MA1 first week quiz

A product requires 2.5 kg of direct materials costing $4.85 and 6 hours of total direct labour hours costing $24.50. Packaging costs $3 per unit. Fixed production overhead is averaged at $120,000 per year for an estimated yearly production of 50,000 units. What is the prime cost? The production cost?

• Prime cost = $32.35 and production cost = $32.35.

• Prime cost = $29.35 and production cost = $34.75.

• Prime cost = $32.35 and production cost = $34.75.

• Prime cost = $34.75 and production cost = $34.75

Cost of transporting materials into the factory is part of the, while cost of transporting the finished product to the customers is part of.

• Prime cost; distribution cost.

• Production cost; SDA expense.

• Distribution cost; selling cost.

• Production cost; administration cost.

Which of the following statements about total cost is false?

• The cost that varies with volume of activity is variable cost.

• The cost that increases per unit of output is fixed cost.

• The cost that varies but not proportionately with activity volume, is semi-fixed cost.

• The cost that decreases only when a certain chunk of activity is reduced, is stepped fixed cost.

Which of the following statements about unit cost is true?

• Fixed cost per unit doubles when activity volume halves.

• Variable cost per unit doubles when activity volume doubles.

• Mixed cost per unit increases when activity volume increases.

• Stepped cost per unit is unaffected by changes in activity volume

A railway company deals with a lot of indirect costs, with various cost behaviours. Which one is incorrectly matched?

• Station master salary – fixed.

• Printed season pass – variable.

• Cost per coach – semi-variable.

• Ticket counter staff salary – stepped.

Given a phone assembly plant, which one of the following is wrongly matched?

• Assembly worker – direct labour.

• Factory manager – indirect labour.

• Machinery lubricant – direct material.

• Screws bought in bulk – indirect material.

Packaging such as plastic container and box for end-product is an example of:

• Direct material

• Indirect material

• Direct expense

• Indirect expense

Accounts department has received an invoice from supplier. Which documents will you need to check the details of the invoice to?

• Delivery note & purchase requisition

• Advice note & dispatch note

• Purchase order & GRN

• Purchase requisition and GRN

Which member of staff is most likely to raise a GRN?

• Store clerk

• Delivery driver

• Sales ledger clerk

• Finance director

Which of the following documents would best supply the necessary financial details when charging direct material costs to cost units?

• Material requisition

• Goods received note

• Purchase order

• Purchase requisition