T3 Question Quide

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t3Question 1
Marks: 2
XYZ Ltd has a labour intensive assembly department. Which of the following methods of absorbing overheads is likely to be used for that department? Choose one answer.
| a. Direct material cost method. | |
| b. Direct labour cost method. | |
| c. Machine hours | |
| d. Direct labour hours method. | |
Question 2
Marks: 1
A cost centre is a
Choose one answer.
| a. A unit of production | |
| b. a management accounting department that accumulates cost information | | | c. head office department responsible for allocating overheads | | | d. function or area into which costs can be organised | | Question 3

Marks: 2
The following details relate to a company: Calculate the most appropriate overhead absorption rate for the assemby department. | Machining | Assembly | |
Total cost centre overhead | £120000 | £180000 | |
Machine Hours | 15000 | 9000 | |
Labour hours | 2000 | 8000 | |
Choose one answer.
| a. £8 per machine hour | |
| b. £18 per labour hour | |
| c. none of these | |
| d. £5 per machine hour | |
| e. £22.50 per labour hour | |
Question 4
Marks: 2
Which of the following is likely to be classified as a direct material cost of a motor car  wheel? Choose one answer.
| a. The metal used to manufacture it. | |
| b. All of these are correct | |
| c. The metal used to manufacture one of the tools used in the car wheel factory. | | | d. It depends on the number of cost centres | |
| e. The cost of operating the raw material stores in the factory. | | Question 5
Marks: 2
Which of the following statements best describes management accounting? Management accounting refers to the provision of information... Choose one answer.
| a. that managers can use to help them plan and control the business | | | b. For managers to keep shareholders informed on a regual basis | | | c. to assist potential investors to decide whether or not to buy shares in the company | | | d. To anyone who has a legitmate interest in the activities of the business | | Question 6

Marks: 2
When a business is faced with a limiting factor (one which limits the activity of an entity) and there is a choice to be made between options to follow, which of the following statements describes the optimal course of action?

Choose one answer.
| a. Choose the option which gives the highest unit contribution. | | | b. Aim to achieve a balance of activities covering all of the options. | | | c. Choose the option which gives the highest unit profit. | | | d. Choose the option which gives highest contribution per unit of limiting factor. | | Question 7

Marks: 2
If the contribution per unit increases, the break even point on the profit/volume chart will: Choose one answer.
| a. be unchanged | |
| b. move to the left | |
| c. move downwards | |
| d. move to the right | |
Question 8
Marks: 4
The following relates to four products made by Mehmet. In a situation of scace labour skills the product that Mehmet would prefer to produce most of would be: | A £| B £| C£ | D £|
Selling price | 30.80| 24.20 | 21.00 | 38.60 |
Labour £4 per hour | 16| 8 | 12 | 16 |
Material costs | 8 | 6 | 2 | 8 |
Fixed costs | 1.9 | 2.2 | 2.5 | 1.3 |
Choose one answer.
| a. Product A | |
| b. Product C | |
| c. Product D | |
| d. Product B | |
Question 9
Marks: 2
Which of the following statements is true?
Choose one answer.
| a. A direct cost can be identified with specific units and products | | | b. All of these are correct | |
| c. An example of a direct cost is material used in the factory | | | d. A direct cost is a cost that can be easily and economically identified with a specific cost centre | | Question 10

Marks: 4
Given the following data for Emma Crystal Jewels:
Fixed costs £20000...
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