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| Section | Objectives |
|---|---|
| Topic 1: Costing Methods | - Absorption costing
|
| Topic 2: Decision Making Techniques | - Cost analysis for decisions
|
| Topic 3: Accounting for Materials, Labour and Overheads | - Material control
|
| Topic 4: Introduction to Cost Accounting | - Cost units and cost centers
|
| Topic 5: Budgeting and Forecasting | - Budgetary control
|
1. Which of the following would NOT require taking into account the time value of money?
A) Calculating the present value of a five-year annuity.
B) Taking a long-term investment decision on the basis of the project's internal rate of return (IRR).
C) Deciding to make a long-term investment in a project on the basis of its payback period.
D) Selecting an investment project on the basis that it has a positive net present value (NPV).
2. The forecast costs per unit for a new product are as follows:
The company uses marginal cost plus pricing and all products are required to achieve a 40% margin.
What would be the selling price per unit?
A) $45.00
B) $55.00
C) $46.20
D) $37.80
3. FILL BLANK
A company has three production departments X, Y and Z, and one service department.
The service department's overhead has been apportioned to the production departments in the ratio 3:2:5. As a result of this apportionment, $2,070 was given to Department Y.
What is the amount of service department overhead that would have been apportioned to Department Z? Give your answer to the nearest dollar.
4. A company is appraising two projects. Both projects are for five years. Details of the two projects are as follows.
Based on the above information, which of the following statements is correct?
A) The annuity factor for project A would double the annuity factor for project B.
B) An annuity could be used to calculate the net present value of the projects.
C) A perpetuity could be used to calculate the net present value of the projects.
D) The annuity factor for project A would be lower than the annuity factor for the project B.
5. The concept of the time value of money:
A) recognises the fact that a cash flow received today will always be worth more than a larger cash flow received in the future.
B) recognises the fact that earlier cash flows are worth more because they can be reinvested.
C) determines the higher interest rates that must be paid on longer term loans.
D) is used for making short term decisions.
Solutions:
| Question # 1 Answer: A | Question # 2 Answer: C | Question # 3 Answer: Only visible for members | Question # 4 Answer: B | Question # 5 Answer: A |
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