AAT L3 Management Accounting (Costing) 4

Question 1

Equivalent units in process costing are used to:

Accepted Answer

Deal with closing work in progress that is partially complete

Answer

Allocate costs to by-products

Answer

Separate normal from abnormal loss

Answer

Convert kilograms to litres

Question 2

By-products in process costing are:

Accepted Answer

Minor, incidental outputs from a process with low sales value

Answer

The main intended output of a process

Answer

Any output above the expected yield

Answer

Defective output requiring rework

Question 3

The difference between absorption costing profit and marginal costing profit is explained by:

Accepted Answer

The change in inventory levels multiplied by the fixed overhead per unit

Answer

The treatment of selling and distribution overheads

Answer

The level of variable costs

Answer

The treatment of direct labour costs

Question 4

Overhead allocation means:

Accepted Answer

Directly attributing a whole overhead cost to a single cost centre

Answer

Sharing overheads between departments on an estimated basis

Answer

Charging overheads to products at a predetermined rate

Answer

Recovering overheads through the selling price

Question 5

Which of the following methods is used to reapportion service department costs to production departments?

Accepted Answer

Repeated distribution method (continuous allotment)

Answer

High-low method

Answer

Standard costing

Answer

Linear regression

Question 6

A favourable overhead expenditure variance means:

Accepted Answer

Actual overhead incurred was less than the budgeted overhead

Answer

More overhead was incurred than budgeted

Answer

Actual activity exceeded budget

Answer

Overhead was under-absorbed