Deck 24: Financial Statements for Manufacturing Entities

Question 1

Which of the following is not an example of a factory cost?

A) Depreciation of plant and equipment
B) Depreciation of the factory
C) Depreciation of the production manager's car
D) Depreciation of the general manager's car

Answer 1

Depreciation of the general manager's car

Question 2

This category of inventory is required at the start of production and is usually material in value, relative to the value of the final finished product:

A) Raw materials
B) Work-in-progress
C) Finished goods
D) Consumables

Answer 2

Raw materials

Question 3

If everything in the manufacturing account remains constant, but the inventory of raw materials increases during the period, then:

A) Prime cost will decrease and the factory cost of goods completed will decrease
B) Prime cost will increase and the factory cost of goods completed will increase
C) Prime cost will increase and the factory cost of goods completed will decrease
D) Prime cost will decrease and the factory cost of goods completed will increase

Answer 3

Prime cost will decrease and the factory cost of goods completed will decrease

Question 4

Factory charge: £7,040 x 90% = £6,336 Administration charge £7,040 x 10% = £704
What is the charge to the manufacturing account for power, heat and light in the period? Refer To: [acc]

A) £5,904
B) £6,336
C) £7,040
D) £7,600

Question 5

Factory charge: £7,040 x 90% = £6,336 Administration charge £7,040 x 10% = £704
What is the charge to the income statement for power, heat and light in the period? Refer To: [acc]

A) £656
B) £680
C) £704
D) £760

Question 6

Assume all other entries in the manufacturing account remain constant. If work-in-progress decreases during the period, then:

A) Prime cost will decrease
B) Prime cost will increase
C) The factory cost of goods completed will decrease
D) The factory cost of goods completed will increase

Question 7

The manufacturing company has an annual stock take, the factory did not cease production during the stock take and some goods in work in progress (costing £11,000) were later counted again and included in finished goods (cost £15,000), as a result net profit was:

A) Overstated by £4,000
B) Overstated by £11,000
C) Overstated by £15,000
D) Overstated by £26,000

Question 8

The following information relates to Questions 8 and 9
You are given the following information for the year ended 31 October 20X1:


-The value of raw materials consumed in the period is:

A) £52,000
B) £57,500
C) £60,000
D) £61,500

Question 9

The following information relates to Questions 8 and 9
You are given the following information for the year ended 31 October 20X1:


-Prime cost in the period is:

A) £77,000
B) £81,000
C) £82,500
D) £91,000

Question 10

The value of factory cost of goods completed in the period is:

A) £87,000
B) £91,000
C) £91,500
D) £101,000

Question 11

An increase in the figure for inventory of raw materials will:

A) Increase the prime cost
B) Reduce the prime cost
C) Increase factory overheads
D) Reduce factory overheads

Question 12

A reduction in the work-in-progress figure will:

A) Decrease the factory cost of goods completed
B) Increase the factory cost of goods completed
C) Decrease the prime cost
D) Increase the prime cost

Question 13

What is the prime cost?
An extract from a manufacturing firm's trial balance provides the following information:

A) £66,000
B) £64,000
C) £68,000
D) £80,000

Question 14

The factory cost of goods completed is £81,000
Given this information, the closing work in progress must be:
An extract from a manufacturing firm's trial balance provides the following information:

A) £4,400
B) £4,900
C) £5,400
D) £6,900

Question 15

Assuming a transfer cost of factory cost plus 10%, what is the gross profit of the retail part of the business?
An extract from a manufacturing firm's trial balance provides the following information:

A) £14,000
B) £5,900
C) £5,400
D) £(4,100)

Question 16

The prime cost of goods manufactured is the total of:

A) Direct factory costs
B) All material cost and labour costs
C) All costs before work-in-progress
D) Factory cost of goods completed.