Bài kiểm tra KTQT
Bài kiểm tra KTQT
The budgeted
data for the latest period are as follows:
- Production and sales volume: 5,000 units
- Material cost: $25,000
- Direct labour cost: $12,000
- Production overhead: $69,800
- Non-production overhead: $71,420
Actual production volume and costs were as budgeted for the period but the actual sales
volume achieved was 4,700 units. There was no inventory at the beginning of the period.
The profit for the period using marginal costing is:
$___(input answer without commas)_(200000)
The answer is $200,000.
Value of closing inventory = $(25,000 + 12,000) * 300/5,000 = $2,220
Sales = $376,000 (4,700 x $80)
Variable cost of production = $37,000 (25,000 + 12,000)
Less: closing inventory = $2,220
Cost of sales $34,780
Contribution = $341,220
Less: fixed overhead = $141,220 (69,800 + 71,420)
Profit $200,000
Bài 2: K Plc had a marginal costing profit of $10,400 in the last period. Its inventories for the
period were valued in the following way:
- Opening inventory: $3,600
- Closing inventory: $4,900
If the business had used absorption costing, the inventory values would have been as follows:
- Opening inventory: $5,800
- Closing inventory: $7,840
What would have been the reported profit using absorption costing?
o $11,140
o $12,240
o $11,800
o $8,720
The answer is $11,140.
Marginal costing profit = $10,400
Less: fixed cost included in opening inventory (5,800 – 3,600) = $2,200
Plus: fixed cost included in closing inventory (7,840 – 4,900) = $2,940
Absorption costing profit = $11,140.
Alternative approach: Increase in inventory using marginal costing = $1,300
Increase in inventory using absorption costing = $2,040
Difference = fixed overhead absorbed in inventory = $740
Inventory is increasing so absorption costing profit is higher than marginal costing profit by the
amount of fixed overhead absorbed. Absorption costing profit = $10,400 + $740 = $11,140.
Bài 3: From the options below, select the scenario when under-absorbed overheads occur.
o Absorbed overhead is less than actual overhead
o Actual overhead is more than budgeted overhead
o Absorbed overhead is more than budget overhead
o Budget overhead is less than absorbed overhead
Bài 4: S Plc sells plastic furniture. Its popular product is kids chairs. These are small chairs
for children which has high demand among playschools and day care centres. S Plc has
budgeted to produce 7,500 kids chairs in November.
The budget for November shows that for the kids chairs, the opening inventory will be 600
units and the closing inventory will be 1,100 units. The monthly budgeted production cost
data for the chair for November is as follows:
Variable direct costs per unit: £6.00
Variable production overhead costs per unit: £3.50
Total fixed production overhead costs: £44,250
The company absorbs overheads on the basis of the budgeted number of units produced.
From the options below, choose the amount by which the budgeted profit for the kids chairs
using absorption costing will vary as compared to the profit computed using marginal
costing.
o £4,700 lower than it would be using marginal costing
o £4,700 greater than it would be using marginal costing
o £2,950 lower than it would be using marginal costing.
o £2,950 greater than it would be using marginal costing.
The answer is: £2,950 greater than it would be using marginal costing.
The only reason why profits differ under both methods of costing is due to the different way
that each method values inventory. Marginal costing organisations value inventory at variable
production cost only, never full production cost, when contrasted with an absorption costing
company.
When production > sales, stock levels rise (closing stock > opening stock) therefore a greater
amount of fixed overhead under absorption costing is being carried forward to the following
period within the valuation of the closing stock, therefore creating a higher profit than
marginal costing.
When production < sales, stock levels fall (closing stock< opening stock) therefore a smaller
amount of fixed overhead under absorption costing is being carried forward to the following
period within the valuation of the closing stock, therefore created lower profit than marginal
costing.
When production = sales, stock levels remain unchanged (closing stock = opening stock)
therefore both methods would give exactly the same profit.
Valuation of inventory:
Variable direct cost per unit: £6.00
Variable production overhead per unit: £3.50
= Total variable production cost per unit: £9.50
Marginal costing: fixed overhead absorbed per unit = £44,250 : 7,500 units = £5.90
Total production cost per unit = £15.40 (9.50 + 5.90)
Absorption costing: Under the absorption costing method, a greater amount of fixed overhead
would be carried forward to the next financial period, due to closing stock being higher than
opening stock (production > sales) = 1,100 units – 600 units x £5.90 = £2,950.
Therefore, using absorption costing, profit would be £2,950 greater than it would be using
marginal costing.
Bài 5: What would be the reported marginal costing profit for the period?:
- Budgeted production is 24,000 units
- Fixed production overhead costs are $240,000
- Forecast sales are 22,000 units
- Under absorption costing the profit for the period is expected to be $32,000
o $20,000
o $32,000
o $12,000
o $24,000
The answer is $12,000.
