F2 - Accounting For Materials and Labour - Questions

F2 Management Accounting
ACCA 365
Accounting for Materials and Labour

Questions
F2 Management Accounting ACCA365

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Question 1
An organisations records for last month show the following in respect of one stores
item:
Date Receipts Issues Stock
units units units
1st 200
5th 100 100
7th 400 500
19th 190 310
27th 170 140
Last months opening stock was valued at a total of 2,900 and the receipts during
the month were purchased at a cost of 1750 per unit.
The organisation uses the weighted average method of valuation and calculates a
new weighted average after each stores receipt.
What was the total value of the issues last month?
A 7,360
B 7,534
C 7,590
D 7,774
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Answer 1
item:
units units units
1st 200
5th 100 100
7th 400 500
19th 190 310
27th 170 140
Opening AVCO = 2900 / 200 = 14.50

Avco after delivery
(400 * 17.50 + 100 * 14.50) / 500 = 16.90
Issues for month 100 @ 14.50 = 1450

(190 + 170) @ 16.60 = 6084
7534

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1
Answer 1
item:
units units units
1st 200
5th 100 100
7th 400 500
19th 190 310
27th 170 140
Last months opening stock was valued at a total of 2,900 and the receipts during
the month were purchased at a cost of 1750 per unit.
The organisation uses the weighted average method of valuation and calculates a
new weighted average after each stores receipt.
What was the total value of the issues last month?
A 7,360
B 7,534
C 7,590
D 7,774
www.acca365.com
Question 2
The following data relate to material J for last month:
Opening stock 300 kg valued at 3,300

Purchases:
4th 400 kg for 4,800
18th 500 kg for 6,500
Issues:
13th 600 kg
25th 300 kg
Using the LIFO valuation method, what was the value of the closing stock for last
month?
A 3,300
B 3,500
C 3,700
D 3,900

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Answer 2
Opening 300 @ 11 3300

Purchase 4th 400 @ 12 4800
Issue 13th 600
400 @ 12 (4800)
200 @ 11 (2200)
Purchase 18th 500 @ 13 6500
Issue 25th 300 @ `13 (3900)
Closing stock 3700

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2
Question 2
The following data relate to material J for last month:
Opening stock 300 kg valued at 3,300

Purchases:
4th 400 kg for 4,800
18th 500 kg for 6,500
Issues:
13th 600 kg
25th 300 kg
Using the LIFO valuation method, what was the value of the closing stock for last
month?
A 3,300
B 3,500
C 3,700
D 3,900

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Question 3
The purchase price of a stock item is $25 per unit. In each three month
period the usage of the item is 20,000 units.
The annual holding costs associated with one unit equate to 6% of its
purchase price. The cost of placing an order for the item is $20.
What is the Economic Order Quantity (EOQ) for the stock item to the
nearest whole unit?
A 730
B 894
C 1,461
D 1,633
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Answer 3
2 x 20 x80000
= 1.5
= 1460.593

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3
Answer 3
The purchase price of a stock item is $25 per unit. In each three month
period the usage of the item is 20,000 units.
The annual holding costs associated with one unit equate to 6% of its
purchase price. The cost of placing an order for the item is $20.
What is the Economic Order Quantity (EOQ) for the stock item to the
nearest whole unit?
A 730
B 894
C 1,461
D 1,633
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Question 4
A company always determines its order quantity for a raw material by
using the Economic Order Quantity (EOQ) model.
What would be the effects on the EOQ and the total annual holding
cost of a decrease in the cost of ordering a batch of raw material?
EOQ Annual holding cost

A Higher Lower
B Higher Higher
C Lower Higher
D Lower Lower

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Answer 4
EOQ
-> Will orders more frequently
Annual Holding cost

-> More orders means lower stocks

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4
Answer 4
A company always determines its order quantity for a raw material by
using the Economic Order Quantity (EOQ) model.
EOQ Annual holding cost

A Higher Lower
B Higher Higher
C Lower Higher
D Lower Lower

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Question 5
Data relating to one particular stores item are as follows:
Average daily issues 70 units
Maximum daily issues 90 units
Minimum daily issues 50 units
Lead time for the replenishment of stock 11 to 17 days
Reorder quantity 2,000 units
Reorder level 1,800 units
What is the maximum stock level (in units) for this stores item?
A 2,950
B 3,100
C 3,250
D 3,800

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Answer 5
Maximum stock level
= re-order level + reorder quantity
(minimum usage X minimum lead time)
= 1800 + 2000 (50 * 11)
= 3250

