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The document contains a series of questions and answers related to cost accounting principles, definitions, and calculations based on provided financial data from ABC company. It covers topics such as the definition of cost accounting, reasons for its development, classification of costs, and specific calculations for direct and indirect costs. Additionally, it includes a scoring system for the answers provided in two separate questions, totaling 30 marks.

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3 views4 pages

Med Term

The document contains a series of questions and answers related to cost accounting principles, definitions, and calculations based on provided financial data from ABC company. It covers topics such as the definition of cost accounting, reasons for its development, classification of costs, and specific calculations for direct and indirect costs. Additionally, it includes a scoring system for the answers provided in two separate questions, totaling 30 marks.

Uploaded by

razanj282
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Question 1: Choice the correct Answer

1- Cost accounting defined as:


(a) Branch of accounting that primarily concerned with bookkeeping directed towards the preparation of
Profit and Loss Account and Balance Sheet.
(b) The techniques and processes of ascertaining costs.
(c) Branch of accounting that primarily concerned with classifying, recording and appropriate allocation
of expenditure for determination of costs of products or services and for the presentation of suitably
arranged data purposes of control and guidance of management.
(d) None of the above.
2- Cost Accounting has been developed due to:
(a) Limitations of financial accounting.
(b) Weaknesses not spotted out by collective results: Financial Accounting shows the net result of an
organization. When the profit and loss account of an organization, shows less profit or a loss, it does not
give the reason for it or it does not show where the weaknesses lies.
(c) Does not help in fixing the price: In Financial Accounting, we get the total cost of production but it does
not aid in determining prices of the products, services, production order and lines of products.
(d) All of the above.
3- Which of the following are general principles of cost accounting:
(a) A cost should be related to its causes.
(b) A cost should be charged only after it has been incurred.
(c) Provide only historical information.
(d) Principles of double entry should always be applied.
4- Cost can be classified
(a) By nature of cost elements
(b) By nature of product
(c) By location
(d) By worker.
5- Elements of cost are:
(a) Materials, labor, and expenses
(b) Overheads, administrative expenses, selling expenses
(c) Materials, wages, production overheads.
(d) Labor, wages, materials

Question 2

The following information was extracted from ABC company books during year ended 2012.

Items Amount (SDG)


purchases 390,000
Opening inventory – raw material 40,000
Opening inventory – WIP 55,000
Opening inventory – Finished Good 80,000
Wages – direct 360,000
Rent and rates 50,000
Maintenance 48,000
Factory supervision 50,000
Insurance 72,000
Assets’ Depreciation 45,000
Salary 55,000
Consumable spare parts 64,000
Royalty expenses 15,000
Salesmen salary 20,000
Promotion and advertisements 22,000
Sub contract services 60,000
Drawing & design expenses 25,000
Closing inventory – raw material 24,000
Closing inventory – WIP 21,000
Closing inventory – Finished Good 50,000
Buildings expense 36,000
Administrative expenses 18,000
Other selling expenses 16,000

Note 1: maintenance, insurance and depreciation divided 1:2:2 between administrative, selling and manufacturing
overhead respectively.

Note 2: building Expenses, rent & rates and consumable spare parts divided 2:2:1 between administrative, selling
and manufacturing overhead respectively.

Note 3: The Company calculates its profit 25% on Cost

Note 4: 30% of materials consumed are indirect and 80% of wages were direct. Indirect materials and indirect wages
are distributed between manufacturing, administration and selling overhead on 40%, 50% and 10% respectively.

Note 5: subcontracting services were relating to cleaning work carried outsourced. Cleaning expenses to be divided
between factory, administration and selling 3:2:5 between Administration, selling and factory respectively.

Require: Choice the correct Answer

1- The direct materials calculated and reported in the cost statement is:
(a) SDG390,000
(b) SDG406,000
(c) SDG284,200
(d) SDG40,000
2- The direct wages calculated and reported in the cost statement is:
(a) SDG360,000
(b) SDG288,000
(c) SDG40,000
(d) None of the above
3- The direct expenses calculated and reported in the cost statement is:
(a) SDG15,000
(b) SDG25,000
(c) SDG40,000
(d) SDG20,000
4- The direct costs calculated and reported in the cost statement is:
(a) SDG289,000
(b) SDG572,200
(c) SDG328,000
(d) SDG612,200
5- Indirect materials classified as production overhead is:
(a) SDG121,800
(b) SDG48,720
(c) SDG60,900
(d) SDG12,180
6- Indirect wages classified as administrative overhead is:
(a) SDG72,000
(b) SDG28,800
(c) SDG7,200
(d) SDG36,000
7- Rent classified as selling overheads is:
(a) SDG50,000
(b) SDG20,000
(c) SDG30,000
(d) SDG10,000
8- The Promotion and advertisements classified as administrative overheads is:
(a) SDG22,000
(b) NIL
(c) SDG11,000
(d) SDG20,000
9- The factory supervision classified as production overheads is:
(a) SDG5,000
(b) SDG40,000
(c) SDG50,000
(d) NIL
10- You have provided with the following
I. SDG297,520
II. SDG252,900 - SDG199,380 - SDG199,380
III. SDG199,380 -SDG200,380 - SDG252,900
IV. SDG252,900 - SDG199,380

The Production overheads, administrative overheads and selling overheads calculated and reported in cost
statement are:

(a) II. ONLY


(b) III. ONLY
(c) I. & IV.
(d) IV. ONLY
Answers
Question 1

Question Answer Marks

1 2

2 2

3 2

4 2

5 2

Total marks 10

Question 2

Question Answer Marks

1 2

2 2

3 2

4 2

5 2

6 2

7 2

8 2

9 2

10 2

Total marks 20

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