CIMA Progress Test 1

Using activity based costing and the information below, what is the budgeted overhead cost per unit of Product Y?

Products manufactured: X and Y

Budgeted production (units) (X): 1,000 (Y): 4,000
Machine hours per unit (X): 10 (Y): 10
Production runs required (X): 10 (Y): 4

Inspections during production (for budgeted production level): 12 per product for both products.

Production set-up costs: $84,000
Quality control costs: $48,000

Laddy Co. is considering undertaking a one-off building project.
The project will use 2 different types of window, standard and decorative.

Standard windows currently cost $40 each and the project will require 20,000 of these.

Decorative brick currently costs $120 each and the project will require 2,000 of these.

Laddy has 7,000 standard windows in stock which cost $30 when they were purchased 3 months ago. These are used in all projects undertaken by Laddy and there are 3 other projects in progress at the moment.
Laddy has 300 decorative windows in stock which cost $150 when they were purchased.
They do not expect to use the decorative type on future projects and could sell any that they have for their current cost price less 10% as some are damaged.

What is the total relevant cost of the windows for consideration of the project?

Z plc currently sells products Aye, Bee and Cee in equal quantities and at the same selling price per unit. The contribution to sales ratio for product Aye is 40%, for product Bee it is 50% and the total is 48%. If fixed costs are unaffected by mix and are currently 20% of sales, the effect of changing the product mix to

Aye: 40% Bee: 25% Cee: 35%
is that the total contribution/total sales ratio changes to:

In relevant costing, when costing plant, which of the following is included?

A manufacturing company recorded the following costs in March for Product M:

Direct Materials: $18,000
Direct Labour: $4,700
Variable Production Overhead: $3,200
Fixed Production Overhead: $17,200
Variable Selling Costs: $3,700
Fixed Distribution Costs: $14,500
Total Costs: $61,300

During March 3,000 units of Product M were produced but only 1,700 units were sold. At the beginning of March there was no inventory.

The value of the inventory of Product M at the end of March using absorption costing was:

What does OPT stand for?

What is the rule when dealing with a scarce resource?

Product X requires 500Kg of Material G. 300Kg of this material is currently in stock, this was purchased at a cost of $2 per Kg, it could be sold for $2.75 per Kg and current purchase price is $4 per Kg. At the moment, the company will not be using the material in any other product.

What is the relevant cost of Material G?

Summary results for Y Co for March are shown below.

Sales revenue: $820,000
Variable production costs: $300,000
Variable selling costs: $105,000
Fixed production costs: $180,000
Fixed selling costs: $110,000
Production in March: 1,000 units
Opening inventory: 0 units
Closing inventory: 150 units

Using marginal costing, the profit for March was:

Which of the following principles are TRUE of TQM (Total Quality Management):

1 Right Time first
2 Materials Requirements Planning
3 Continuous Improvement
4 Customer Focus

The following data relates to production of A Co's three products in period 6:

Product: X, Y and Z

Production and sales (units) (X): 300 (Y): 200 (Z): 150
Machine hours per unit (X): 30 (Y): 10 (Z): 10
No of production runs (X): 7 (Y): 2 (Z): 1
No of deliveries to customers (X): 5 (Y): 5 (Z): 5

Production overhead costs
Machining: $35,750
Set-up costs: $5,250
Packing costs (dispatch): $22,500

What is the overhead cost per unit of product Y using activity based costing?

ABC produces 3 products A,B & C with the following data available:

Selling Price per product A: $40 B: $45 C: $90
Variable Cost A: $35 B: $37 C: $75
% of Total Sales A: 30% B: 50% C: 20%

Fixed Costs in the period are expected to be $500,000

Budgeted sales are 200,000 units

Calculate the sales revenue required to break even.

Which of the following is a benefit of JIT (Just In Time)

J Co produces and sells two products. The O sells for $12 per unit and has a total variable cost of $7.90, while the H sells for $17 per unit and has a total variable cost of $11.20. For every four units of O sold, three of H are sold. J Co's fixed costs are $131,820 per period. Budgeted sales revenue for the next period is $398,500.

The margin of safety is terms of sales revenue is:

Which of the following is an advantage of ABC?

What are the X and Y values when y=0 and x=0 with the following constraint 16x + 20y ≤ 22,000

An organisation uses absorption costing.

The budgeted fixed production overheads for the company for the latest year were $300,000 and the budgeted output was 200,000 units. At the
end of the company’s financial year the total of the fixed production overheads was $210,000 and the actual output achieved was 150,000 units.

The under/over absorption over overheads was:

A Co is concerned about a shortage of capacity in the forthcoming period. The company makes two product B and C. Each product B take 5 skilled labour hours and uses 20 machine hours, whilst a C uses 10 labour hours and 30 machine hours. It has identified that the following restrictions will be in place in the next month:
• Skilled labour limited to 300 hours.
• Machine time limited to 1,000 hours.

Which of the following pairs of inequalities relate to the constraints A Co is facing next month?

Sussex Co’s entire machine capacity is used to produce essential components. The variable costs of using the machines are $13,000 and the fixed costs are $52,000. If all the components were purchased from an outside supplier, the machines could be used to produce other items which would earn a total contribution of $25,000.

What it the maximum price that Sussex Co should be willing to pay to the outside supplier for the components, assuming there is no change in fixed costs?

Which of the following best describes slack?

The following cost is not a relevant cost:

The salary to be paid to an engineering supervisor who will oversee the production of a new product. This role will be created specifically for this new product and the $50,000 salary will be a fixed cost. This cost will not be included in the cost of the project.

In a TQM environment, which of the following would be classified as an external failure cost?

Select all that apply.

Skilled labour at a manufacturing plant is in short supply, and all available skilled labour time is fully utilised. A customer has asked for a special job that will cost $400 in direct materials and will require 15 hours of skilled labour time. Skilled labour costs $8 per hour and variable production overhead is $2 per hour. Fixed production overheads are absorbed at a rate of $20 per skilled labour hour. If the job is undertaken the skilled labour will be withdrawn from work on making items that earn a contribution of $25 per skilled labour hour.

What is the minimum price that should be charged if this special job is undertaken?

Which of the following would you do to improve throughput accounting ratio?

Which of the following is an example of a fixed cost?

Which of the following is a disadvantage of ABC?

A company produces two types of product in three areas.

Area 1:
* Product 1- 16 hours per product
* Product 2 - 20 hours per product
* Hours available: 22,000

Area 2
* Product 1- 8 hours per product
* Product 2 - 20 hours per product
* Hours available: 18,000

Area 3
* Product 1- 24 hours per product
* Product 2 - 12 hours per product
* Hours available: 24,000

Contribution per unit ($)
*Product 1: $8
* Product 2: $16

Which two of the following are the variables of the question?

Which of the following are the constraints of the question
1 16x + 20y ≤ 22,000
2 8x + 20 y ≤ 18,000
3 24x + 12y ≤ 24,000
4 x,y ≥ 0

Selling Price: $30
Variable Costs: $12
Fixed Costs: $520,000
Budgeted Production: 40,000 units

How many units need to be sold to achieve a profit of $200,000?

Total Overheads: $250,000
Inspection costs: 25%
Client Meeting costs: 75%
No. of Inspections: 40
No. of Clients: 70

What is the cost per driver of Inspections?