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5
Answer 5
Data relating to one particular stores item are as follows:
Average daily issues 70 units
Maximum daily issues 90 units
Minimum daily issues 50 units
Lead time for the replenishment of stock 11 to 17 days
Reorder quantity 2,000 units
Reorder level 1,800 units
What is the maximum stock level (in units) for this stores item?
A 2,950
B 3,100
C 3,250
D 3,800

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Question 6
An organisation operates a piecework system of remuneration, but
also guarantees its employees 80% of a time-based rate of pay
which is based on $20 per hour for an eight hour working day.
Three minutes is the standard time allowed per unit of output.
Piecework is paid at the rate of $18 per standard hour.
If an employee produces 200 units in eight hours on a particular day,

what is the employees gross pay for that day?
A $128
B $144
C $160
D $180
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Answer 6
Piecework renumeration
200 units @ 3 minutes = 600 minutes
= 10 hours
10 hours @ $18 = $180
Guaranteed minimum
8 hours @ $20 @ 805 = $128

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6
Question 6
An organisation operates a piecework system of remuneration, but
also guarantees its employees 80% of a time-based rate of pay
which is based on $20 per hour for an eight hour working day.
Three minutes is the standard time allowed per unit of output.
Piecework is paid at the rate of $18 per standard hour.
If an employee produces 200 units in eight hours on a particular day,

what is the employees gross pay for that day?
A $128
B $144
C $160
D $180
www.acca365.com
Question 7
The following statements refer to situations occurring in Process Q of
an organisation which operates a series of consecutive processes:
(i) Direct labour is working at below the agreed productivity level.
(ii) A machine breakdown has occurred.
(iii) Direct labour is waiting for work to be completed in a previous
process.
Which of these situations could give rise to idle time?

A (i) and (ii) only
B (i) and (iii) only
C (ii) and (iii) only
D (i), (ii) and (iii)
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Answer 7
The following statements refer to situations occurring in Process Q of
an organisation which operates a series of consecutive processes:
(i) Direct labour is working at below the agreed productivity level.
(ii) A machine breakdown has occurred.
(iii) Direct labour is waiting for work to be completed in a previous
process.
Which of these situations could give rise to idle time?

A (i) and (ii) only
B (i) and (iii) only
C (ii) and (iii) only
D (i), (ii) and (iii)
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7
Question 8
A jobbing company operates a premium bonus scheme for its
employees of 75% of the time saved compared with the standard
time allowance for a job, at the normal hourly rate. The data
relating to Job 1206 completed by an employee is as follows:
Allowed time for Job 1206 4 hours

Time taken to complete Job 1206 3 hours
Normal hourly rate of pay 8
What is the total pay of the employee for Job 1206?

A 24
B 30
C 32
D 38
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Answer 8
Basic pay
3 hours @ 8 = 24
Bonus pay
Time saved 1 hour
Bonus = 1 hour @ 8 @ 75% = 6
Total pay = 30

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Answer 8
A jobbing company operates a premium bonus scheme for its
employees of 75% of the time saved compared with the standard
time allowance for a job, at the normal hourly rate. The data
relating to Job 1206 completed by an employee is as follows:
Allowed time for Job 1206 4 hours

Time taken to complete Job 1206 3 hours
Normal hourly rate of pay 8
What is the total pay of the employee for Job 1206?

A 24
B 30
C 32
D 38
www.acca365.com

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F2 Management Accounting

Accounting for Materials and Labour

F2 Management Accounting ACCA365

Opening AVCO = 2900 / 200 = 14.50

Issues for month 100 @ 14.50 = 1450

F2 Management Accounting ACCA365

Opening stock 300 kg valued at 3,300

F2 Management Accounting ACCA365

Opening 300 @ 11 3300

F2 Management Accounting ACCA365

Opening stock 300 kg valued at 3,300

F2 Management Accounting ACCA365

F2 Management Accounting ACCA365

EOQ Annual holding cost

F2 Management Accounting ACCA365

Annual Holding cost

F2 Management Accounting ACCA365

EOQ Annual holding cost

F2 Management Accounting ACCA365

F2 Management Accounting ACCA365

= 1800 + 2000 (50 * 11)

F2 Management Accounting ACCA365

F2 Management Accounting ACCA365

If an employee produces 200 units in eight hours on a particular day,

F2 Management Accounting ACCA365

If an employee produces 200 units in eight hours on a particular day,

Which of these situations could give rise to idle time?

Which of these situations could give rise to idle time?

Allowed time for Job 1206 4 hours

What is the total pay of the employee for Job 1206?

F2 Management Accounting ACCA365

Allowed time for Job 1206 4 hours

What is the total pay of the employee for Job 1206?

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