ATD FMA Free Test

Q1

A manufacturing company benchmarks the performance of its accounts receivable department with that
of a leading credit card company.
What type of benchmarking is the company using?

Q2

Information relating to two processes (F and G) was as follows:
Process           Normal loss as                             Input                          Output
Details                    % of input                                 (litres)                          (litres)
F                              8                                         65,000                       58,900
G                              5                                         37,500                      35,700
For each process, was there an abnormal loss or an abnormal gain?

Q3

Which of the following BEST describes target costing?

Q4

ABC Co has a manufacturing capacity of 10,000 units. The flexed production cost budget of the
company is as follows:
Capacity                                       60%                                 100%
Total production costs                shs. 11,280                       shs15,120
What is the budgeted total production cost if it operates at 85% capacity?

Q5

A manufacturing company operates a standard absorption costing system. Last month 25,000
production hours were budgeted, and the budgeted fixed production cost was Shs 125,000. Last month the
actual hours worked were 24,000 and standard hours for actual production were 27,000.
What was the fixed production overhead capacity variance for last month?

Q7

Under which of the following labour remuneration methods will direct labour cost always be a variable
cost?

Q7

The purchase price of an item of inventory is shs 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 shs 20.
What is the Economic Order Quantity (EOQ) for the inventory item to the nearest whole unit?

Q8

Two products G and H are created from a joint process. G can be sold immediately after split-off. H
requires further processing into product HH before it is in a saleable condition. There are no opening
inventories and no work in progress of products G, H or HH. The following data are available for last
period:
Details                                                                                                shs
Total joint production costs                                                             350,000
Further processing costs of product H                                             66,000
Product                             Production units                            Closing inventory
GR                                             420,000                                          20,000
HH                                              330,000                                         30,000
Using the physical unit method for apportioning joint production costs, what was the cost value of the
closing inventory of product HH for last period?