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Question 20

Overtime worked as a result of a rush order at the customers request should be classified as a:

Options:

Direct expense

Direct labour cost

Production overhead cost

Administration overhead cost

Question 21

Which of the following is a relevant cost?

Options:

A sunk cost

A committed cost

An incremental cost

A historical cost

Question 22

The International Federation of Accountants (IFAC) stated that it was important that “accountants in business” should understand what the drivers of stakeholder value are. Which of the following statements is valid?

Options:

Anyone with an interest in an organisation can be considered to be one of its stakeholders.

Stakeholders must be external to the organisation.

Only an organisation’s shareholders and employees can be considered to be its stakeholders.

Only an organisation’s shareholders can be considered to be its stakeholders.

Question 23

A company has spent $5,000 on a report into the viability of using a subcontractor. The report highlighted the following:

A machine purchased six years ago for $30,000 would become surplus to requirements. It has a written-down value of $10,000 but would be resold for $12,000.

A machine operator would be made redundant and would receive a redundancy payment of $40,000.

The administration of the subcontractor arrangement would cost the company $25,000 each year.

Which THREE of the following are relevant for the decision? (Choose three.)