- 2 -

(A)

600

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02201010/CAPE 2008

1.

Which of the following provides analytical data for those who manage a firm?
(A)
(B)
(C)
(D)

2.

With reference to cost and management accounting, which of the following statements is MOST accurate?
(A)
(B)
(C)
(D)

3.

It requires a group of accounts that

is entirely different from the group of accounts used in financial accounting.
It focuses solely on determining how
much it costs to manufacture a product or provide a service.
It provides product or service cost
information as well as information for internal decision making.
It is required for business record
keeping as are financial accounting and tax accounting.

A firm estimates that its annual carrying cost for material ABC is $.30 per lb, demand is 50 000 lbs, and ordering
costs are $100 per order. The economic order quantity (EOQ) rounded to the nearest pound is
(A)
(B)
(C)
(D)

4.

Financial accounting
Internal auditing
Cost and management accounting
External auditing

1125 lbs
1 732 lbs
4 082 lbs
5 774 lbs

The MAIN function of a cost accountant is to

(A)

ascertain the cost of products and

services
(B)
present economic events in quantified
terms
(C)
report past results making use of
historical data
(D)
report on the performance of
management
5. The MAIN function of a financial accountant
is to
(A)
(B)
(C)
(D)

determine the cost of products and

services
present economic events in quantified
terms
advise management of financial
matters
provide information on demand to
management

6. Which stock valuation method assumes that ALL stocks are the same?
02201010/C APE2008

(A)
3- (B)
(C)
(D)

7.

The Ramsaran Co. requires 70 000 units of product G for the year. The units will be used evenly throughout the
year. It costs $80 to place an order. Its carrying cost is $15 per unit. What is the economic order quantity (EOQ)
rounded to the nearest whole unit?
(A)
(B)
(C)
(D)

8.

Last in first out (LIFO)

Average cost
First in first out (FIFO)
Retail inventory

600
690
800
864

Which of the following is NOT an ordering

cost?
(A)

(B)
(C)
(D)

Preparing the order

The merchandise ordered
Storing the inventory

Receiving the inventory

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02201010/CAPE2008

Items 9 - 10 refer to an item of inventory for Worme Company which has the following data for August 2007.
600 barrels at $9.00 each
950 barrels at $9.50 each
200 barrels at $9.70 each
560 barrels
Beginning inventory
Purchases August 5
Purchases August 15
Ending inventory

10. What is the value assigned to the ending inventory if

Worme uses the first in first out method (FIFO)?
(A)
(B)
(C)
(D)

9. What is the value assigned to the ending inventory if

Worme uses the last in first out method
(LEFO)?
(A)
(B)
(C)
(D)

11.

$4 480
$5 040
$5 360
$5 432

13.

(A)
(B)
(C)
(D)

fixed
constant
semi-variable
step
14.

12.

Variable cost behaviour means that with an

increase in activity,
(A)
(B)
(C)
(D)

total cost and cost per unit remain

constant
total cost remains constant and cost
per unit increases
total cost and cost per unit increase
total cost increases and cost per unit
remains constant

What is the BEST method of payment to

employees when output is difficult to measure
and where wages are not affected by the level of
output?
(A)
(B)
(C)
(D)

Mixed costs are also referred to as

$4 480
$5 040
$5 360
$5 432

Bonus
Piece-rate
Fixed salary
Commission

Which of the following types of cost is the

plastic that is used in the manufacture of dolls?
I.
II.
III.
IV.
(A)
(B)
(C)
(D)

Prime cost
Product cost
Direct cost
Fixed cost
I and III only
I, II and III only
I, II and IV only
II, III and IV only

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6-

Items 15 - 16 refer to the following information from

Jackson's Sales Work Schedule.
1 - 500 units
501 - 1000 units
1001 -1200 units
1201 and more units

19. Which of the following is characteristic of a

process-costing system?

$2.00 per unit

$3.00 per unit
$3.50perunit
$4.00 per unit

(A)

In one week Joan completed 1400 units, of which 50 were

rejected.

(D)

15. What method of remuneration is used by Jackson?

(A)
(B)
(C)
(D)

(B)
(C)

Differential hourly rate

Commission
Differential piece work
Fixed salary

20. A process-costing system is used by a

company that
(A)
(B)

16. What was Joan's income for the week?

(A)
(B)
(C)
(D)

Work-in-process inventory is restated

in terms of completed units.
Costs are accumulated by order.
It is used by a company which
manufactures custom machinery.
Standard costs are not applicable.

21
.

$1 400
$2 800
$3 800
$4 000

(C)
(D)

produces heterogeneous products

produces items by special request of
customers
produces homogeneous products
accumulates costs by job

Which of the following BEST describes the type

of costing often called 'full costing'?

17. The support department allocation method that is the

MOST widely used because of its simplicity is
the

(A)
(B)
(C)
(D)

Standard costing
Variable costing
Activity-based costing
Absorption costing

22.

(A)
(B)
(C)
(D)

step-down method
reciprocal allocation method
direct allocation method
sequential allocation method

18. The cost of a foreman's salary in a factory is classified

under
V.
VI.
VII.

02201010/C APE 2008

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(A) fixed production costs

(B) variable production costs
(C) distribution costs

Which of the following would be included in

product costs under both absorption costing
and variable costing?
(A)
(B)
(C)
(D)

Supervisory salaries
Equipment depreciation
Variable manufacturing costs
Variable administrative expenses

VIII.

02201010/C APE 2008

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(D) administrative costs

Items 23 - 24 refer to the following information.

The Caribbean Company manufactures a single product. The following data relate to the year 2007:
Variable cost per unit
Production
Selling and administrative
Fixed costs in total
Production
Selling and administrative

$50
$25
$200 000
$85 000

During 2007,5 000 units were produced and 4 800 units were sold. There were no beginning inventories.
23. The value of finished goods inventory at the
end of 2007 using variable costing is
(A)
(B)
(C)
(D)

24. Under absorption costing the cost of goods

sold for 2007 is

$6 000 greater than under absorption

costing
$7 000 less than under absorption
costing
$8 000 less than under absorption
costing
The same as absorption costing

(A)
(B)
(C)
(D)

$240 000
$432 000
$450 000
$552 000

25. Eversley Inc. manufactures products on a job-order basis. The job cost sheet for the Rose Hill job shows the following
for the month of March:
Direct materials
Direct labour (100 hours at 7.25)
Machine hours incurred
Predetermined overhead rate per machine hour

$5 000
$ 725
40 hours
. $ 26

At the end of March, the total cost appearing on the Rose Hill job cost sheet will be
(A)
(B)
(C)
(D)

$5
$5
$6
$8

725
765
765
325

-o-

'J,

26.

Mary worked 9 hours on Job ABX. The regular

rate is $7 per hour. Job ABX required 7 hours of
regular time and 2 hours overtime at a rate of 50
per cent above the regular rate. What was the
cost of labour applied to Job ABX?
(A)
(B)
(C)
(D)

27.

$56
$63
$70
$94.50

An order for a job was received. Labour is the only direct cost at $80 per hour and indirect costs are $40 per
hour. What is the total cost if 20 hours are spent on the job?
(A)
(B)
(C)
(D)

$ 120
$ 800
$1 600
$2 400

Items 28 - 29 refer to the following information.

During April, city employees worked only on Job Siera. At the end of the month, $714 of overhead had been
applied to this job. The company allocated overhead at the rate of 50 per cent of direct labour cost. Total workin- process inventory at the end of the month was $2 819.
2 8. What was the amount of direct labour included in Job Siera?
(A)
(B)
(C)
(D)

$ 357
$1071
$1428
$2 142

29. What was the amount of direct materials included in Job Siera?
(A)
$ 677
(B)
$1 391
(C)
$2 142
(D)
$4 658
Items 30 - 31 refer to the following information.

(A)
(B)
(C)
(D)

$11.33
$11.45
$28.00
$29.00

The Hilary Firm uses a job-order costing system

allocating overhead based on machine hours.
Cost data for a production period are as follows:

Overheads 85 000
Machine hours 7 500
Prime costs 125 000
30.

Estimated Actual $ $
82 605
7 210
126 000

What is the predetermined overhead rate per

machine hour?

31.

What is the amount of over- OR under- absorbed

overhead?
(A)
(B)
(C)
(D)

$ 619 under-absorption
$ 916 over-absorption
$ 916 under-absorption
$9116 over-absorption

32. Which of the following statements about activitybased costing is FALSE?

(A)
(B)
(C)
(D)

It promotes cost control.

Indirect cost allocation bases are likely
to be cost drivers.
It provides less information than cost
systems previously used.
It provides more accurate product
costs.

1234. The amount allocated to Product A for moulding is

(A)
(B)
(C)
(D)

33. The activity rate under the activity-based costing

system for finishing is
(A)
(B)
(C)
(D)

37. Which of the following is NOT a benefit of

budgeting?

$18.53
$21.67
$46.33
$65.00

28.

(A) It uncovers potential bottlenecks

before they occur.
29.
(B) It coordinates the activities of the
entire organization by integrating the
plans and objectives of the various
parts.
30.
(C)It ensures that accounting records
comply with generally accepted
accounting principles.
31.
(D) It provides benchmarks for
evaluating
Subsequent performance

35. Peter wants to compute the cost for preparing a tax

return for his client. Labour is the only direct
cost at $150 per hour. Indirect costs are $80 per
labour hour. What is the total direct cost and
indirect cost respectively, if 8 hours are spent
preparing the tax return?

(A)

$ 4 800
$12 800
$17 336
$38 703

Direct
Cost

Indirect
Cost

$ 640

$1 200

$1the
100following information.
$ 900
Items 33 - (B)
34 refer to
(C)
$1 200
$ 640
Travis Inc.(D)
has two$1
products,
A
and
B.
The company uses an activity-based costing system. The estimated total
240
$ 230
cost and expected activity for EACH of the company's THREE activity cost pools are as follows:
Activity
Cost Pool
Cost

Estimated
Product A

Moulding

$17 600

800

300

1 100

Waxing
Finishing

$12 000
$26 000

500
800

200
400

700
1 200

3 6. Relative to traditional product costing, activity- based

costing differs in the way costs are
(A)

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02201010/C APE 2008

Expected Activity
Product B
Total

processed

(B)
(C)
(D)

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02201010/CAPE2008

allocated
benchmarked
incurred

Items 38 - 39 refer to the following information.

Items 41 - 44 refer to the following information.

Nash Sports Ltd sells football kits. Ten per cent

of its sales are cash transactions and the
remainder is on one month's credit. Nash Sports
Ltd gets one month's credit on ALL purchases
made. Sales and purchases are as follows:

TheAlgore Company uses a standard costing

system. Data for November are as follows:
Standards
Material: 2 litres per unit at $3 per litre
Labour: 3 hours per unit at $4.20 per hour

December 2006
January 2007
February 2007

Sales
Purchases
$
$
30 000 16 000
25 000 14 000
18 000 20 000

Actual
Production: 2 750 units were produced during
the month
Material: 5 000 litres at $3.10 per litre
Labour: 9 000 hours at $4.50 per hour

38. How much was paid to suppliers in the month of

February 2007?
41.
(A)
(B)
(C)
(D)

What is the material price variance?

$14 000

$16 000
$20000
$25 000

(A)
(B)
(C)
(D)

$0
$ 500 F
$ 500 U
$1 500 F

39. How much cash was collected from credit sales in the
month of February 2007?
40.

(A)
$16200
A standard
is 500
(B) cost$22
(C)
(D)

$24 000
$27 000

42. What is the material quantity variance?

(A)
(B)
(C)
(D)

$1 500 U
$1 500 F
$1 550 U
$6 750 F

43.
What is the labour rate variance?

(A)
(B)
(C)

the cost that will produce maximum

profit
a target cost for the period ahead
the average cost of production in the
cost period

(D)

always greater than actual cost

(A)
(B)
(C)
(D)
$1 050F
$1 090 F
$3 150 F
$3 150 U
44. What is the labour efficiency variance?

I
(A)
(B)
(C)
(D)

$2 610 F
$2 610 U
$2 700 F
$2 700 U

45.

9-

Which of the following costs is a predetermined

amount usually expressed on a per unit basis?
(A)
(B)
(C)

A variable marketing overhead

A benchmark
A standard

(A)
(B)
(C)
(D)

250
750
1 000
1250

(D)

46.

A fixed factory overhead

A product has a selling price of $150 and

variable costs of $30. The company has fixed
costs of $30 000. What is the break-even point in
units?

47. A company has break-even sales of $30 000, annual sales of $50 000, and budgeted sales of $40 000. The margin of
safety is
(A)
(B)
(C)
(D)

10%
25%
40%
50%

48. A product has a selling price of $20 and variable costs of $12. Fixed expenses total $ 120 000 annually. How many
units must be sold to yield a profit of $30 000?
(A)
(B)
(C)
(D)

12 500
18 750
20 000
25 000
*

Item 49 refers to the following information

on the Jamaica Banana Group's products.

$
Selling price per unit
Variable cost per unit
Total fixed cost
49.

How many units must the Jamaica Banana Group sell in order to achieve operating income of $200 000?
(A)
(B)
(C)
(D)

50.

300
150
400 000

1 000
2 000
4 000
6 000

The term 'standard hours allowed 'measures

(A)
(B)
(C)
(D)

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02201010/C APE 2008

budgeted output at actual hours

budgeted output at standard hours
actual output at standard hours
actual output at actual hours

51.

Actual fixed overhead minus budgeted fixed

overhead equals the
(A)
(B)
(C)
(D)

fixed overhead volume variance

fixed overhead spending variance
non-controllable variance
controllable variance

52.

The net present value and internal rate of return

are superior methods to the pay-back method
because they
(A)

10-

(B)
(C)
(D)

consider the time value of money

require less input
reflect the effects of depreciation and
corporation taxes

are easier to implement

w,
53. The net present value of a project is positive.
However, the company did NOT accept this
project. One can assume that, for this project,
the
(A)
(B)
(C)
(D)

qualitative factors outweigh the

benefit of the investment
positive net present value is
unacceptable
net initial investment cannot be
recovered
return is greater than that required by
the company

54. A weakness of the internal rate of return for

screening investment projects is that it
(A)

does not consider the time value of

money
assumes that the company is able to
reinvest cash flows from the
project at the company's discount
rate
(C)
assumes that the company is able to
reinvest cash flows from the
project at the internal rate of return
(D)
does not take into account all the cash
flows from a project
(B)

IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR WORK ON THIS TEST.

02201010/C APE 2008

i.