Quiz 1

RAB 3103
Management Accounting 1
Name: .

Matric No :

Questions
1. Classify each of the following as being usually fixed or
variable cost:
A. Direct labour
B. Depreciation of machinery if straight line
method
C. Factory rental
D. Supplies and other indirect material
E. Advertising
F. Maintenance of machinery
G. Factory managers salary
H. Royalty payment for each unit produced

2. Classify the following costs, which are likely to be

controllable or non-controllable by the head of production
department:
A. Price paid for material
B. Raw material used
C. Electricity used for machinery
D. Machine depreciation
E. Direct labour
F. Insurance for machinery

3. Classify the following as direct or indirect labour:

A. Machine operator in a factory producing furniture
B. Lawyers in legal firm
C. Maintenance worker in a factory producing cars
D. Lorry driver in a road haulage company
E. Coordinators in an education industry.

Answers

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4. Prime cost is: (Choose the right answer)
A. All cost incurred in manufacturing a product
B. The total of direct cost
C. Material cost of a product
D. The cost of operating a production department

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5. Which ONE of the following costs could NOT be classified as

a production overhead in a food processing company?
A. The cost of renting the factory building.
B. The salary of the factory manager.
C. The depreciation of equipment located in the
material store.
D. The cost of ingredients.

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6. Which of
sold?
A.
B.
C.
D.

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the following accurately relates to cost of goods

An expense
Product cost
Inventory cost
Period cost

7. For the relevant cost data in items (A)-(G), indicate which

of the following is the best classification as SUNK COST,
INCREMENTAL COST, VARIABLE COST, FIXED COST, SEMIVARIABLE COST,STEP COSTS, CONTROLLABLE COST, NONCONTROLLABLE COST or OPPORTUNITY COST:
A. A company is considering selling an old machine.
The machine has a book value of RM20,000. In
evaluating the decision to sell the machine, the
RM20,000 is a
B. As an alternative to the old machine, the
company can rent a new one. It will cost RM3,000
a year. In analyzing the cost-volume behavior the
rental is a
C. To run the firms machine, here are two
alternative courses of action. One is to pay the
operator a base salary plus a small amount per
unit produced. This makes the total cost of the
operators a .
D. As an alternative, the firm can pay the operator a
flat salary. It would then use one machine when
volume is low, two when it expend, and three
during peak periods. This means that the total
operator cost would be a ..
E. The machine mentioned in (A) could be sold for
RM 8,000. If the firm considers retaining and
using it, the RM 8,000 is a
F. If the firm wishes to use the machine any longer,
it must be repaired. For the decision to retain the

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machine, the repair cost is a ..

G. The machine is charged to be foreman of each
department at a rate of RM 3,000 a year. In
evaluating the foreman, the charge is a .

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8. The following data relate to two output levels of a
department:
Machine hours
18,500
Overheads
251,750

17,000
RM 246,500

RM

Required :
a. Calculate the variable overhead per machine hour.

b. Calculate the fixed overhead.

c. Estimates the total overheads for output levels of

22,000 machine hours.