Question 1

Christian the management accountant at a car manufacturer has been given a list of costs that have been incurred due to accidents and errors either occurring or being prevented.
Which of the following are examples of non-conformance costs? Select ALL that apply.

Options :

A : Cost of scrap

B : Loss of goodwill

C : Cost of repairs to products

D : Inspection costs

E : Cost of repairs to equipment

Answer: A,B,C

Question 2

A company is preparing its annual budget and is estimating the number of units of Product A that it will sell in each quarter of year 2. Past experience has shown that the trend for sales of the product is represented by the following relationship:

y = a + bx where

y = number of sales units in the quarter a = 10,000 units b = 3,000 units x = the quarter number where 1 = quarter 1 of year 1

Actual sales of Product A in Year 1 were affected by seasonal variations and were as follows:

Quarter 1:14,000 units Quarter2: 18,000 units Quarter 3: 18,000 units Quarter 4: 20,000 units

Calculate the expected sales of Product A (in units) for each quarter of year 2, after adjusting for seasonal variations using the additive model.

Options :

A : The expected sales for year 2 Quarter 4 was 32700 units

B : The expected sales for year 2 Quarter 4 was 32000 units

C : The expected sales for year 2 Quarter 4 was 33000 units

D : The expected sales for year 2 Quarter 4 was 40000 units

Answer: B

Question 3

A company is preparing its annual budget and is estimating the number of units of Product W that it will sell in each quarter of year 2. Past experience has shown that the trend for sales of the product is represented by the following relationship:

Calculate the expected unit sales of Product W for each quarter of year 2, after adjusting for seasonal variations using the multiplicative model.

Options :

A : The sales forecast for year 2 Quarter 4 = 35,100 units

B : The sales forecast for year 2 Quarter 4 = 25,100 units

C : The sales forecast for year 2 Quarter 4 = 22,600 units

D : The sales forecast for year 2 Quarter 4 = 38,100 units

Answer: A

Question 4

Information about a company's only two products is as follows:

The revenue from the products must be in the constant mix of 2U:3V. Budgeted monthly sales revenue is $110,000.
Fixed costs are $23,095 each month.
To the nearest $10, what is the budgeted monthly margin of safety in terms of sales revenue?

Options :

A : $35,500

B : $74,500

C : $12,140

D : $38,940

Answer: A

Question 5

Which THREE of the following statements about different costing systems are correct?

Options :

A : Contribution per unit is the selling price per unit minus the variable costs per unit.

B : In a period during which finished goods inventory levels fall, profit using marginal costing will be higher than if absorption costing is used.

C : When valuing inventory using throughput costing, the direct labour cost is excluded.

D : Over-absorption of fixed production overhead is caused by actual sales exceeding budgeted sales.

E : Finished goods inventory will be assigned a higher value using throughput costing than absorption costing.

Answer: A,B,C

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