What is the double entry for the issue of direct materials from inventory?
A. Dr Material control account Cr Work in progress
B. Dr Material control account Cr Production overhead
C. Dr Work in progress Cr Material control account
Dr Production overhead Cr Material control account
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Which TWO of the following are required in order to calculate the Economic Order Quantity (EOQ)?
A. Cost of holding a unit of inventory for the period
B. Average inventory
Cost of ordering a consignment
D. Purchases in the current period
Why would a business prefer to hold low volumes of inventory?
A. Because the cost of ordering inventory is high
Because the amount you use doesn’t vary
C. Because the cost of holding inventory is very high
D. Because you can only order a set amount
Which TWO of the following are reasons why an organisation may decide to use absorption costing?
A. To allocate the fixed costs of production to units
B. To determine how much inventory to maintain
C. To know how profitable a product is
D. To help to plan production levels
A business producing product Z has a production process that involves two staff remotely overseeing the operation of five machines. Which of the following is the most suitable basis for absorption costing?
A. Estimated production
B. Machine hours
C. Labour hours
D. Raw materials used
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