Exam 11: Introduction to Accounting

Boo-keeper Ltd prepares tax returns for clients. The firm employs six bookkeepers who cost the firm £10,000 in total each week. Each bookkeeper is expected to charge 30 hours per week to client jobs. At the end of the week the total hours charged by the six bookkeepers to client jobs is 150. The cost of spare capacity is closest to:

Use the following information for Question : Four products are manufactured in a labour-intensive process by XYZ: Alpha Beta Gamma Delta Selling price per unit 100 150 90 200 Variable costs per unit 45 85 30 110 Labour hours 2 4 3 4 -Assuming an overall capacity constraint, what is the ranking order of products for XYZ to produce to maximise its profitability:

The accounting system which records production costs for a batch of identical goods is:

QRS has extracted the following information from its inventory records. Timber and metal are in regular use by the company but Plastic is no longer used by the company. Inventory record Quantity Purchase Replacement Scrap in stock price price value Timber 150\ 11.50 \ 12.00 \ 3.25 Metal 40 \ 6.75 \ 6.90 \ 1.76 Plastic 300 \ 3.45 \ 3.50 \ 1.10 QRS has been asked to produce a special order which requires 110 pieces of timber, 80 pieces of metal and 400 pieces of plastic. -The accounting cost of materials (i.e. the amount charged to a job based on traditional accounting principles) is closest to:

QRS has extracted the following information from its inventory records. Timber and metal are in regular use by the company but Plastic is no longer used by the company. Inventory record Quantity Purchase Replacement Scrap in stock price price value Timber 150\ 11.50 \ 12.00 \ 3.25 Metal 40 \ 6.75 \ 6.90 \ 1.76 Plastic 300 \ 3.45 \ 3.50 \ 1.10 QRS has been asked to produce a special order which requires 110 pieces of timber, 80 pieces of metal and 400 pieces of plastic. -The relevant cost of materials for the special order is closest to:

Goods that have begun the production process but which have not yet been completed are referred to as:

Use the following comparison of alternative equipment investment decisions for STU Alternative 1 Alternative 2 Cost of equipment \ 100,000 \ 150,000 Revenue \ 35,000 \ 50,000 Depre ciation per annum (25\%) -\ 25,000 -\ 37,500 Cash ope rating costs -\ 15,000 -\ 16,000 Loss -\ 5,000 -\ 3,500 -Before making any decision on a relevant cost basis, STU Ltd also needs to consider:

Four products are manufactured by MNO: Maxi Midi Mini Micro Selling price per unit 600 400 300 250 Variable labour costs per unit ( \4 0/hour) 250 120 140 90 Variable material costs per unit 275 250 100 110 -Each of the four products takes two production hours. Assuming production hours as the overall capacity constraint, the ranking order of products for MNO to maximise its profitability is:

Use the following information about the cost of quality for a company Staff training for quality system 8,000 Warranty repairs 6,000 Quality testing during production 12,000 Customer discounts for faults 5,000 Waste \& rework during production 5,000 Quality system costs 15,000 51,000 -The principal conclusion that can be drawn from this information is that the company:

Four products are manufactured by MNO: Maxi Midi Mini Micro Selling price per unit 600 400 300 250 Variable labour costs per unit ( \4 0/hour) 250 120 140 90 Variable material costs per unit 275 250 100 110 -Applying the theory of constraints and a throughput accounting approach, and assuming labour to be the bottleneck constraint, the ranking order of products for MNO to maximise its profitability within the labour constraint is:

JKL Group has a rental cost of €25,000 per month with a four-year lease term. Casual staff are employed on a weekly basis to carry out telephone sales. The cost of casual staff is €12,000 per month and telephone call costs are €5,000 per month. -An offshore call centre has offered to carry out the telephone sales activity from its own premises and using its own staff and telephone services for a fixed payment of €15,000 per month. The call centre's outsourcing proposal should be:

Accounting for professional service firms differs from manufacturing mainly because:

Use the following comparison of alternative equipment investment decisions for STU Alternative 1 Alternative 2 Cost of equipment \ 100,000 \ 150,000 Revenue \ 35,000 \ 50,000 Depre ciation per annum (25\%) -\ 25,000 -\ 37,500 Cash ope rating costs -\ 15,000 -\ 16,000 Loss -\ 5,000 -\ 3,500 -On a relevant cost basis, STU Ltd should:

JKL Group has a rental cost of €25,000 per month with a four-year lease term. Casual staff are employed on a weekly basis to carry out telephone sales. The cost of casual staff is €12,000 per month and telephone call costs are €5,000 per month. -For JKL Group, rental is

A standard cost may be defined as: