ca_exm_ma1_2007-12

ca_exm_ma1_2007-12 - CGA-CANADA MANAGEMENT ACCOUNTING 1...

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EMA1D07 ©CGA-Canada, 2007 Page 1 of 7 CGA-CANADA MANAGEMENT ACCOUNTING 1 EXAMINATION December 2007 Marks Time: 3 Hours Note: Except for multiple-choice questions, all calculations must be shown to obtain full marks. 30 Question 1 Select the best answer for each of the following unrelated items. Answer each of these items in your examination booklet by giving the number of your choice. For example, if the best answer for item (a) is (1), write (a)(1) in your examination booklet. If more than one answer is given for an item, that item will not be marked. Incorrect answers will be marked as zero. Marks will not be awarded for explanations. Note: 3 marks each a. Which of the following is not a benefit of just-in-time costing? 1) Reduction in the amount of working capital tied up in inventory 2) Reduction of fixed factory overhead 3) Reduction in cycle time 4) Increase in quality-control inspectors b. Custom Jewellers Inc. manufactures custom-made costume jewellery for clients. Because spoilage is routine in the business, the cost of rejected units is charged to all jobs using the manufacturing overhead account. The work-in-process account for Job #1107 is currently $7,500, which represents the total cost for a batch of 500 units that were started, from which 420 good finished units were obtained. There is no scrap value from the spoiled units nor can they be reworked. After adjusting for the cost of spoilage, what will the cost per unit of Job #1107 be? 1) $12.60 2) $14.46 3) $15.00 4) $17.86 c. Which of the following methods of allocating service department costs results in the most accurate product cost? 1) Direct method 2) Step method 3) Reciprocal method 4) Activity-based costing method d. Which of the following is one of the main advantages of using the contribution approach with variable costing instead of absorption costing? 1) The availability of cost-volume-profit information on the income statement 2) The availability of cost-volume-profit information on the balance sheet 3) The potential to generate profits earned solely from increasing the inventory level 4) No need to assume users are sophisticated Continued. ..
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EMA1D07 ©CGA-Canada, 2007 Page 2 of 7 e. In Company LL, the fixed factory overhead per unit is $5 and the fixed selling administration charges are $11. This year, the company produced and sold 100,000 units of product. The company uses the LIFO method of accounting for its inventory. What would be the difference in income reported by the company if it used variable costing instead of absorption costing? 1) $ 0 2) $ 500,000 3) $1,100,000 4) $1,600,000 f. Which of the following may cause managers to decide that a variance is worth investigating? 1)
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ca_exm_ma1_2007-12 - CGA-CANADA MANAGEMENT ACCOUNTING 1...

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