These are ACCA F2 (MA/FMA) Management Accounting MCQs for Part-C of the Syllabus “Cost accounting methods and systems”.

These multiple-choice questions (MCQs) are designed to help ACCA F2 (MA) students to better understand the exam format. We aim to instill in students the habit of practicing online for their CBE exams. By doing so, students can reduce exam stress and prepare more effectively.

INFORMATION ABOUT THESE MCQs Test

Course: ACCA – Associations of Chartered Certified Accountants
Fundamental Level: Knowledge, FIA – Foundation in Accounting
Subject: Management Accounting
Paper: F2 – MA/FMA
Chapter: Process Costing, and Process costing, joint products and by-products
Chapter Number: 8 of the Practice and Exam Kit
Syllabus Area: C – Cost accounting methods and systems
Questions Type: CBE MCQs
Exam Section Type: Section A

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Number of the Questions

There are 17 Questions in this F2 MCQ Test that cover Chapter 8a; Process Costing of ACCA F2 (MA/FMA) Management Accounting Module.

Time

This MCQs test is not time-bound. Take your time and solve them without stress. Pay proper attention and focus. Do not rush or hesitate.

Result

Students will get their F2 CBE MCQ result after they finish the entire test. They will also be able to see the score in percentage, correct and incorrect answers, as well as explanations for the incorrect questions.

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MCQs: Choose one from the given options.
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F2 - Chapter 8 - Part A - MCQs

Course: ACCA - FIA
Subject: F2 (MA/FMA) Management Accounting
Chapter: 8 - Process costing, and Process costing, joint products and by-products
Syllabus Area: C - Cost accounting methods and systems
Exam Section: Section A
Questions type: MCQs
Time: No Time Limit

INSTRUCTIONS

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1 / 28

A company makes a product in two processes. The following data is available for the latest period, for process 1.

Opening work in progress of 200 units was valued as follows.

Material	$2,400
Labour	$1,200
Overhead	$400

No losses occur in the process.

Units added and costs incurred during the period:

Material	$6,000 (500 units)
Labour	$3,350
Overhead	$1,490

Closing work in progress of 100 units had reached the following degrees of completion:

Material	100%
Labour	50%
Overhead	30%

The company uses the weighted average method of inventory valuation.

How many equivalent units are used when calculating the cost per unit in relation to overhead?

630

600

500

700

2 / 28

A company operates a continuous process into which 3,000 units of material costing $9,000 was input in a period. Conversion costs for this period were $11,970 and losses, which have a scrap value of $1.50, are expected at a rate of 10% of input. There were no opening or closing inventories and output for the period was 2,900 units.

What was the output valuation?

$20,271

$20,520

$20,970

$22,040

3 / 28

A company manufactures two joint products and one by-product in a single process. Data for November are as follows.

	$
Raw material input	216,000
Conversion costs	72,000

There were no inventories at the beginning or end of the period.

	Output Units	Sales price $ per unit
Joint product E	21,000	15
Joint product Q	18,000	10
By-product X	2,000	2

By-product sales revenue is credited to the process account. Joint costs are apportioned on a sales value basis.

What were the full production costs of product Q in November (to the nearest $)?

$104,727

$180,727

$103,273

$102,445

4 / 28

Two joint products A and B are produced in a process. Data for the process for the last period are as follows:

Product	A	B
	Tonnes	Tonnes
Sales	480	320
Production	600	400

Common production costs in the period were $12,000. There was no opening inventory. Both products had a gross profit margin of 40%. Common production costs were apportioned on a physical basis.

What was the gross profit for product A in the period?

$2,880

$3,840

$4,800

$2,304

5 / 28

A company needs to produce 340 litres of Chemical X. There is a normal loss of 10% of the material input into the process. During a given month the company did produce 340 litres of good production, although there was an abnormal loss of 5% of the material input into the process.

How many litres of material were input into the process during the month?

______ litres

6 / 28

A chemical process has a normal wastage of 10% of input. In a period, 2,500 kg of material were input and there was an abnormal loss of 75 kg.

What quantity of good production was achieved?

