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CIMA
CIMAPRA17-BA2-1-ENG
Fundamentals of Management Accounting
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Question: 70
FL uses an absorption costing system. The overhead absorption rate for production overheads is $8.60 per direct labour
hour.
Budgeted production overhead costs for the year were $473,000 and actual costs incurred were $468,000. 56,000
labour hours were used.
Which ONE of the following statements is correct?
A . Overheads were under-absorbed by $5,000
B . Overheads were over-absorbed by $8,600
C . Overheads were under-absorbed by $8,600
D . Overheads were over-absorbed by $13,600
Answer: D
Question: 71
Refer to the Exhibit.
Fabex Ltd manufactures a household detergent called "Clear".
The standard data for one of the chemicals used in production (chemical XTC) is as follows:
(a) 50 litres used per 100 litres of �Clear� produced
(b) Budgeted monthly production is 1000 litres of �Clear�.
The closing inventory of chemical XTC for November valued at standard price was as follows:
Actual results for the period during December were as follows:
(a) 500 litres of chemical XTC was purchased for �1300.
(b) 550 litres of chemical XTC was used.
(c) 900 litres of �Clear� was produced.
It is company policy to extract the material price variance at the time of purchase.
What is the total direct material price variance (to the nearest whole number)?
A . �50 adverse
B . �50 favourable
C . �55 adverse
D . �55 favourable
Answer: A
Question: 72
CORRECT TEXT
Refer to the Exhibit.
PJ Ltd has forecast that the relationship between total overheads and machine hours will be as follows:
If the budget is to be based on 4,000 machine hours, the variable overhead absorption rate will be:
*per machine hour.
Give your answer to 2 decimal places.
Answer: 4.46
Question: 73
An overtime premium may be defined as:
A . The rate of pay at which overtime hours are paid
B . A premium paid to workers with special skills
C . The additional payment made during overtime hours
D . The total number of overtime hours worked
Answer: C
Question: 74
A company operates an absorption costing system. Overheads are absorbed using a pre-determined absorption rate
using labour hours. In the period actual labour hours were 10,600, 400 hours below budget. Actual overheads for the
period were �234,680 and there was an under-absorption of overheads of �1,480.
What was the budgeted level of overheads?
A . �242,000
B . �233,200
C . �245,072
D . �224,720
Answer: A
Question: 75
Refer to the exhibit.
Budget information for �Crome Ltd� is as follows:
The budgeted cost allowance for the sale of 1000 units would be:
A . �25,846
B . �30,000
C . �32,000
D . �48,000
Answer: B
Question: 76
Within a relevant range of output, the variable cost per unit of output will:
A . Increase as output increases
B . Reduce as output increases
C . Remain constant as output increases
D . Be impossible to tell without further information
Answer: C
Question: 77
Which THREE of the following are characteristics of job costing?
A . It is appropriate where homogeneous products are manufactured
B . It is only appropriate in manufacturing environments
C . Costs are traced to separately identifiable cost units
D . It cannot be applied in a public sector or not for profit organization
E . A separate work in progress account is maintained for each cost unit
F . It is a specific order costing system
Answer: C,E,F
Question: 78
SP Limited operates an absorption costing system. It uses a predetermined overhead absorption rate based on machine
hours. Budgeted factory overheads for the year were �1,080,000 but actual overhead incurred was �1,046,000.
Budgeted machine hours were 120,000 and actual machine hours were 119,000.
Overheads for the period were.
A . Under-absorbed by �25,000
B . Under-absorbed by �9,000
C . Over-absorbed by �25,000
D . Over-absorbed by �9,000
Answer: C
Question: 79
CORRECT TEXT
A product sells for �10 per unit and has an annual break-even volume of 50,000 units. The annual fixed costs are
�100,000.
The variable cost per unit is:
Give your answer to 2 decimal places.
Answer: �8.03
Question: 80
In an integrated cost and financial accounting system, the accounting entries for the payment of net wages to indirect
production workers would be:
A . Debit: Bank accountCredit: Wages control account
B . Debit: Work in progress control accountCredit: Bank account
C . Debit: Wages control accountCredit: Bank account
D . Debit: Production overhead control accountCredit: Bank account
Answer: C

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