MATS Lesson 8 - Starter

A budget for 8,000 units of output shows direct materials cost of £17,400 and a direct labour cost of £12,600. Actual output is 9,000 units.

Using a flexed budget which is correct?

• direct materials £19,575

  direct labour £14,175

• direct materials £19,575

  direct labour £12,600

• direct materials £17,400

  direct labour £14,175

• direct materials £17,400

  direct labour £12,600

Which of the following is a Fixed cost for a manufacturing business?

• Raw materials to make the product

• Salaries of maintenance staff

• Production workers paid on the basis of work done

• Royalties paid to the designer of the product

What is the Economic Order Quantity (EOQ) for material XX5?

• £1200

• 144,000 kg

• £144,000

• 1200 kg

Answer explanation

2x7200x20/£2

2880000/£2

A company pays its production-line employees on a piecework basis, but with a guaranteed rate. How much will R Williams be paid?

• £400

• £450

• £435

• £396

From the list below, what would be the best basis of apportionment for lighting and heating overheads?

• Carrying value of production equipment

• Number of employees

• Factory floor space

• Time spent servicing production equipment

What is the budgeted overhead absorption rate for each department if both are heavily automated?

• Cutting £9, Assembly £25

• Cutting £9, Assembly £75

• Cutting £20, Assembly £25

• Cutting £20, Assembly £75

What is the budgeted overhead absorption rate for each department if both are labour intensive?

• Cutting £9, Assembly £25

• Cutting £9, Assembly £75

• Cutting £20, Assembly £25

• Cutting £20, Assembly £75

Over-absorbed overheads are ​ ​ (a)   to production overheads and ​ (b)   to the statement of ​ (c)   .

Under-absorbed overheads are ​ (d)   to the total cost of production and ​ (e)   profits.

• debited
• credited
• profit and loss
• added
• reduce
• financial position
• increases
• subtracted