______ kg

7 / 28

A process produces two joint products A and B in equal physical quantities. A and B are sold at split off point for $5 per kg and $8 per kg respectively. There are no further costs after the split off point.

If joint costs are apportioned on a relative sales value basis, which of the following statements is true?

Product A will have the higher return on sales ratio (operating margin)

Both products will have the same return on sales ratio (operating margin)

The cost per kg will be the same for both products

The cost per kg of product A will be higher than that of product B

8 / 28

In a period, a process produced 2,000 kg of a main product and 400 kg of a by-product. The cost of production was $5,000. 1,800 kg of the main product were sold at $10 per kg and all of the by- product produced was sold for $1per kg. There was no opening inventory.

If the sales income of the by-product is deducted from the cost of production, what is the profit for the period?

$13,900

$13,860

$13,400

$15,860

9 / 28

The following question is taken from the September to June 2018 exam period.

A process is subject to a normal loss of 12% of input. Losses can be sold for $5 per kg. In the last period 10,000 kg of material costing $100,000 was input to the process. Conversion costs for the period were $50,000 and output was 9,200 kg.

What is the credit to the statement of profit or loss from the abnormal gain account in the last period?

$4,260

$4,545

$6,818

$4,818

10 / 28

Which of the following statements about process losses are correct?

Units of normal loss should be valued at full cost per unit
Units of abnormal loss should be valued at their scrap value

Neither of them

(i) only

Both of them

(ii) only

11 / 28

The following question is taken from the January to June 2015 exam period.

Normally no losses are expected from a process. Any abnormal losses are sold for scrap.

Which of the following calculates the net cost to the company of one unit of abnormal loss?

Total input cost ÷ expected output units

Total input cost ÷ actual output units

(Total input cost – total scrap value) ÷ expected output units

(Total input cost ÷ expected output units) – scrap value per unit

12 / 28

A company manufactures Chemical X, in a single process. At the start of the month there was no work-in- progress. During the month 300 litres of raw material were input into the process at a total cost of $6,000. Conversion costs during the month amounted to $4,500. At the end of the month 250 litres of Chemical X were transferred to finished goods inventory. The remaining work-in-progress was 100% complete with respect to materials and 50% complete with respect to conversion costs. There were no losses in the process and there is no scrap value available during months when losses occur.

What are the equivalent units for closing work-in-progress at the end of the month?

Material 25 litres, Conversion costs 50 litres

Material 25 litres, Conversion costs 25 litres

Material 50 litres, Conversion costs 50 litres

Material 50 litres, Conversion costs 25 litres

13 / 28

A company manufactures two joint products, P and R, in a common process. Data for June are as follows.

	$
Opening inventory	1,000
Direct materials added	10,000
Conversion costs	12,000
Closing inventory	3,000

	Production Unites	Sales Units	Sales Price $ per unit
P	4,000	5,000	5
R	6,000	5,000	10

If costs are apportioned between joint products on a sales value basis, what was the cost per unit of product R in June?

$1.25

$2.50

$2.75

$2.22

14 / 28

In a particular process, the input for the period was 2,000 units. There were no inventories at the beginning or end of the process. Normal loss is 5% of input.

In which of the following circumstances is there an abnormal gain?

Actual output = 1,800 units
Actual output = 1,950 units
Actual output = 2,000 units

(ii) and (iii) only

(ii) only

(i) and (ii) only

(i) only

15 / 28

In a process account, how are abnormal losses valued?

At the cost of raw materials

The same as good production

The same as normal losses

At their scrap value

16 / 28

A company produces a certain food item in a manufacturing process. On 1 November, there was no opening inventory of work in process. During November, 500 units of material were input to the process, with a cost of $9,000. Direct labour costs in November were $3,840. Production overhead is absorbed at the rate of 200% of direct labour costs. Closing inventory on 30 November consisted of 100 units which were 100% complete as to materials and 80% complete as to labour and overhead. There was no loss in process.

What is the full production cost of completed units during November?

$16,800

$16,416

$10,400

$20,520

17 / 28

What is the value of the closing work in progress on 30 November?

$20,520

$2,440

$4,104

$3,720

18 / 28

Which of the following statements is/are correct?

