Page 323 - GMAT 2017b_Neatb

Accounting Practice Test

(A) The issue price is recalculated each time new In addition, the stores department has total costs of
deliveries are made into stock. £30 000 and spends 50% of its time servicing the
(B) The issue price is always at the latest price. assembly plant. There were 50 000 labour hours
(C) The goods are always issued strictly in the physical worked and 25 000 machine hours run in the assembly
order in which they are received. plant in 2001.
(D) The issue price is always at the earliest price. The overhead cost per direct labour was:
(a) £2.
69. Which of the following is not a method of pricing raw (b) £4.
material issues from stock? (C) £2.3.
(A) Standard costing.
(d) £4.6.
(B) Unit cost.
(C) Marginal cost.
74. If a company uses predetermined overhead recovery
(D) Continuous weighted average.
rates and at the end of a period finds that there has been
70. Which of the following is a direct labour cost? an under-recovery of overhead, which of the following
(a) Supervisors' salaries in the factory. best explains how the under- recovery has occurred?
(B) Costs of the payroll accounting section. (A) Actual overhead cost has exceeded the amount
(C) A bonus paid to the storeman. used as a basis for the establishment of the
(D) The wages of an operative paid on the basis of predetermined rate.
output achieved. (B) Actual overhead cost has been less than the
amount used as a basis for the establishment of
71. Production overheads are absorbed into production the predetermined rate.
units by the use of an overhead absorption rate. Which (C) Actual activity levels were higher than planned
one of the following best describes how the absorption due to an increase in demand.
rate is calculated? (D) An expected price increase in the overhead which
(A) Total number of units produced divided by the was built into the overhead recovery rate did not
total cost centre overheads. take place.
(B) Total number of units produced multiplied by the
75. If there has been an over recovery of overheads, at the
unit overhead cost.
end of the accounting period the amount concerned
(C) Total cost centre overheads divided by the cost
should be?
centre activity level.
(A) Debited to the company profit and loss account.
(D) Total indirect costs for the business divided by
(B) Credited to the company profit and loss account.
the total number of units produced.
(C) Carried forward to the next accounting
period as a cost saving.
72. XYZ Ltd has a labour intensive assembly department.
(D) Used to reduce next period's overhead
Which of the following methods of absorbing
recovery rate.
overheads is likely to used for that department?
(A) Direct labour hours method.
76. Which of the following is not an essential feature of a
(B) Direct labour cost method.
budget?
(C) Direct material cost method.
(A) There is a clearly defined budget period.
(D) A percentage of prime cost.
(B) It is a combination of financial and non-financial
data set by reference to key budget assumptions.
73. XYZ Ltd has the following data relating to its
(C) It permits managers flexibility in terms of the
assembly plant in the year ended 31 December
policies that should be pursued to meet corporate
2001:
objectives.
£000
(D) It has been formally approved and accepted as
Direct material costs 500
realistic by managers.
Direct labour cost 250
Assembly plant indirect costs 100
77. A master budget comprises:
326