MAC2601 Oct/Nov 2013 exam paper — questions

Every question, by topic

1. Question 1.1 · Accounting for material, labour and overheads; inventory valuation · 2 marks

   Abbettery (Pty) Ltd is a construction company that builds large shopping malls as well as residential complexes, and it values its inventory using the FIFO method. Its inventory records for October 2013 show an opening inventory on 1 October of 150 units at R6,50 each, and a purchase on 3 October of 1 200 units at R6,80 each; freight charges equal to 10% of the cost price per unit apply, and the average ZAR/USD exchange rate for that day was 9,9275. On 5 October, 800 units were issued, and on 8 October 25 units (out of units bought on 8 October) were returned to the supplier. Using the FIFO method, what is the value of the inventory purchased on 3 October 2013? Choose the correct option: A. R8 796; B. R8 061; C. R8 976; D. R8 160.Show the full questionShow less

2. Question 1.2 · Accounting for material, labour and overheads; inventory valuation · 2 marks

   Referring again to Abbettery (Pty) Ltd, which uses the FIFO method of inventory valuation, which one of the following statements correctly describes this inventory valuation method? A. Materials received or purchased first are issued last; B. Materials received or purchased first are issued first; C. Materials with the highest value are issued first; D. Materials with the lowest value are issued last.Show the full questionShow less

3. Question 1.3 · Direct and absorption costing · 2 marks

   Nkandla (Pty) Ltd absorbs its production overheads on the basis of machine hours. In the preceding accounting period, the budgeted production overheads were R200 000 against actual production overheads of R225 000; budgeted machine hours were 40 000 against actual machine hours of 35 000; and budgeted units produced were 25 000 against actual units produced of 22 500. Determine whether the overheads for the preceding period were over- or under-applied, and by how much: A. R50 000 over applied; B. R50 000 under applied; C. R45 000 under applied; D. R45 000 over applied.Show the full questionShow less

4. Question 1.4 · Direct and absorption costing · 2 marks

   A chicken farm applies a predetermined overhead recovery rate based on machine hours. For the year, budgeted farming overheads amounted to R600 000, while actual farming overheads amounted to R750 000. During the year the farm absorbed R810 000 of farm overheads based on 125 000 actual machine hours worked. Calculate the farm's budgeted level of machine hours for the year (rounded to the nearest whole number): A. 92 395 hours; B. 125 000 hours; C. 92 593 hours; D. 126 000 hours.Show the full questionShow less

5. Question 1.5 · Job costing · 2 marks

   Jambo Plumbing Services is in the process of implementing a costing system and requires the expertise of a management accountant; its manager, P. Postman, approaches you for advice. Which one of the following statements is NOT true about a job costing system? A. Job costing is appropriate where homogeneous products are manufactured using the same production facilities; B. Job costing is appropriate where heterogeneous products are manufactured using the same production facilities; C. A common example of a business where job costing is applied is a workshop where repairs are carried out on different vehicles and the cost of repairing each vehicle is calculated separately; D. Job costing is not appropriate in industries where large quantities of similar products pass through a single process or consecutive processes during production.Show the full questionShow less