The increase in inventory = 24,000 - 22,000 = 2,000 units.
The overhead absorption rate = $240,000 / 24,000 per unit
Inventory increases and therefore the absorption profit is higher than the marginal profit by
2,000 x $240,000 / 24,000 = $20,000.
Therefore marginal profit = 32,000 - 20,000 = $12,000
Bài 6: The absorption costing profit is $82,750. Opening inventory is 4,500 units and closing
inventory is 3,700 units. Fixed overheads are absorbed at $4 per unit.
What would be the reported profit using marginal costing?
o $88,500
o $3,200
o $85,950
o $79,550
The answer is $85,950.
The decrease in inventory is 800 units.
Therefore the marginal profit will be higher than the absorption profit by 800 x $4 = $3,200.
Therefore marginal profit = 82,750 + 3,200 = $85,950.
Bài 7: The following are the cost details for a toy soldier made by Play Today.
$
Direct materials (per unit) 3
Direct labour (per unit) 1
Direct expenses (per unit) 2
Variable production overheads (per unit) 1
Variable selling & administration costs (per unit) 1
Fixed overhead absorption rate 2
The closing inventory is 100 units. What is the value of closing inventory under marginal
costing?
o $600
o $700
o $800
o $1,000
The answer is $700.
Closing inventory valuation is calculated as follows:
$
Direct materials (per unit) 3
Direct labour (per unit) 1
Direct expense (per unit) 2
Variable production overheads (per unit) 1
Inventory value per unit =7
Value of closing inventory = $700 (100 units x $7)
Under marginal costing, only variable production costs are included in inventory value.
Further, variable selling and admin costs are not production costs and so would not be
included when calculating the marginal cost of a unit.
Bài 8: From the options below, select the effect of a decrease in the level of stock during a
period on absorption costing profits and closing stock valuation assuming the overhead
absorption rate remains unchanged.
o Absorption costing profits will be lower and closing stock valuation higher than
under marginal costing
o Absorption costing profits will be higher and closing stock valuation higher than
under marginal costing
o Absorption costing profits will be lower and closing stock valuation lower than under
marginal costing
o Absorption costing profits will be higher and closing stock valuation lower than under
marginal costing
Bài 9: Super Fast manufactures toy sports cars. Sales this year have been significantly below
target due to a new competitor in the market. The management team receives a bonus if target
profit are achieved. Super Fast uses absorption costing and a significant portion of costs are
fixed overheads.
Despite poor revenues, the profit targets for the year were achieved and management received
their bonus.
Which of the following is a possible explanation?
o Management reduced production levels to match demand, resulting in a reduction in
total variable production costs
o Production levels were reduced, resulting in a fall in inventory
o Management reduced their selling price for the second half of the year, resulting in
improved sales for the second half of the year
o Production levels were increased, resulting in a build up of inventory
Bài 10: A single-product company prepares income statements using both absorption and
variable costing methods. Manufacturing overhead cost applied per unit produced under
absorption costing in year 2 was the same as in year 1. The year 2 variable costing statement
reported a profit whereas the year 2 absorption costing statement reported a loss. The
difference in reported income could be explained by units produced in year 2 being:
A) Less than units sold in year 2.
B) Less than the activity level used for allocating overhead to the product.
C) In excess of the activity level used for allocating overhead to the product.
D) In excess of units sold in year 2.
Bài 11: T Ltd uses a standard labour hour rate to charge its overheads to its clients' work.
During the last annual reporting period production overheads were underabsorbed by
£19,250. The anticipated standard labour hours for the period were 20,000 hours while the
standard hours actually charged to clients were 23,100. The actual production overheads
incurred in the period were £481,250.
The budgeted production overheads for the period were:
o None of the above
o £400,000
o £464,500
o £475,000
The answer is £400,000.
Under absorption means that more production overheads were actually needed than expected
based on actual output. Therefore “flexed” production overheads (budget cost based on actual
output) can be found by subtracting the under absorption from the actual production
overheads.
Actual production overheads = £481,250
Under absorption = £19,250
Flexed production overheads = £481,250 - £19,250 = £462,000.
The overhead absorption rate (OAR) used can be calculated by dividing flexed production
overheads by actual standard hours -> OAR = £462,000/23,100 = £20 per hour
Budgeted production overheads = £20 x 20,000 hrs = £400,000.
