Depreciation of equipment
D. Notional rent
(23) Which of the following formulae can be used for calculating labour efficiency ratio?
A. Actual hours÷Standard hours of actual output
B. Budgeted hours÷Actual hours
C. Standard hours of actual output÷Actual hours
D. Standard hours of actual output÷Budgeted hours
(24) A hotel had total costs of $1,500,000 for a period. There were a total of 120,000 occupied bed-
nights in the period.
What is the cost per service unit (to two decimal places)?
A. 12.52
B. 12.50
C. 0.08
D. 8.00
(25) A company manufactures a single product which is sold for $70.00 per unit. Unit costs are:
$ / Unit
Variable production 29.50
Fixed production 21.00
Variable selling 4.80
Fixed selling 9.00
20,000 units of the product were manufactured in a period during which 19,700 units were sold.
Using marginal costing, what was the total contribution made in the period? ______________
(26) A company planned to produce 4,000 units of product X during a particular year and had
budgeted its fixed production overheads for the year at $20,000. During the year it actually produced
4,200 units of product X and it incurred fixed production overheads of $21,840. A predetermined fixed
production overhead absorption rate per unit is applied.
Which of the following statements is true?
A. Fixed overheads were under-absorbed by $840
B. Fixed overheads were under-absorbed by $1,840
C. Fixed overheads were over-absorbed by $840
D. Fixed overheads were over-absorbed by $1,000
(27) The following information relates to Product X for month one.
Opening inventory: Nil
Production: 900 units
Sales: 800 units
If marginal costing rather than absorption costing is used, what is the effect on profit and inventory
valuation?
A. Profit higher, Inventory valuation lower
B. Profit lower, Inventory valuation higher
C. Profit higher, Inventory valuation higher
D. Profit lower, Inventory valuation lower
(28) A company has calculated that its activity ratio is 103.5% and that its efficiency ratio is 90.0%.
What is its capacity utilisation ratio (to the nearest whole number)?
A. 93.15%
B. 93%
C. 1.15%
D. 115%
(29) A company operates a piecework payment scheme. The staff receive $0.60 for each unit
produced. However the company guarantees that every member of staff will receive at least $45 per
day. Shown below is the number of units produced by worker A during a recent week:
Day Monday Tuesday Wednesday Thursday Friday
Units produced 90 70 75 60 90
What are worker A's earnings for the week? ____________
(30) What is an investment centre?
A. Part of a business where management are responsible both for revenues and for operating costs
B. Part of a business that utilises equipment and machinery
C. Part of a business where management are responsible for decisions regarding the purchase of
non current assets
D. Part of a business involved in financial services
(31) In an interlocking accounting system, what would be the entry in the cost accounts to record the
charging of indirect production labour costs?
A. Dr Cost ledger control Cr Production overhead
B. Dr Production overhead Cr Wages control
C. Dr Wages control Cr Financial ledger control
D. Dr Work-in-progress Cr Wages control
(32) A company is required to sale 88,000 units of M in the next period. For every unit of M 0.5 kgs of
raw material Y is required. Stock already present of M is 12,000 units and stock to be kept in the end
of the period are 14,000 units. In addition to this material Y inventory levels have to be increased by
24,000 kgs.
A. 45000
B. 69000
C. 24,000
D. 60,000
(33) It is expected that a product will take 36 minutes to produce. In a period 180 hours are worked
and 325 units of product are made. A bonus of half of the time saved is paid to the employees. The
wage rate is $8.00 per hour. What is the total amount of bonus paid to the employees?
A. $252
B. $120
C. $60
D. None
(34) In a payments by results scheme employees are paid a bonus based on hours saved at the basic
wage rate. The bonus payable to the employee is calculated as the hours saved multiplied by the ratio
of time saved to time allowed. An employee produces 480 units in 72 hours. The time allowed for this
number of units is 108 hours. The employee's basic rate of pay is $10 per hour.
What is the total amount payable to the employee for this job?
A. $120
B. $720
C. $733
D. $840
(35) A company operates a job costing system. Job 812 requires $60 of direct materials, $40 of direct
labour and $20 of direct expenses. Direct labour is paid $8 per hour. Production overheads are
absorbed at a rate of $16 per direct labour hour and non-production overheads are absorbed at a rate
of 60% of prime cost.
What is the total cost of Job 812?
A. $240
B. $260
C. $272
D. $320
(36) Which one of the following statements is incorrect?
