acc3002cw1sept2008pom

# acc3002cw1sept2008pom - UNIVERSITY OF TECHNOLOGY JAMAICA...

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UNIVERSITY OF TECHNOLOGY, JAMAICA FACULTY OF BUSINESS AND MANGEMENT SCHOOL OF BUSINESS ADMINISTRATION INTRODUCTION TO COSTING (AC3002) MID – SEMESTER TEST 1 (PART 1) DURATION: 2 HOURS This test consist of 20 multiple choice questions. Circle the correct response on the answer sheet provided. Do not open this paper until you are told to do so by the examiner in charge. NAME OF STUDENT: INDENTICATION NO: GROUP:

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(1) The manager of Hi-Pro feeds limited has been trying for the last six months to determine the economic order quantity for his inventory system. After a series of experiment the following order quantities and their related holding and ordering cost are presented. Order quantity Ordering Costs Holding Cost 5,000 units \$7,500 \$6,700 6,000 units \$6,800 \$7,200 4,500 units \$5,200 \$5,200 The Economic order quantity from the above data is: (a) 5,000 units (b) 6,000 units (c) 4,500 units (d) Cannot be determined from the above information. (2) A country’s economy is in a period of deflation. Which of the following is true about the LIFO method of inventory pricing?, (a) The LIFO value calculated for inventory at the end of the period will exceed the value calculated under FIFO. . (b) Cost of goods issued under LIFO will be exceeded by cost of goods issued under FIFO. (c) The AVCO method and the LIFO method will give the same value. (d) Cost of goods issued under FIFO will be less than cost of goods issued under LIFO. (3) Which of the following is not true of the economic order quantity? (a) It is a reorder quantity (b) It is the optimal order quantity (c) Demand is measured annually (d) It reduces the purchase price per unit of stock acquired (4) The data below concerns a raw material component (XC45) which is used to produce a finished product, the RT20. This means that GCT is recoverable. \$ Cost of 10 kgs. of raw material XC45 (before trade discount) 5,000 Customs duty 1,200 Trade discount 500 Non returnable case 100 GCT 750 At what cost should the raw material be recorded in the books of accounts if the net realizable value is \$5799? (a) \$5800 (b) \$5799 (c) \$6300 (d) \$5000 (5) A component has a safety stock of a1000, a re-order quantity of 6,000 and a rate of demand which varies between 400 and 1400 per week. The average stock is approximately: (a) 4,000 (b) 2,000 (c) 3,000 (d) 7,000
(6) There are 55,000 units of part XY5 on order with the suppliers and 32,500 units outstanding on existing

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acc3002cw1sept2008pom - UNIVERSITY OF TECHNOLOGY JAMAICA...

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