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Refer to the exhibit.



WS operates an integrated accounting system. Transactions relating to production overheads for the month of May were as follows:

Indirect Material costs were $15,000

Indirect Labour Costs were $45,000

Production overheads of $58,000 were incurred during the period.
Depreciation of factory machinery amounted to $32,000.

Overheads costs absorbed by production using a standard absorption rate was $164,000 for the period.

What are the correct entries to record the absorption of production overheads for the period?

The correct set of entries to record the absorption of production overheads for the period is:

  1. A
  2. B
  3. C
  4. D

Answer(s): C



Refer to the exhibit.



SP, a manufacturing company, uses a standard costing system. The standard variable production overhead cost is based on the following budgeted figures for the year:

During the month of September, 5,300 actual hours were worked and 5,600 standard hours of output were produced. Total variable production overhead costs in September were $8,600.

What was the total variable production overhead variance in September?

  1. $200 adverse
  2. $650 adverse
  3. $650 favourable
  4. $200 favourable

Answer(s): A



PQR Manufacturing Ltd. has £3,000,000 of fixed costs for the forthcoming period. The company produces a single product 'X', which has a selling price of £75 per unit and total cost of £50.

75% of the total cost represents variable costs.

What are the break-even units?

  1. 80,000
  2. 240,000
  3. 120,000
  4. 40,000

Answer(s): A



Eton Ltd. operates a manufacturing process that produces product A. Information for this process last month is as follows:

(a) Opening work in progress - 2,500 kg valued at £2,000 for direct material and £1,500 for labour and overheads.

(b) Materials input - 25,000 kg at £2.10 per kg.

(c) Labour - £10,000

(d) Overheads - £5,000

(e) Output during the month - 20,000 kg.

(f) There were 7,500 units of closing work in progress which was complete as to materials and 30% complete as to conversion.

(g) Normal loss for the month was 3% of input and all losses have a scrap value of £1 per kg.
What was the average cost per kg of finished output during the month?

  1. £1.73
  2. £2.72
  3. £2.78
  4. £2.80

Answer(s): C






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