A. Job costs are collected separately, whereas process costs are averages
B. In job costing the progress of a job can be ascertained from the materials requisition notes and
job tickets or time sheet
C. In process costing information is needed about work passing through a process and work
remaining in each process
D. In process costing, but not job costing, the cost of normal loss will be incorporated into normal
product costs
(37) Procal Ltd is a manufacturer. In Period 1 the following production occurred
Units started (there was no opening WIP) = 1,300 units
Closing WIP = 500 units
Degree of completion of closing WIP:
Materials 80%
Costs incurred in Period 1:
Materials $7,200
What was the total cost per equivalent unit of production?
A. $6.00
B. $8.77
C. $4.00
D. $10.00
(38) A manufacturing company makes and sells a single product. The sales budget for the year is 8,000
units. Each unit of the product requires 1.2 kilograms of raw materials. The company has budgeted to
reduce inventory levels of finished goods from 2,000 units at the start of the year to 1,500 units at the
end of the year, but it plans to increase inventory levels of the raw material from 1,500 kilograms to
2,400 kilograms.
What will be the budgeted purchase quantities of raw materials for the year?
A. 8,100 kilograms
B. 8,300 kilograms
C. 9,900 kilograms
D. 10,200 kilograms
(39) The following statements relate to spreadsheets:
(i) A spreadsheet consists of records and files.
(ii) Most spreadsheets have a facility to allow data within them to be displayed graphically.
(iii) A spreadsheet could be used to prepare a budgeted income statement.
(iv) A spreadsheet is the most suitable software for storing large volumes of data.
Which of the above statements are correct?
A. (i) and (ii) only
B. (i), (iii) and (iv) only
C. (ii) and (iii) only
D. (iii) and (iv) only
(40) A company manufactures a single product. In a computer spreadsheet the cells F1 to F12 contain
the budgeted monthly sales units for the 12 months of next year in sequence with January sales in cell
F1 and finishing with December sales in F12. The company policy is for the closing inventory of
finished goods each month to be 10% of the budgeted sales units for the following month.
Which of the following formulae will generate the budgeted production (in units) for March next
year?
A. =[F3 +(0.1*F4)]
B. =[F3 -(0.1*F4)]
C. =[(1.1*F3) - (0.1*F4)]
D. =[(0.9*F3) +(0.1*F4)]
(41) Figures in a spreadsheet cell have been formatted as 'number'.
Which of the following characteristics will NOT be available to adjust?
A. Number of decimal places
B. Commas to indicate thousands
C. Negative number formatting options
D. Currency symbols
(41) What type of error message does Excel give when you try to divide by a blank cell?
A. #VALUE!
B. #DIV/0!
C. #NUM!
D. #REF!
(42) Which of the following are reasons for formatting data in a spreadsheet?
(1) To make text (i.e. labels) more visually interesting
(2) To get data into the correct order for analysis
(3) To make numbers more descriptive of what they represent
(4) To make the data appear as plain text
A. (1) and (3) only
B. (2) and (3) only
C. (2) and (4) only
D. (1), (2) and (3)
(43) Wrap text is an important formatting function which:
A. Places a border around the highlighted text
B. Increase the height of a row containing text so that the whole of the text is visible
C. Aligns the text to the left, right or centre
D. Changes the size and font of the text
(44) You work in the accounts department of a company. Your friend in the sales department has
requested some accounting information and assures you that the finance director is aware of this
request. Which ONE of the following should you do?
 A. Print out the information and give it to them
B. Give them your computer password and let them use your computer
C. Decline the request
D. Confirm the request with the finance director
(45) If cell B3 contains the value 136.54 and cell B4 contains the formula ‘=ROUND(B3,-1)’, the value
contained in cell B4 would be:
A. 136.5
B. 136
C. 100
D. 130
(46) If wastage is 20% of input. What would be the material input in the processs for one kg of output
A. 1.00
B. 1.25
C. 1.2
D. 0.05
(47) Three dimensional spreadsheet would be best described by which of the following?
A. Spreadsheets which need special glasses for users to be able to read them
B. Spreadsheets which need an extra, 3D programme to make them viewable on a normal
computer screen
C. Spreadsheets which use a number of worksheets, each one linked to an overall summary
worksheet
D. Spreadsheets spread over a number of workbooks which are not linked together
(48) How should the time 25 past four p.m. be entered onto a spreadsheet?
A. 16.25.00 pm
B. 4;25;00 pm
C. [Link]
D. 16;25;00
(49) Which of the following is not an advantage of component bar charts?
A. The relative importance of each component can be assessed
B. The information can be interpreted quickly
C. More than one component can be displayed at a time
D. The total value can be easily assessed and determined
(50) Under which menu is the ‘Print Area’ and ‘Freeze Panes’ found in Microsoft Excel respectively?
A. Formulas, Page layout
B. Page Layout, view
C. View, insert
D. Insert, Formulas