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TEST CODE OO1073

MAYIJUNE 2OO1

CARIB B EAN EXAMINATIONS COUN CIL

ACCOUNTING

UNIT2 - Paper0L

9G minutes

READ T}IE FOLLOWING DIRECTICINS CAREFULLY

This paper cornprises TWO sections - SECTiON A and SECTION B. SECTION A comprises30 multipie-choice items. SECTION B comprises 6 short answer items.

MUITIPLE-CHOICE

In addition to this test booklet, you should have an answer sheet.

Each ilem in the multiple-choice test has four suggested aaswers lettered (A), (B), (C), (D). Readeach item you are aboulto answer and decide which choice is best.

On your answet sheet, find the number which correspogds to your item and blacken the spacehaving t}re same ietter as the answer you have chosen. Look at the sample item below.

Sample ltem

Prime cost is calculated by

(A) adding direct factory expenses to cost of materials used(B) adding indjsect factory expenses to cost of materials used(C) subtracting di:ect factory expenses from cost of materials usedP) sub*acting indirect factory expenses from cost of materials used

Sample Answer

The best answer to this item is "adding direct factory expenses to cost of materials used," soanswer space (A) has been blaekened.

If you \Pant lo change your an$wsr, be sure to erase your oid answer completely and frll in yournew choice

sHqRTANSwErui

In the case of the short answsr quastioas, each question is followed Ay u ni*Ier of lines or aspace in which ycu are expected to write ycur answer. YOU MUST.R-ETURN THE SHORT-ANSS/ER SECTION OF TI{E PAPER ATONG WITH YOUR MUITIPLE-CHOICE PAPERAND ANSWER SI{EET.

When you are toid to begin, tum the page and work as quickiy and as ca:efully as you can. If youcannot answer an icem or question, omit it and go on to the next one. You cafl eome back to theharder item iater.

You will have 90 minutes to answer the questions on tbis papar,

F'ORM TP 2l.1fi4

ADVAN CED PRCFI CIEN CY EXA1VIINATION

@@oe

Copyrieht @ ?000 Caribbean Examinatioas Councii

5.

_,-

Bayshore Investrnent Corporation employs a cost of capitai rate of. LZVa for all cdpital invest-

rnent and has prepared the following analysis for four projects for the upcoming year:

Project i Project 2 Project 3' Project 4

Initiai Investrnent s400 06d': r"S5i6tbo"' $496 000 $s44 000

Net Present Value {$ 7 596) $ 8552 $ 28 128 5 29324

Internal Rate of Return 11Vo 13% L4% 15Td

Which project(s) should Bayshore Inveslr*ent Corporation undertake during th'e upcoming year

based on a budget of $1 200 000?

(A) Projects 1 and 3(B) h'ojects 2 and 3(C) Projecls 3 and 4(D) Projects 2, 3, and 4

Lashley's Pine Products L,td had the following information on its books:6.

Finished Bopds inventory Jan 1,2000Finished goods inventory Dec 31,2000Cost of goods soldSales l

Operating expenses

What was the cost of goods manufactsred for 2000?

(A) $286 000(B) $386 oo0(c) $414 000

0) $614 000

$ i 200 000$ 86 000$ 500 000

$? 000 000$ 32s 00s

7, Storebay Industries Ltd had the follcwing activities during 2000:

Direct materiatsInventory Jan 1,2000PurchasesInventory Dec 31, 2000

Direc t manufacturing labourIndirect materialsWork in process inventory Jan 1

Work in process inventorY Dec 31

Firrished goods inventory fan 1

Finished goods inventory Dec 3l

What was Storebay's eost of direct materials used dwing 2000?

(A) $117 600(B) 5169 200(c) $21s 600(D) S249 200

nnl n-?? /fr ,t D1f /tnn1

$ ?0 000215 600

36 4CI0

60 00080 00014 0002 800

70 000105 000

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I.tr.

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Which of the follcwing statemenis aretrue regarding financial and managerialaccounting?

Tlansportalion costs incun'edby a manu-facturing company to ship its producr toits customers would be classified as

(A) product cost(B) manufacturing overhead(Ci period cost(D) adminislrative cost

Kodle Company sells a single product.The product has a selling price of $60 perunit a:rd variable cost is 707o of sales. Ifthe company's fixed expenses total$120 000 per year, then ir will have abreak-even of

{A) $ 84 000(B) $i20 000(c) $r70 348(D) $400 000

Staddards represent the best expectedlevel of performance. They are usuallydeveloped f,rom a careful study and areexpressed

(A) on a per unit basisF) by a management team(C) through an organization's goals(D) througtr an organizarion's policies

and procedures

Dolene Company's fixed manufacturingoverhead casts totalled $100 000 andva.:riable seiling costs toralled $80 000.Under variable costing how would thesecosts be classified?