A by-product is a product produced at the same time as other products which has a relatively low volume compared with the other products
Since a by-product is a saleable item it should be separately costed in the process account, and should absorb some of the process costs
Costs incurred prior to the point of separation are known as common or joint costs

(i) and (ii)

(iii) only

(i) and (iii)

(ii) and (iii)

19 / 28

Two products (W and X) are created from a joint process. Both products can be sold immediately after split-off. There are no opening inventories or work in progress. The following information is available for last period:

Total joint production costs	$776,160
Product	Production units	Sales units	Selling price per unit
W	12,000	10,000	$10
X	10,000	8,000	$12

Using the sales value method of apportioning joint production costs, what was the value of the closing inventory of product X for last period?

$155,232

$388,080

$77,616

$310,464

20 / 28

A company uses process costing to establish the cost per unit of its output.

The following information was available for the last month:

Input units	10,000
Output units	9,850
Opening inventory	300 units, 100% complete for materials and
	70% complete for conversion costs
Closing inventory	450 units, 100% complete for materials and
	30% complete for conversion costs

The company uses the weighted average method of valuing inventory.

What were the equivalent units for conversion costs?

9,985 units

9,505 units

9,775 units

9,715 units

21 / 28

If there had been a normal process loss of 10% of input during the month what would the value of this loss have been?

$1,050

Nil

$600

$450

22 / 28

A company manufactures two joint products, P and R, in a common process. Data for June are as follows.

	$
Opening inventory	1,000
Direct materials added	10,000
Conversion costs	12,000
Closing inventory	3,000

	Production Unites	Sales Units	Sales Price $ per unit
P	4,000	5,000	5
R	6,000	5,000	10

If costs are apportioned between joint products on a physical unit basis, what was the total cost of product P production in June?

$12,000

$10,000

$8,800

$8,000

23 / 28

A company makes a product in two processes. The following data is available for the latest period, for process 1.

Opening work in progress of 200 units was valued as follows.

Material	$2,400
Labour	$1,200
Overhead	$400

No losses occur in the process.

Units added and costs incurred during the period:

Material	$6,000 (500 units)
Labour	$3,350
Overhead	$1,490

Closing work in progress of 100 units had reached the following degrees of completion:

Material	100%
Labour	50%
Overhead	30%

The company uses the weighted average method of inventory valuation.

What is the value of the units transferred to process 2?

$15,400

$13,200

$7,200

$14,840

24 / 28

The following information relates to a company's polishing process for the previous period.

Output to finished goods	5,408 units valued at $29,744
Normal loss	276 units
Actual loss	112 units

All losses have a scrap value of $2.50 per unit and there was no opening or closing work in progress.

What was the value of the input during the period?

$30,434

$28,842

$29,744

$29,532

25 / 28

Which of the following is NOT an acceptable method of accounting for by-products?

Pre-separation costs are apportioned to the by-product to calculate its profit

Sales value of the by-product is deducted from the cost of the main product

By-product income less post-separation costs is added to the sales of the main product

Net realisable value of the by-product is deducted from the cost of the main product

26 / 28

A company manufactures three joint products and one by-product from a single process.

Data for May are as follows.

Opening and closing inventories	Nil
Raw material input	$180,000
Conversion costs	$50,000

Output

		Units	Sales price $ per unit
Joint product	L	3,000	32
	M	2,000	42
	N	4,000	38
By-product R		1,000	2

By-product sales revenue is credited to the sales account. Joint costs are apportioned on a sales value basis.

What were the full production costs of product M in May (to the nearest $)?

$57,687

$66,506

$58,193

$57,844

27 / 28

Two products G and H are created from a joint process. G can be sold immediately after split-off. H requires further processing before it is in a saleable condition. There are no opening inventories and no work in progress. The following data are available for last period:

	$
Total joint production costs	384,000
Further processing costs (product H)	159,600

Product	Selling price per unit	Sales Units	Production Units
G	$0.84	400,000	412,000
H	$1.82	200,000	228,000

Using the physical unit method for apportioning joint production costs, what was the cost value of the closing inventory of product H for last period?

$45,181

$37,520

$36,400

$40,264

28 / 28

A company uses process costing to value its output. The following was recorded for the period: