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AYB225 Management Accounting

Past examination questions, and additional practice questions

Questions 1-5Standard absorption costing and variances (lectures 5 and 6)

Questions 6-12 AC/VC (lecture 7)

Questions 13-15Weighted average process costing (lecture 8) Questions 16-18Service department allocation (lecture 9)
Questions 19-22Joint cost allocation (lecture 9)

Available past exam questions exist for lectures 5-9 only. There are none available for lectures 10-11. Providing you with these questions in no way indicates or limits the type of questions on the final exam. You are advised in preparing for the final examination to work through all your lecture material, and through all the practice and tutorial questions provided.

QUESTION 1

The following is data selected from the records of All–Standard Manufacturing Company, a company which employs a standard absorption cost system. Materials carried at actual cost.

Standard costs per unit

Direct labour (5 hrs @ $4 hr)$20.00
Direct materials (20kg @ $2 kg)40.00
Variable overhead (5 hrs @ $1.50 hr)7.50
Fixed overhead (5 hrs @ $3 hr)15.00 $82.50

Budget information for the month

Variable overhead$15,000
Fixed overhead30,000
Overhead is applied at a rate per direct labour hour.

Actual results – October operations

Miscellaneous variable overhead$5,000
Miscellaneous fixed overhead$26,000
Indirect labour (all variable)$4,000
Indirect materials (all variable)$2,000
Actual direct material used30,000
Actual direct materials cost$66,000
Actual direct labour cost$33,600
Actual production1,450 units
Actual direct labour hours8,000 hrs*
(* This figure represents 80% of normal capacity)

YOU ARE REQUIRED TO:
1. Calculate as many variances as is possible from the data given. (10 marks) 2. Show the journal entries for overhead for the month, including the entry to recognise overhead variances. (2 marks)

QUESTION 2
Lou Limited is a manufacturer of sporting goods. The firm uses a standard cost system, and an extract from the standard cost card for one of the firm’s products shows the following:

Variable factory overhead per unit$10
Fixed factory overhead per unit$7.00
Direct labour per unit2 hours

Factory overhead is applied per direct labour hour based on normal capacity, which is 75% of full capacity. Budgeted fixed overhead at full capacity is $22,750.

Actual data for the month of October 1996 follows:

Units produced3,800
Fixed overhead$24,000
Variable overhead$43,000

REQUIRED:
a) Explain in words whether the fixed overhead volume variance will be zero, favourable or unfavourable, and why. You are not required to calculate the variance. (1 mark) b) Calculate the standard hours allowed for production for the month. (1 mark) c) If the total budget overhead for actual hours worked was $63,500, what were the actual direct labour hours worked for the month? (1 mark) d) What amount would be debited to Work in Process account for fixed overhead if: 1. Standard absorption costing was used?

2. Standard direct (variable) costing was used? 3. Normal absorption costing was used?
4. Actual absorption costing was used? (4 marks) e) What is the firm’s denominator capacity in direct labour hours? (1 mark)

QUESTION 3
Matt Mott’s Manufacturing Company is a firm which produces a number of high-tech products. Some of the details from the standard cost specification of one of its products is as follows:

Total product cost per unit (assuming absorption costing) $341 Direct material cost per unit$125
Variable overhead cost per unit$72
Fixed overhead cost per...
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