AAT L3 Management Accounting (Costing) 6

Question 1

The purpose of a bill of materials is to:

Accepted Answer

List the standard quantities of each material required to produce one unit of output

Answer

Record payments to suppliers

Answer

Calculate the total cost of production

Answer

Authorise payment for raw materials

Question 2

When a business uses time sheets for labour costs, the primary purpose is to:

Accepted Answer

Allocate labour costs to specific jobs, cost centres, or products

Answer

Calculate each employee's tax liability

Answer

Record employee holiday entitlement

Answer

Calculate overtime premiums for payroll

Question 3

Idle time represents:

Accepted Answer

Time when workers are paid but not productively engaged in making products

Answer

Time spent by employees on overtime

Answer

Time saved by efficient working

Answer

Administrative time charged to overhead

Question 4

In a standard costing system, a standard cost card sets out:

Accepted Answer

The budgeted unit cost based on standard quantities and prices

Answer

The actual costs incurred in the period

Answer

The average historical costs for the product

Answer

The maximum allowable cost per unit

Question 5

The direct labour efficiency variance measures:

Accepted Answer

Whether workers took more or less time than standard to produce actual output

Answer

Whether the wage rate paid differed from standard

Answer

The overall cost of direct labour compared to budget

Answer

The amount of idle time during the period

Question 6

Target profit output is calculated as:

Accepted Answer

(Fixed costs + target profit) / contribution per unit

Answer

Fixed costs / contribution per unit

Answer

Target profit / selling price

Answer

Variable costs / target profit