Sample Exam 324 3 
Management Accounting
Use the data below to answer questions 1 through 3.
The following data for ABC Ltd pertain to the production of 3,000 skate gaurds during April.
Direct Materials (All materials purchased were used):
Standard cost: $9.00 per meter.
Total actual cost: $5,985.
Standard cost allowed for units produced was $5,400.
Materials efficiency variance was $270 unfavourable.
1) The flexible budget amount expressed in number of input units per output unit is: a) 0.20 meters
b) 0.21 meters
c) 0.19 meters
d) 600.00 meters
e) None of the above
2) The materials price variance is: a) $855 favorable
b) $315 favorable
c) $855 unfavorable
d) $315 unfavorable
e) None of the above
3) The actual cost per meter is: a) $10.500
b) $ 9.975
c) $ 9.500
d) $ 9.474
e) None of the above
4) A chemical company sells liquid acid for $2.00 per litre. The production costs per 10,000 litres are:
Material $ 3,500
Direct labor $ 2,500
Overhead $ 5,000
Upon completion, the acid is poured into 1-litre containers and sent to the distribution centre. The cost of each container is $0.175 and transportation costs are $0.025 per litre.
The company has the ability to further process the acid into cleaning fluid. For every 50 litres of acid input, 25 litres of cleaning fluid are output. If the company decides to continue processing, total production costs will increase by $8,000 per 10,000 litres of acid processed (resulting in 5,000 litres of cleaning fluid) over existing amounts. 1 litre of cleaning fluid can be sold for $4.20. The litre containers used to package the cleaning fluid cost $0.350 each and transportation costs are $0.050 per litre of cleaning fluid.
Should the company process further and sell cleaning fluid? a) Yes. Profit will increase by $7,000
b) Yes. Profit will increase by $1,000
c) No. Profit will decrease by $7,000
d) No. Profit will decrease by $1,000
e) None of the above will result.
8. Which of the following is NOT an
Use the data below to answer questions 1 through 3.
The following data for ABC Ltd pertain to the production of 3,000 skate gaurds during April.
Direct Materials (All materials purchased were used):
Standard cost: $9.00 per meter.
Total actual cost: $5,985.
Standard cost allowed for units produced was $5,400.
Materials efficiency variance was $270 unfavourable.
1) The flexible budget amount expressed in number of input units per output unit is: a) 0.20 meters
b) 0.21 meters
c) 0.19 meters
d) 600.00 meters
e) None of the above
2) The materials price variance is: a) $855 favorable
b) $315 favorable
c) $855 unfavorable
d) $315 unfavorable
e) None of the above
3) The actual cost per meter is: a) $10.500
b) $ 9.975
c) $ 9.500
d) $ 9.474
e) None of the above
4) A chemical company sells liquid acid for $2.00 per litre. The production costs per 10,000 litres are:
Material $ 3,500
Direct labor $ 2,500
Overhead $ 5,000
Upon completion, the acid is poured into 1-litre containers and sent to the distribution centre. The cost of each container is $0.175 and transportation costs are $0.025 per litre.
The company has the ability to further process the acid into cleaning fluid. For every 50 litres of acid input, 25 litres of cleaning fluid are output. If the company decides to continue processing, total production costs will increase by $8,000 per 10,000 litres of acid processed (resulting in 5,000 litres of cleaning fluid) over existing amounts. 1 litre of cleaning fluid can be sold for $4.20. The litre containers used to package the cleaning fluid cost $0.350 each and transportation costs are $0.050 per litre of cleaning fluid.
Should the company process further and sell cleaning fluid? a) Yes. Profit will increase by $7,000
b) Yes. Profit will increase by $1,000
c) No. Profit will decrease by $7,000
d) No. Profit will decrease by $1,000
e) None of the above will result.
8. Which of the following is NOT an