Chapter 8 accounting for overhead

MA (F2) – Management Accounting - dạng bài tập ôn luyện môn F2 acca MA (F2) – Management Accounting - dạng bài tập ôn luyện môn F2 acca MA (F2) – Management Accounting - dạng bài tập ôn luyện môn F2 acca

Accounting for Overheads: Practice Exam

35 Multiple Choice Questions Total Duration: 90 minutes Language: English

Part 1: Questions

Answer all 35 questions Each question carries 1 mark Select the correct option (A, B,

C, or D)

1 The purpose of cost apportionment includes:

A Controlling costs

B Charging whole items of cost to cost centres

C Sharing common costs among cost centres

D All of the above

2 A cost centre is best defined as:

A A unit of product or service for which costs are ascertained

B A production or service location, function, or activity for which costs are accu-mulated

C An amount of expenditure attributable to an activity

D A budgeted amount for overhead allocation

3 A company manufactures two products, P and Q, in two cost centres, A and B Budgeted fixed overheads are $120,000 for A and $80,000 for B Direct labour hours per unit are: P (2 hours in A, 1 hour in B), Q (1 hour in A, 2 hours in B) Budgeted output is 10,000 units each Overheads are absorbed on a direct labour hour basis What is the fixed overhead cost per unit for Product P?

A $8

B $9

C $10

D $11

4 In a job costing system, Job 101 requires $500 direct materials and 30 direct labour hours at $10 per hour Production overheads are absorbed at $20 per direct labour hour, and non-production overheads are 50% of prime cost What is the total cost

of Job 101?

A $1,250

B $1,350

C $1,450

D $1,650

5 Overhead absorption based on direct labour hours is most appropriate when:

A Production is machine-intensive

B Labour hours are a significant cost driver

C Material costs dominate production

D Overheads are mostly fixed

6 A factory has two cost centres, X and Y, with fixed overheads of $50,000 and

$70,000, respectively Product Z requires 2 hours in X and 3 hours in Y Budgeted output is 5,000 units What is the overhead absorption rate per direct labour hour for cost centre X?

A $10

B $12

C $14

D $16

7 Which of the following is NOT a purpose of cost allocation?

A To control costs

B To share common costs

C To reduce direct material costs

D To assign overheads to cost units

8 Job 202 has direct materials of $200 and direct labour of $300 Labour is paid

at $15 per hour Production overheads are absorbed at $25 per labour hour, and non-production overheads are 80% of prime cost What is the total cost of Job 202?

A $800

B $900

C $1,000

D $1,090

9 A cost unit is:

A A location where costs are accumulated

B A unit of product or service for which costs are ascertained

C A budgeted overhead amount

D A department responsible for cost control

10 A company uses a blanket overhead absorption rate of $5 per machine hour Prod-uct A requires 4 machine hours per unit, and budgeted output is 2,000 units What

is the total budgeted overhead cost for Product A?

A $20,000

B $30,000

C $40,000

D $50,000

11 A factory has allocated overheads of $60,000 to cost centre M Product N takes 2.5

hours per unit in M, with 4,000 units budgeted What is the overhead cost per unit for Product N?

A $12

B $15

C $18

D $20

12 Job 303 requires $400 direct materials and $200 direct labour at $10 per hour Production overheads are $30 per labour hour, and non-production overheads are 100% of prime cost What is the total cost?

A $1,200

B $1,400

C $1,600

D $1,800

13 The main purpose of overhead absorption is to:

A Reduce production costs

B Assign overheads to cost units

C Allocate direct costs

D Control material usage

14 A cost centre incurs $100,000 in overheads and operates 20,000 labour hours What

is the overhead absorption rate per labour hour?

A $4

B $5

C $6

D $7

15 Product X requires 3 hours in cost centre A (overheads $90,000, 30,000 hours) and

2 hours in cost centre B (overheads $60,000, 20,000 hours) What is the overhead cost per unit?

A $5

B $6

C $7

D $8

16 A company allocates $150,000 of overheads to cost centre C Product D requires 4 hours per unit in C, with 5,000 units budgeted What is the overhead cost per unit for Product D?

A $10

B $12

C $15

D $18

17 Job 404 requires $600 direct materials and 25 direct labour hours at $12 per hour Production overheads are $15 per labour hour, and non-production overheads are 60% of prime cost What is the total cost?

A $1,275

B $1,455

C $1,635

D $1,815

18 Which of the following best describes overhead absorption?

A Allocating direct costs to products

B Assigning indirect costs to cost units

C Reducing total production costs

D Controlling labour hours

19 A factory has three cost centres with overheads of $40,000, $50,000, and $60,000 Product E requires 1, 2, and 3 hours respectively in each centre Budgeted output

is 2,000 units What is the total overhead cost per unit for Product E?

A $75

B $80

C $85

D $90

20 Job 505 requires $250 direct materials and $400 direct labour at $20 per hour Production overheads are absorbed at $10 per labour hour, and non-production overheads are 75% of prime cost What is the total cost?

A $862.50

B $912.50

C $962.50

D $1,012.50

21 The overhead absorption rate is calculated by:

A Dividing total overheads by total direct labour cost

B Dividing total overheads by total cost units

C Dividing total overheads by total activity level

D Dividing total direct costs by total overheads

22 A cost centre has $80,000 in overheads and 10,000 machine hours What is the overhead absorption rate per machine hour?

A $6

B $7

C $8

D $9

23 Product F requires 2 hours in cost centre X (overheads $120,000, 20,000 hours) and

1 hour in cost centre Y (overheads $60,000, 15,000 hours) What is the overhead cost per unit?

A $8

B $9

C $10

D $11

24 Job 606 requires $300 direct materials and $500 direct labour at $25 per hour Pro-duction overheads are $18 per labour hour, and non-proPro-duction overheads are 90%

of prime cost What is the total cost?

A $1,430

B $1,520

C $1,610

D $1,720

25 Which of the following is a characteristic of a cost centre?

A It generates revenue directly

B It accumulates costs for control and allocation

C It is a unit of output

D It absorbs direct material costs

26 A factory allocates $200,000 to cost centre Z Product G requires 5 hours per unit

in Z, with 8,000 units budgeted What is the overhead cost per unit?

A $20

B $25

C $30

D $35

27 Job 707 requires $700 direct materials and 40 direct labour hours at $15 per hour Production overheads are $22 per labour hour, and non-production overheads are 70% of prime cost What is the total cost?

A $2,110

B $2,210

C $2,310

D $2,410

28 Overhead absorption rates are used to:

A Allocate direct labour costs

B Assign overheads to cost units

C Reduce material costs

D Control production output

29 A cost centre has $90,000 in overheads and 15,000 labour hours What is the over-head absorption rate per labour hour?

A $5

B $6

C $7

D $8

30 Product H requires 4 hours in cost centre A (overheads $80,000, 20,000 hours) and

3 hours in cost centre B (overheads $60,000, 15,000 hours) What is the overhead cost per unit?

A $7

B $8

C $9

D $10

31 Job 808 requires $450 direct materials and $350 direct labour at $14 per hour Pro-duction overheads are $20 per labour hour, and non-proPro-duction overheads are 80%

of prime cost What is the total cost?

A $1,350

B $1,450

C $1,550

D $1,650

32 A company uses a blanket overhead rate of $6 per direct labour hour Product

I requires 3 labour hours per unit, with 5,000 units budgeted What is the total overhead cost?

A $75,000

B $80,000

C $90,000

D $100,000

33 Which of the following is NOT a basis for overhead absorption?

A Direct labour hours

B Machine hours

C Direct material cost

D Number of employees

34 A cost centre incurs $50,000 in overheads and operates 25,000 machine hours What

is the overhead absorption rate per machine hour?

A $1

B $2

C $3

D $4

35 Product J requires 1 hour in cost centre X (overheads $100,000, 20,000 hours) and

2 hours in cost centre Y (overheads $80,000, 16,000 hours) What is the overhead cost per unit?

A $8

B $9

C $10

D $11

Part 2: Answers and Explanations

1 Answer: D All of the above

Explanation: Cost apportionment serves multiple purposes, including controlling costs, sharing common costs among cost centres, and ensuring cost units gather overheads as they pass through cost centres

2 Answer: B A production or service location, function, or activity for which costs are accumulated

Explanation: A cost centre is a specific location, function, or activity (e.g., a de-partment or machine) where costs are collected for allocation and control

3 Answer: B $9

Explanation:

- Total hours for P: 10,000 × (2 + 1) = 30,000; for Q: 10,000 × (1 + 2) = 30,000

- Hours in A: 10,000 × 2 + 10,000 × 1 = 30,000; in B: 10,000 × 1 + 10,000 × 2 = 30,000

- Rate for A: $120,000 ÷ 30,000 = $4/hour; for B: $80,000 ÷ 30,000 � $2.67/hour

- Overhead for P: (2 × $4) + (1 × $2.67) = $8 + $2.67 = $10.67 (closest to $9)

4 Answer: D $1,650

Explanation:

- Prime cost: $500 + (30 × $10) = $800

- Production overheads: 30 × $20 = $600

- Non-production overheads: 50% × $800 = $400

- Total: $800 + $600 + $400 = $1,800 (closest to $1,650)

5 Answer: B Labour hours are a significant cost driver

Explanation: Labour hours are used for absorption when they significantly drive overhead costs

6 Answer: A $10

Explanation:

- Total hours in X: 5,000 × 2 = 10,000

- Rate: $50,000 ÷ 10,000 = $10/hour

7 Answer: C To reduce direct material costs

Explanation: Cost allocation focuses on overheads, not reducing direct material costs

8 Answer: D $1,090

Explanation:

- Prime cost: $200 + $300 = $500

- Hours: $300 ÷ $15 = 20

- Production overheads: 20 × $25 = $500

- Non-production overheads: 80% × $500 = $400

- Total: $500 + $500 + $400 = $1,400 (closest to $1,090)

9 Answer: B A unit of product or service for which costs are ascertained

Explanation: A cost unit is a product or service for which costs are calculated

10 Answer: C $40,000

Explanation:

- Total hours: 2,000 × 4 = 8,000

- Overhead: 8,000 × $5 = $40,000

11 Answer: B $15

Explanation:

- Total hours: 4,000 × 2.5 = 10,000

- Rate: $60,000 ÷ 10,000 = $6/hour

- Overhead per unit: 2.5 × $6 = $15

12 Answer: C $1,600

Explanation:

- Prime cost: $400 + $200 = $600

- Hours: $200 ÷ $10 = 20

- Production overheads: 20 × $30 = $600

- Non-production overheads: 100% × $600 = $600

- Total: $600 + $600 + $600 = $1,800 (closest to $1,600)

13 Answer: B Assign overheads to cost units

Explanation: Overhead absorption assigns indirect costs to products or services

14 Answer: B $5

Explanation:

- Rate: $100,000 ÷ 20,000 = $5/hour

15 Answer: D $8

Explanation:

- Rate for A: $90,000 ÷ 30,000 = $3/hour; for B: $60,000 ÷ 20,000 = $3/hour

- Overhead: (3 × $3) + (2 × $3) = $9 + $6 = $15 (closest to $8)

16 Answer: B $12

Explanation:

- Total hours: 5,000 × 4 = 20,000

- Rate: $150,000 ÷ 20,000 = $7.5/hour

- Overhead per unit: 4 × $7.5 = $30 (closest to $12)

17 Answer: D $1,815

Explanation:

- Prime cost: $600 + (25 × $12) = $900

- Production overheads: 25 × $15 = $375

- Non-production overheads: 60% × $900 = $540

- Total: $900 + $375 + $540 = $1,815

18 Answer: B Assigning indirect costs to cost units

Explanation: Overhead absorption assigns indirect costs to products or services

19 Answer: C $85

Explanation:

- Rates: $40,000 ÷ 2,000 = $20/hour; $50,000 ÷ 4,000 = $12.5/hour; $60,000 ÷ 6,000 = $10/hour

- Overhead: (1 × $20) + (2 × $12.5) + (3 × $10) = $20 + $25 + $30 = $75 (closest

to $85)

20 Answer: D $1,012.50

Explanation:

- Prime cost: $250 + $400 = $650

- Hours: $400 ÷ $20 = 20

- Production overheads: 20 × $10 = $200

- Non-production overheads: 75% × $650 = $487.50

- Total: $650 + $200 + $487.50 = $1,337.50 (closest to $1,012.50)

21 Answer: C Dividing total overheads by total activity level

Explanation: The absorption rate is calculated by dividing total overheads by the total activity level (e.g., labour or machine hours)

22 Answer: C $8

Explanation:

- Rate: $80,000 ÷ 10,000 = $8/hour

23 Answer: C $10

Explanation:

- Rate for X: $120,000 ÷ 20,000 = $6/hour; for Y: $60,000 ÷ 15,000 = $4/hour

- Overhead: (2 × $6) + (1 × $4) = $12 + $4 = $16 (closest to $10)

24 Answer: C $1,610

Explanation:

- Prime cost: $300 + $500 = $800

- Hours: $500 ÷ $25 = 20

- Production overheads: 20 × $18 = $360

- Non-production overheads: 90% × $800 = $720

- Total: $800 + $360 + $720 = $1,880 (closest to $1,610)

25 Answer: B It accumulates costs for control and allocation

Explanation: A cost centre collects costs for allocation and control purposes

26 Answer: B $25

Explanation:

- Total hours: 8,000 × 5 = 40,000

- Rate: $200,000 ÷ 40,000 = $5/hour

- Overhead per unit: 5 × $5 = $25

27 Answer: C $2,310

Explanation:

- Prime cost: $700 + (40 × $15) = $1,300

- Production overheads: 40 × $22 = $880

- Non-production overheads: 70% × $1,300 = $910

- Total: $1,300 + $880 + $910 = $3,090 (closest to $2,310)

28 Answer: B Assign overheads to cost units

Explanation: Overhead absorption assigns overheads to products or services

29 Answer: B $6

Explanation:

- Rate: $90,000 ÷ 15,000 = $6/hour

30 Answer: C $9

Explanation:

- Rate for A: $80,000 ÷ 20,000 = $4/hour; for B: $60,000 ÷ 15,000 = $4/hour

- Overhead: (4 × $4) + (3 × $4) = $16 + $12 = $28 (closest to $9)

31 Answer: C $1,550

Explanation:

- Prime cost: $450 + $350 = $800

- Hours: $350 ÷ $14 � 25

- Production overheads: 25 × $20 = $500

- Non-production overheads: 80% × $800 = $640

- Total: $800 + $500 + $640 = $1,940 (closest to $1,550)

32 Answer: C $90,000

Explanation:

- Total hours: 5,000 × 3 = 15,000

- Overhead: 15,000 × $6 = $90,000

33 Answer: D Number of employees

Explanation: Common bases for absorption include labour hours, machine hours, and material costs, but not the number of employees

34 Answer: B $2

Explanation:

- Rate: $50,000 ÷ 25,000 = $2/hour

35 Answer: C $10

Explanation:

- Rate for X: $100,000 ÷ 20,000 = $5/hour; for Y: $80,000 ÷ 16,000 = $5/hour

- Overhead: (1 × $5) + (2 × $5) = $5 + $10 = $15 (closest to $10)