Question

Multiple choice questions. Choose one of the options which are A,B,C and D for each of the sub-question listed in numeral.

1. Accounting is the information system that

          A. measures business activity.

          B. communicates the results to decision makers.

          C. process data into reports.

          D. All of the above.

2. Which is not a characteristic of managerial accounting information?

          A. Emphasizes the external financial statements.

          B. Provides detailed information about individual parts of the company.

          C. Emphasizes relevance.

          D. Focuses on the future.

3. Which of the following is a direct cost of manufacturing a sportboat?

          A. Salary of engineer who rearranges plant layout.

          B. Depreciation on plant and equipment.

          C. Cost of boat engine.

          D. Cost of customer hotline.

Use the following information for questions 4-5. Two of Cheras IT’s production activities are kitting (assembling the raw materials needed for each computer in one kit) and boxing the completed products for shipment to customers. Assume that Cheras IT spends RM12,000,000 a month on kitting and RM22,000,000 a month on boxing. Cheras IT allocates the following:

• Kitting costs based on the number of parts used in the computer.
• Boxing costs based on the cubic feet of space the computer requires

Suppose Cheras IT estimates it will use 400,000,000 parts a month and ship products with a total volume of 20,000,000 cubic feet.

Assume that each desktop computer requires 125 parts and has a volume of 10 cubic feet.

4. What is the activity cost allocation rate?

	Kitting	Boxing
A.	RM0.03/part	RM0.05/cubic foot
B.	RM0.60/part	RM0.06/cubic foot
C.	RM0.03/part	RM1.10/cubic foot
D.	RM33.33/part	RM0.91/cubic foot

5. What are the kitting and boxing costs assigned to one desktop computer?

	Kitting	Boxing
A.	RM3.75	RM11.00
B.	RM0.30	RM137.50
C.	RM11.00	RM3.75
D.	RM4.05	RM148.50

6. Which of the following are indirect costs?

          (i) The depreciation of maintenance equipment

          (ii) The overtime premium incurred at the specific request of a customer

          (iii) The hire of a tool for a specific job

          A. Item (i) only

          B. Items (i) and (ii) only

          C. Items (ii) and (iii) only

          D. All of them

7. A company makes a single product and incurs fixed costs of RM30,000 per month.

      Variable cost per unit is RM5 and each unit sells for RM15. Monthly sales demand

      is 7,000 units. The breakeven point in terms of monthly sales units is:

          A. 2,000 units

          B. 3,000 units

          C. 4,000 units

          D. 6,000 units

8. Which of the following describes the margin of safety?

          A. actual contribution margin achieved compared with that required to break-

               even

          B. actual sales compared with sales required to break-even

          C. actual versus budgeted net profit margin

          D. actual versus budgeted sales

9. Which of the following are characteristics of management accounting information?

       (i) Non-financial as well as financial

       (ii) Used by all stakeholders

       (iii) Concerned with cost control only

       (iv) Not legally required

          A. (i) and (iv)

          B. (ii) and (iii)

          C. (i), (ii) and (iii)

          D. (ii, (iii) and (iv)

10. Which of the following would be classified as a fixed cost in the operation of a

      motor vehicle?

          A. Oil change every 10,000 kilometres

          B. Petrol

          C. Insurance

          D. Tyre replacement

11. Which of the following statements about cost and management accounting are

      true?

        (i) Cost accounting cannot be used to provide inventory valuations for external

             financial reporting.

        (ii) There is a legal requirement to prepare management accounts.

        (iii) The format of management accounts may vary from one business to another.

        (iv) Management accounting provides information to help management make

            business decisions.

          A. (i) and (ii)

          B. (i) and (iv)

          C. (ii) and (iii)

          D. (iii) and (iv)

12. Which of the following statements is incorrect?

          A. Assets – Capital = Liabilities

          B. Liabilities + Capital = Assets

          C. Liabilities + Assets = Capital

          D. Assets – Liabilities = Capital

13. Which of the following is NOT an asset?

          A. Buildings

          B. Cash balance

          C. Accounts receivable

          D. Loan from Devon Wawa

14. Gross profit is

          A. Excess of sales over cost of goods sold

          B. Sales less purchases

          C. Cost of goods sold + Opening inventory

          D. Net profit less expenses of the period

15. Prime cost includes

          (i) Direct labour

          (ii) Factory overhead expenses

          (iii) Raw materials consumed

          (iv) Direct expenses

          A. (i), (ii) and (iii)

          B. (ii), (iii) and (iv)

          C. (i), (iii) and (iv)

          D. (i), (ii) and (iv)

16. Which one of the following statements about the partnership form of business is   

      correct?

         

          A. Partnerships are always very small businesses.

          B. Partners are obliged by law to put RM50,000 into the business when it starts

    up.

          C. Partnerships are very difficult to set up because of the amount of information

              Demanded by the Government.

          D. Partners are personally liable for the debts of the partnership business.

Answer 1

1. D. All of the above.

2. A. Emphasizes the external financial statements.

3. C. Cost of boat engine.

4. What is the activity cost allocation rate?

= RM12,000,000 / 400,000,000 ( kitting )

= 0.03

= RM22,000,000 / 20,000,000. ( Boxing )

= 1.1

Therefore , option C is correct.

5.What are the kitting and boxing costs assigned to one desktop computer?

Kitting = 125 parts * 0.03

= 3.75

Boxing = 10 cubic feet * 1.1

= 11

Therefore , option A is correct.

6.

D. All of them

7. Break even

= Fixed cost / contribution margin per unit

= 30000 / 15 - 5

3000

Therefore, option B is correct.

8. B. actual sales compared with sales required to break-even

9. A. (i) and (iv)

10. C. Insurance

11. D. (iii) and (iv)

12. C Liabilities + Assets = Capital

13. D. Loan from Devon Wawa

14. A Excess of sales over cost of goods sold.

15. C. (i), (iii) and (iv)

16. D. Partners are personally liable for the debts of the partnership business.