Periad costs

iA)$0(B) $ 80 000(c) $ro0 o0o(D) $i80 000

Product costs

$180 000$100 000$ 80 000$0

Both are mandatory.Both rely on the same underlying

financial data.Both emphasize the segrnents of

an organisation, rather than jusllooking at the organisati,on as awhole.

Both are geared to the future,raLher than the past.

tr onlyII and Itr onlyII, III and fV onlyI, [, III, and fV

15.

1S.Tv

(A)(B)(c)(D)

Use the following information to answeritems 13 and 1.4.

Kadobment Furniture had 60 000 chairsin process at June i, 2000 {7ATa con-verted), and 40 000 chairs in process atJune 30, 2000 (507o converted). All di-rect materials are added at the beginningof the production prccess. During themonth, 140 0O0 chairs were transferredto finished goods.

What wererhe equivaleni rnits formarerialscosl for June using the weighted ayeragemethod?

(A) 1i8 000 chairsiB) 140 000 chairs{C) 160 000 chairs(D) 180 000 chairs

What were the equivalent units for con-version costs for lune using the r,veightedaverage method?

118 000 chairsi40 000 chairs160 000 chairsi80 000 chairs

17.

18.

L4.

(A)(B)(c)(D)

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' -7 -

The Chemtile Cornpany has a stasdard cost sysfate The following $randard$ have been estab-lished fu a particular lxoduct

Standard quantity per unit of ouqrut 8.3 kilogramsStandard price $19.15

The following data p*tain to opaations concerning the product for the last month:

Acfual materials purchasedAchral cost of material purchasedAetual materials used in produetionAsfiral outllut

7 500 kilcgrams$14i 3?57 700 kiiograms700 units

What is the matarial grice variance for the month?

(A) $ 22s0FG) $ 7 s40u(c) $ 766OU(D) $24 31? U

Which of tle following would NOT beconsidered an indirect cost of serviag aparticular custoner at a fast food cutlec?

(A) Csst af a hamburgel patry in theburger tlry order

(B) S/agesoftlreemployeewhotakestlre eustomer's order

(C) Cost of heating aad lighdng rhekitchen

@) Salary of fl:e outlet's manager

,- Iilhicb of tbs foiiowing variances is MOSTcantollable by a production supervisor?

(Ai lvlaterials pice variance{g) Mabrials quantity variance(C) Fixed overhead volurna variance(D) Veriableoverheadspendingvari-

arae

25.

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Use the folloxing information to answer items 29 and 3t

Smith Company has'the following data related to an itern of inventory during July ?000:

Beginning inventoryPurchases, July IPurchases, July 18Ending inventory

500 barrels at $7.0S each850 barrels at $7.50 eachi00 barrels at $7.70 each460 barrels

29- The valne assigned to ending inventoryif Smi& uses LIFO is

(A) 5224A(B) $2 560(c) $2 800(D) fi3 220

The value assigned to csst of goods soldif Smith uses FIFO is

(A) $6 e30fB) $7:?s(c) $7 s2s(D) ' $7 s95

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2. Barrington Company has been crdering 125 u&its of !figets per month based on tbe recammen-datioa of the salesman who visi'.s fhe company monthly. Aaew purchasing managerhas decided

to use tlre *onomic ordering quantity model to asmrtain the mon&ly purchases. The nanagercollected the followirg datr

Anaual demand 500 unitsDays open 25O per yexI-ead tirne 10 days

Ordering costs $150Annual unit carrying cos* $20

Calculate:

(a) ThSEOQ

O) The number of orders per Year

(c) ?he annual ordering costs

(d) The annual carryiag coss [6marks]

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4. The following informalion is related to Hnmkirx Mediql Associates Practiee for January 200L,the firm's first month of aperatiaa.

Doctors' salaries for January

Nur€es' salaries far Janrrary

Medical sopplies purchased in January

Utilities (80% reiateu tt patient t'eakuent)

Office salaries (50% relates ro patient beatmenr)

Medical supplies inve.rtory fanuary 31

Depreciaiion (medical equiprnent January)

Building rental (80% related to patieat treabnent)

During the manth of lanuary 66 patients were treated-

(a) Compule &a csst of services rendered.

(b) Compute the average cost lrer patienl

$24 0008 400

3 600

1 800

5 200

I 60S

I ?00

t 400

[5marks]

[lmark ]

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