Chapter 2_Quiz_MA (DBS)

A firm has to pay a 20c per unit royalty to the inventor of a device which it manufactures and sells.

How would the royalty charge be classified in the firm's accounts?

• Selling expense

• Direct expense

• Production overhead

• Administrative overhead

Which of the following would be classed as indirect labour?

• Assembly workers in a company manufacturing televisions

• A stores assistant in a factory store

• Plasterers in a construction company

• A consultant in a firm of management consultants

A manufacturing firm is very busy and overtime is being worked.

How would the amount of overtime premium contained in direct wages normally be classed?

• Wood used to make a chair

• Factory Overheads

• Direct labour costs

• Administrative overheads

A company makes chairs and tables. Which of the following items would be treated as an indirect cost?

• Wood used to make a chair

• Metal used for the legs of a chair

• Fabric to cover the seat of a chair

• The salary of the factory supervisor

A company manufactures and sells toys and incurs the following three costs:

Which of these are classified as distribution costs?

• Rental of the finished goods warehouse

• Depreciation of its own fleet of delivery vehicles

• Commission paid to sales staf

Which of the following best describes a controllable cost?

• A cost which arises from a decision already taken, which cannot, in the short run, be changed.

• A cost for which the behaviour pattern can be easily analysed to facilitate valid budgetary control comparisons.

• A cost which can be influenced by its budget holder.

• A specific cost of an activity or business which would be avoided if the activity or business did

  not exist.

Which of the following best describes a period cost?

• A cost that relates to a time period which is deducted as expenses for the period and is not included in the inventory valuation.

• A cost that can be easily allocated to a particular period, without the need for arbitrary apportionment between periods.

• A cost that is identified with a unit produced during the period, and is included in the value of inventory. The cost is treated as an expense for the period when the inventory is actually sold.

• A cost that is incurred regularly every period, eg every month or quarter.

A company employs four supervisors to oversee the factory production of all its products. How would the salaries paid to these supervisors be classified?

• As a direct labour cost

• As a direct production expense

• As a production overhead

• As an administration overhead

The following costs were incurred in February:

Direct materials …………....   RM 43,000

Direct labor ………………....  RM 16,000

Manufacturing overhead …..  RM 37,000

Selling expenses …………... RM 27,000

Administrative expenses…… RM 26,000

 

Calculate the conversion cost during the month.

Which of the following costs would be considered production overhead in the production of bread?

• Flour
• Electricity
• Yeast
• Sugar