A-AS Level (CIE) Accounting Paper-1: Specimen Questions with Answers 36 - 38 of 93

Question 36

Question

MCQ▾

A Company manufactures tire. The company uses standard absorption costing system and based on machine hours it absorbs production overheads.

The following are the details

Output 3000 units

Variable

Fixed overheads 12000

Machine hours 0.5 hours per unit

How much is variable overhead absorption?

Choices

Choice (4)

a.

b.

c.

d.

Answer

b.

Explanation

The total budgeted number of hours is

Now we can calculate the variable and fixed overhead absorption rates and show the standard cost card.

Question 37

Question

MCQ▾

From the following data of A ltd. and B ltd.

From the Following Data of a Ltd. And B Ltd
AB
Sales45009600
Variable cost30007200
Fixed Cost12002000

What will contribution for firm A and B?

Choices

Choice (4)

a.

4000,2000

b.

1200,2000

c.

300,400

d.

1500,2400

Answer

d.

Explanation

Contribution for firm A will be,

Contribution for firm B will be,

Question 38

Question

MCQ▾

When a goodwill account is raised at the time of admission of a new partner, credit is given to old partners in their:

Choices

Choice (4)

a.

old profit-sharing ratio

b.

Ratio of sacrifice

c.

New profit-sharing ratio

d.

Capital ratio

Answer

c.

Explanation

The new partner is supposed to pay his share of the tangible assets and goodwill, as per the new profit-sharing ratio. When a partner is admitted, goodwill of the firm must be revalued. However, not all business maintains a goodwill account in their books of accounting. Goodwill adjustments can be done:

  • Goodwill account opened
  • Goodwill account not opened

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