Bài 12: Stead Company produces a single product. Last year, the company's net operating
income computed by the absorption costing method was $6,400, and its net operating income
computed by the variable costing method was $9,100. The company's unit product cost was
$17 under variable costing and $20 under absorption costing. If the ending inventory
consisted of 2,100 units, the beginning inventory in units must have been:
A) 1,200
B) 2,100
C) 3,000
D) 4,800
Bài 13: HMF Co produces a single product. The budgeted fixed production overheads for the
period are $500,000. The budgeted output for the period is 2,500 units. Opening inventory at
the start of the period consisted of 900 units and closing inventory at the end of the period
consisted of 300 units. If absorption costing principles were applied, the profit for the period
compared to the marginal costing profit would be which of the following?
A. $125,000 higher
B. $120,000 lower
C. $120,000 higher
D. $125,000 lower
Bài 14: Gabuat Corporation, which has only one product, has provided the following data
concerning its most recent month of operations:
Selling price $ 106
Select one:
A. $24,200
B. $33,800
C. $58,000
D. $8,800
E. All are incorrect
Bài 15: A company uses a standard absorption costing system. The fixed overhead absorption
rate is based on labour hours. Extracts from the company's records for last year were as
follows:
Budget Actual
Fixed production overhead $450,000 $475,000
Output 50,000 units 60,000 units
Labour hours 900,000 930,000
The under- or over-absorbed fixed production overheads for the year were:
o $65,000 over-absorbed
o $10,000 under-absorbed
o $10,000 over-absorbed
o $15,000 over-absorbed
Traditional absorption costing takes the total budgeted fixed overhead for a period and
divides by a budgeted (or normal) activity level e.g. units, in order to find the overhead
absorption rate. This is a simple method of charging fixed overhead and allows fixed
overhead to be allocated to products, jobs or work-in-progress.
Overhead absorption rate (OAR) = Budgeted production overhead Normal/budget level of
activity.
OAR = ($450,000 : 900,000hrs) = $0.50 per labour hr.
Standard labour hours per unit = 900,000 hours/50,000 units = 18 hours per unit.
Standard hours flexed for actual output = 18 hours x 60,000 units = 1,080,000 hours.
Actual production overheads = 1,080,000 hours x $0.50 = $540,000
Over absorption of fixed overheads for the period is = $540,000 – 475,000 = $65,000.
Bài 16: Super Rich Ltd published it's financial statement for the last period and reported a
healthy profit of €300m.
Which costing system would have resulted in Super Rich reporting the highest profit figure in
it's annual financial statements assuming inventory levels had increased?
o No difference in profit
o Absorption Costing
o Throughput Costing
o Marginal Costing
Bài 17: X Plc. uses a standard absorption costing system. It has budgeted an output of
200,000 units for the year and the budgeted annual fixed production overheads are £300,000.
At the end of the company's financial year the total of the fixed production overheads debited
to the Fixed Production Overhead Control Account was £260,000 and the actual output
achieved was 200,000 units.
From the options below, select the correct under/over absorption of overheads.
o £40,000 under absorbed
o £40,000 over absorbed
o £70,000 under absorbed
o £70,000 over absorbed
Bài 18: The budgeted overhead absorption rate for variable production overhead in a
department was £5.25 per direct labour hour and for the fixed production overhead, £3.85 per
direct labour hour. In the period, actual direct labour hours worked were 2,000 less than
budget.
If actual production overhead were as expected for variable and fixed overhead, the total
underabsorbed production overhead for the period would have been:
o £2,800
o £10,500
o £0
o £7,700
It's estimated fixed production overheads for the next period are £100,000 and it's estimated
production level is 10,000 dolls. Its actual fixed production overheads for the previous period
were £110,000 and it produced 10,000 dolls.
TLC Ltd's selling price for the coming period is based on full cost (including non production
costs) plus 50%. What is the selling price?
o £27.75
o £11.25
o £26.25
o £35.00
The answer is: £26.25 The full cost per unit is calculated as follows:
Direct materials £2.50
Direct labour £3.00
Variable production overheads £1.00
Selling and administration £1.00
Fixed production overheads (W1) £10.00
Cost per doll £17.50
Selling price = cost plus 50% or cost x 1.5 = £17.50 x 1.5 = £26.25
W1 - OAR = estimated fixed production overheads/estimated production level in units =
£100,000 / 10,000 = £10
Bài 20: Perry Ltd makes and sells a single product with the following information:
$/unit
Selling price 50
Direct material 15
Direct labour 10
Variable overhead 5
Fixed overheads are $5,000. Budgeted and actual output and sales are 1,000 units.
Using absorption costing, calculate the profit for the period.
o $5,000
o $10,000
o $15,000
o $20,000
Output and sales are the same level so no need to worry about opening and closing inventory.
Sales: 1,000 units x $50 = $50,000
Costs:
Direct materials: 1,000 units x $15 = $15,000
Direct labour: 1,000 units x $10 = $10,000
Variable overheads: 1,000 units x $5 = $5,000
Fixed overheads: $5,000
Total cost: $35,000
Profit: $15,000