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Fundamentals of Management Accounting Questions 86–90 (page: 19)

A company uses an integrated accounting system and absorbs production overhead using a predetermined rate of $6 per machine hour.

Last period a total of 25,500 machine hours were worked and the actual production overhead incurred was $158,000.

The accounting entries for the absorption of production overhead for the period would be:

Which of the following statements is correct?

i) sector bodies use budgetary planning and control systems

ii) costing cannot be used by public sector bodies because they have no measurable output

iii) in public sector bodies tend to focus on cost management therefore they have no need for non-financial information

Refer to the exhibit.


The budget for product Sentra for the month of August is given below:

Each unit of Sentra requires 4kg of raw materials. The raw materials purchases budget for the month of August is:

CORRECT TEXT

Refer to the exhibit.



A company is considering purchasing a machine that will have a useful life of three years after which time it will be sold. Relevant cash flows relating to the purchase and operation of the machine are as follows.

The annual cost of capital is 14%.

The net present value of the investment in the machine is, to the nearest whole $:

Refer to the exhibit.



The budget for ORG for the month of September contained the following data:

During the month the actual number of units produced was 1,550. The management accounts showed a direct labour rate variance of $200 adverse and direct labour efficiency variance of $150 adverse.

The actual direct labour hours in the month was: