Topic: Accounting for Cost Elements

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MI – Nov 2020 – L1 – SA – Q12 – Accounting for Cost Elements

Identify a factor that is NOT to be considered during stocktaking.

Question

The objective of periodic stocktaking is to find out the physical quantities of all types of stocks at a given date. Which of the following is NOT a factor to be considered during stocktaking?

A. Adequate numbers of staff with clear and precise instructions

B. Period of stock take should not interfere with production

C. Adequate technical assistance should be available to identify materials

D. Great care should be taken to ensure that invalid stock items are not included

E. Quantities of each type of stocks should not be checked against stock records

Answer

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Tags: Inventory, Management Controls, Stocktaking
Level: Level 1

Topic: Accounting for Cost Elements
Series: NOV 2020

MI – Nov 2015 – L1 – SB – Q6b – Accounting for Cost Elements

Calculates cash receipts expected over three months, considering credit sales terms and bad debts.

Question

The following information was extracted from the books of LAHA Limited:

Product P (units)	Product Q (units)
November	1,500
December	2,000
January	1,000
February	2,000
March	3,000

Product P is sold for ₦200 per unit, and Product Q for ₦300 per unit. All sales are on credit. 20% of total sales are received in the month of sale, 40% in the following month, and the remaining balance (excluding bad debts) is received at the end of the second month. Bad debts are 2% of total sales and are written off at the end of the second month following sale.

Required:
Calculate the cash receipts expected in January, February, and March. (12 Marks)

Answer

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Tags: Accounts Receivable, Bad Debts, Cash Flow, Cash Receipts, Credit Sales, Sales Revenue
Level: Level 1

Topic: Accounting for Cost Elements
Series: NOV 2015

MI – Nov 2015 – L1 – SB – Q3 – Accounting for Cost Elements

Determines inventory balance using FIFO and weighted average pricing methods.

Question

A company located in Ijora area of Lagos extracted the following figures from its materials analysis sheet:

Date	Transaction	Quantity	Unit price (N)
1st January	Balance b/f	10,000	50
25th January	Receipt	7,000	55
6th February	Issue	14,000	–
3rd March	Receipt	5,000	60
27th March	Receipt	4,500	62
4th June	Issue	7,500	–
24th June	Issue	2,500	–
30th June	Receipt	6,500	65

You are required to record the above transactions in the inventory ledger and determine the value of the inventory balance at the end of June 2015 using:
a. First-in-First-out pricing method. (10 Marks)
b. Weighted average pricing method. (10 Marks)

(Total 20 Marks)

Answer

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Tags: Cost Accounting, FIFO, Inventory Management, Inventory Valuation, Material Analysis, Pricing methods, Weighted Average
Level: Level 1

Topic: Accounting for Cost Elements
Series: NOV 2015

MI – Nov 2015 – L1 – SA – Q8 – Accounting for Cost Elements

Identifies information that is not typically included in a standard store ledger card.

Question

Which of the following information would NOT be contained in a standard store ledger card?
A. Description of the item
B. Minimum inventory level
C. Re-order quantity
D. Supplier’s address
E. Pricing method

Answer

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Tags: Inventory Records, Stock Control, Store Ledger
Level: Level 1

Topic: Accounting for Cost Elements
Series: NOV 2015

MI – Nov 2015 – L1 – SA – Q4 – Accounting for Cost Elements

Identifies a reason why an organization may not hold inventory.

Question

An organisation may NOT hold inventory in order to:
A. Meet regular demands
B. Even out seasonal variation in demand
C. Act as buffer when higher demand is expected
D. Meet technical requirements of a production system
E. Take advantage of bulk purchase discounts

Answer

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Tags: Inventory, Production Systems, Stock Management
Level: Level 1

Topic: Accounting for Cost Elements
Series: NOV 2015

MI – Nov 2015 – L1 – SA – Q3 – Accounting for Cost Elements

Identifies the term related to compensation for employees beyond the regular wage.

Question

Which of the following terms is known as compensation beyond the regular wage?
A. Overtime
B. Incentive
C. Bonus
D. Salaries
E. Leave allowance

Answer

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Tags: Employee Compensation, Incentives, Wages
Level: Level 1

Topic: Accounting for Cost Elements
Series: NOV 2015

MI – Nov 2021 – L1 – SA – Q10 – Accounting for Cost Elements

Identify the correct term for calculating gross pay and associated payments.

Question

The computation of the gross pay for each employee and calculation of payments to be made to employees, government and pension funds is called:

A. Wages control accounting
B. Labour cost accounting
C. Payroll accounting
D. Direct labour accounting
E. Overhead control accounting

Answer

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Tags: Labour Costs, Payroll Accounting, Wages
Level: Level 1

Topic: Accounting for Cost Elements
Series: NOV 2021

MI – Nov 2021 – L1 – SA – Q3 – Accounting for Cost Element

Identify the incorrect method for updating inventory records.

Question

Which of the following is NOT used in updating inventory records?

A. Material requisition notes
B. Material returns note
C. Material invoices
D. Goods received notes
E. Goods returned notes

Answer

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Tags: Inventory, Material Requisition, Records
Level: Level 1

Topic: Accounting for Cost Elements
Series: NOV 2021

MI – May 2022 – L1 – SA – Q7 – Accounting for Cost Elements

Identifying a non-advantage of the Just-in-Time purchasing arrangement.

Question

Which of the following is NOT an advantage of Just-in-Time purchasing arrangement?

A. Reduced investment in raw materials
B. Substantial savings in factory space
C. Low quantity discounts
D. Low investment in work-in-progress
E. Reduction in paperwork

Answer

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Tags: Inventory, Just-in-Time, Purchasing
Level: Level 1

Topic: Accounting for Cost Elements
Series: MAY 2022

MI – May 2022 – L1 – SA – Q1 – Accounting for Cost Elements

Identify a cost that is not a carrying cost in inventory control from the list provided.

Question

Which of the following is NOT a carrying cost under inventory control?

A. Warehouse rent
B. Insurance cost
C. Stores staffing cost
D. Material handling cost
E. Set up and tooling cost

Answer

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Tags: Carrying Cost, Inventory Control, Management Information Systems
Level: Level 1

Topic: Accounting for Cost Elements
Series: MAY 2022

MI – May 2021 – L1 – SB – Q3a – Accounting for Cost Elements

Calculate closing inventory and issued materials values using FIFO and LIFO methods.

Question

Koloko Wakama Plc trades in farm feeds. The following information relates to the movement of inventory for the month of June 2019:

Date	Units	Cost/Unit
June 6	20,000	N10.00
June 16	15,000	N12.50
June 26	30,000	N15.00

The following issues were made to the production floor from the store department:

Date	Units
June 8	8,000
June 18	10,000
June 24	6,000
June 29	20,000

You are required to:
a. Determine the value of closing inventory and the value of the materials issued as at the end of June 2019 using:
i. First-in-first-out (FIFO) method (7 Marks)
ii. Last-in-first-out (LIFO) method (7 Marks)

Answer

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Tags: Costing, FIFO, Inventory, LIFO
Level: Level 1

Topic: Accounting for Cost Elements
Series: MAY 2021

MI – Nov 2014 – L1 – SA – Q2 – Accounting for Cost Elements-

Identify which is NOT an advantage of centralized storage.

Question

The objectives of storing materials vary from one organisation to another. Which of the following is NOT an advantage of a centralized storage?

A. Stock taking is facilitated
B. Lower stock on average
C. Lower risk of duplication
D. Level of paper work is reduced
E. Loss of local knowledge from the user

Answer

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Tags: Centralized Storage, Inventory Control, Stock Management
Level: Level 1

Topic: Accounting for Cost Elements
Series: NOV 2014

MI – May 2021 – L1 – SA – Q8 – Accounting for Cost Elements

Calculate the Economic Order Quantity (EOQ) based on given values.

Question

A company uses 40,000 units of an item per annum. It is recorded that the holding costs are ₦4 per unit and ordering cost is ₦50 per order. The Economic Order Quantity (EOQ) is:

A. 2,500
B. 1,500
C. 1,000
D. 800
E. 500

Answer

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Tags: EOQ, Holding Cost, Inventory, Ordering Cost
Level: Level 1

Topic: Accounting for Cost Elements
Series: MAY 2021

MI – May 2021 – L1 – SA – Q2 – Accounting for Cost Elements

Identify the definition of perpetual inventory recording.

Question

Perpetual inventory is a method of recording inventory:

A. Every day
B. Every weekend
C. In perpetuity
D. After each physical stock count
E. After each movement in stock

Answer

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Tags: Inventory, Perpetual Inventory, Stock Movement
Level: Level 1

Topic: Accounting for Cost Elements
Series: MAY 2021

MI – Nov 2023 – L1 – SA – Q7 – Accounting for Cost Elements

Identifying the correct journal entry for issuing direct materials to production.

Question

Which of the following journal entries is correct for the issuance of direct materials to production?

DR	CR
A. Materials	Work in progress
B. Work in progress	Materials
C. Work in progress	Accounts payable
D. Materials	Accounts payable
E. Materials	Accounts Receivable

Answer

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Tags: Cost Accounting, Direct Materials, Journal Entries
Level: Level 1

Topic: Accounting for Cost Elements
Series: NOV 2023

MI – Nov 2019 – L1 – SA – Q8 – Accounting for Cost Elements

This question asks to identify the term used for wages paid to employees not directly involved in production.

Question

The amount of wages paid to some set of employees who are not directly engaged in the process of converting raw materials into finished product is called:

A. Labour cost
B. Direct wages cost
C. Variable cost
D. Indirect labour cost
E. Wages and salaries

Answer

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Tags: Indirect Costs, Labour Costs, Management Information, MCQ
Level: Level 1

Topic: Accounting for Cost Elements
Series: NOV 2019

MI – Nov 2019 – L1 – SA – Q6 – Accounting for Cost Elements

This question asks to calculate the minimum inventory level for a company's production process.

Question

What is the minimum inventory level?
A. 360,000 units
B. 240,000 units
C. 180,000 units
D. 160,000 units
E. 120,000 units

Answer

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Tags: Inventory Management, Management Information, MCQ, Minimum Inventory Level
Level: Level 1

Topic: Accounting for Cost Elements
Series: NOV 2019

MI – Nov 2019 – L1 – SA – Q5 – Accounting for Cost Elements

This question asks to calculate the re-order level for a company's inventory management.

Question

XBA Company uses a single material to produce its final product called COCOAB. The usage for the production ranges between 30,000 units and 60,000 units a day with the delivery period from 3 and 5 days. Calculate the re-order level:
A. 90,000 units
B. 150,000 units
C. 180,000 units
D. 240,000 units
E. 330,000 units

Answer

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Tags: Inventory Management, Management Information, MCQ, Re-order Level
Level: Level 1

Topic: Accounting for Cost Elements
Series: NOV 2019

MI – Mar-Jul 2020 – L1 – SA – Q11 – Accounting for Cost Elements

Identify the document used to record the start and finish time of an operation by a worker.

Question

The document filled by a worker to record the starting and finishing time of his own operation is known as:

A. Job cost sheet
B. Completion of job sheet
C. Job time sheet
D. Job materials requisition sheet
E. Clock card

Answer

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Tags: Cost Elements, Job Costing, Labour Costing, Time Recording
Level: Level 1

Topic: Accounting for Cost Elements
Series: MAR/JULY 2020

MI – May 2016 – L1 – SB – Q2b – Accounting for Cost Elements

Perform cost analysis for a small manufacturer with given data.

Question

Mr. Kogberegbe, a small manufacturer, has approached you as a Cost Accountant with the following data:

Sales Forecast

Additional information:
• Purchases are 45% of selling price and are paid for two months after
delivery. Delivery is in the month of sales.
• Collections from sales are 25% in the month of sales less 2% cash discount,
55%in the month after salesand the balance in the third month after sales.
• Production overheads are paid in the same month in which they are
incurred and this amounts to N1,240,000 per month. Included in
this amountaredepreciationof N70,000 andprepaidrent of N500,000.
• Other expenses are paid for in arrears and these amount to N620,000 per
month.
• New plant of N540,000 will be bought in the month of January and
installed at acostof N75,000 the following month.
• Bank opening balance as at August 2016 shows an overdraft of
N2,150,000 and interest is charged at 3% of drawn down balance. I g n o r e
other bank charges

Required:
Prepare a cash budget for Mr. Kogberegbe’s business for the three months i.e,
September to November, 2016. Calculate the values to the nearest naira and show
all your workings.

Answer

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Tags: Cost Accounting, Cost Analysis, Small Business
Level: Level 1