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🇵🇰 CSS Accounting and Auditing · flashcards
CSS Accounting and Auditing Cost and Management Accounting Flashcards
62 question-and-answer cards covering Cost and Management Accounting as it is examined in CSS Accounting and Auditing. 24 of them are printed below, taken from across the deck — no signup, no paywall on the preview.
24 sample cards from the Cost and Management Accounting deck
Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.
State the EOQ formula and define its variables.
$$\text{EOQ} = \sqrt{\frac{2 D O}{C}}$$ where $D$ = annual demand/usage, $O$ = ordering cost per order, and $C$ = carrying (holding) cost per unit per annum.
At the Economic Order Quantity, what is the relationship between ordering cost and carrying cost?
At EOQ the total annual ordering cost equals the total annual carrying cost; this equality is the point of minimum total inventory cost.
How is the re-order level calculated?
$$\text{Re-order Level} = \text{Maximum usage} \times \text{Maximum lead time}$$ It is the stock level at which a fresh purchase order is initiated.
How is the minimum stock level calculated?
$$\text{Minimum Level} = \text{Re-order Level} - (\text{Average usage} \times \text{Average lead time})$$ It acts as a buffer (safety) stock below which stock should not normally fall.
How is the maximum stock level calculated?
$$\text{Maximum Level} = \text{Re-order Level} + \text{Re-order Quantity} - (\text{Minimum usage} \times \text{Minimum lead time})$$
How is the average stock level calculated?
$$\text{Average Level} = \frac{\text{Maximum Level} + \text{Minimum Level}}{2} \quad \text{or} \quad \text{Minimum Level} + \frac{1}{2}\text{Re-order Quantity}$$
Distinguish between direct labour and indirect labour.
Direct labour is the work directly engaged in converting raw materials into finished products and is identifiable with specific units/jobs (e.g., machine operators). Indirect labour cannot be traced to specific output and is treated as overhead (e.g., supervisors, store-keepers, cleaners).
Describe the time-rate (time-wage) method of labour remuneration.
Under the time-rate system, a worker is paid according to time spent at work, regardless of output: $$\text{Wages} = \text{Hours worked} \times \text{Rate per hour}$$ It is simple and ensures quality but provides no direct incentive to increase output.
Describe the piece-rate method of labour remuneration and its formula.
Under the piece-rate system, a worker is paid per unit produced regardless of time taken: $$\text{Wages} = \text{Units produced} \times \text{Rate per unit}$$ It rewards efficiency but may compromise quality and offers no guaranteed minimum wage.
Explain the Halsey premium plan of wage payment.
Under the Halsey plan the worker gets the guaranteed time wage plus a bonus of (usually) 50% of the value of time saved: $$\text{Earnings} = (T \times R) + \tfrac{1}{2}(S - T) \times R$$ where $T$ = time taken, $S$ = standard (allowed) time, $R$ = rate per hour.
Explain the Rowan premium plan of wage payment.
Under the Rowan plan the bonus is the proportion of time saved to standard time, applied to time wages: $$\text{Earnings} = (T \times R) + \frac{S - T}{S} \times (T \times R)$$ where $T$ = time taken, $S$ = standard time, $R$ = rate per hour.
What is labour turnover?
Labour turnover is the rate of change in the workforce — the number of employees leaving and being replaced over a period relative to the average number employed. High turnover increases recruitment, training, and disruption costs.
State a formula for the labour turnover rate (separation method).
$$\text{Labour Turnover (Separation Method)} = \frac{\text{Number of separations during the period}}{\text{Average number of workers}} \times 100$$
What is idle time, and how is it classified?
Idle time is the period for which workers are paid but no productive work is done. It is classified as normal idle time (unavoidable, e.g., tea breaks, machine set-up — treated as overhead) and abnormal idle time (avoidable, e.g., strikes, power failure, machine breakdown — charged to the costing profit and loss account).
How are the costs of normal versus abnormal idle time treated in cost accounting?
Normal idle time cost is unavoidable and is absorbed into the cost of production (as overhead/inflated labour rate), whereas abnormal idle time cost is treated as a loss and charged directly to the costing profit and loss account, not to product cost.
Distinguish between allocation and apportionment of overheads.
Allocation is the charging of whole items of overhead that are wholly identifiable with a single cost centre (e.g., a department's own supervisor salary). Apportionment is the proportionate distribution of common overheads that relate to several cost centres over those centres on a suitable basis (e.g., rent split by floor area).
Give examples of suitable bases for apportioning common overheads.
Rent and rates — floor area; lighting/heating — floor area or number of light points; depreciation and insurance of plant — value of plant; supervision — number of employees; canteen/welfare costs — number of employees; power — machine horsepower or machine hours.
What is the difference between primary distribution and secondary distribution of overheads?
Primary distribution allocates and apportions all overheads among all cost centres (both production and service departments). Secondary distribution re-apportions the totals of service (support) departments over the production departments that use them, so that all overhead ends up in production cost centres.
What is absorption of overheads?
Absorption (recovery) of overheads is the process of charging the overheads of a production cost centre to the individual units, jobs, or products passing through it, using a predetermined overhead absorption rate.
State the general formula for an overhead absorption rate.
$$\text{Overhead Absorption Rate} = \frac{\text{Total overheads of the cost centre}}{\text{Total units of the absorption base}}$$ where the base may be units, labour hours, machine hours, wages, or prime cost.
Name the common methods (bases) of absorbing overheads.
Percentage of direct material cost, percentage of direct wages, percentage of prime cost, rate per unit of output, direct labour-hour rate, and machine-hour rate.
What is over-absorption (over-recovery) of overheads and what causes it?
Over-absorption occurs when the overhead absorbed (using the predetermined rate) exceeds the actual overhead incurred. It is caused by actual overheads being lower than estimated, or actual activity being higher than the budgeted level used to set the rate.
What is under-absorption (under-recovery) of overheads and what causes it?
Under-absorption occurs when the overhead absorbed is less than the actual overhead incurred. It is caused by actual overheads exceeding the estimate, or actual activity being lower than the budgeted level used to set the rate.
How are over- and under-absorbed overheads treated in cost accounts?
They may be (a) transferred to the costing profit and loss account (especially if due to abnormal causes or small amounts), (b) carried forward to the next period via an overhead suspense/reserve account, or (c) adjusted by a supplementary rate to cost of sales, WIP, and finished goods if the amount is significant and due to normal causes.
What this deck covers
The Cost and Management Accounting deck follows the CSS Accounting and Auditing Cost and Management Accounting syllabus — 7 chapters and 29 topics — so questions land on material that is genuinely examinable rather than trivia around it. That works out to roughly 8.9 cards per chapter.
Answers are written to be recallable, not just readable — averaging about 228 characters, which is long enough to carry the reasoning and short enough to say out loud.
A deck like this earns its keep on the second and third pass. Read the syllabus first so you know the shape of the subject, then use the cards to find the specific facts that have not stuck.
Cost and Management Accounting flashcards FAQ
How many Cost and Management Accounting flashcards are in this CSS Accounting and Auditing deck?
62 cards. This page previews 24 of them, sampled evenly across the deck so you can judge the difficulty before installing anything.
Are these CSS Accounting and Auditing flashcards free?
Yes. The preview here is free to read with no signup, and the full 62-card deck is free inside the Examius app.
What do the Cost and Management Accounting cards cover?
They follow the CSS Accounting and Auditing Cost and Management Accounting syllabus — 7 chapters and 29 topics — so the questions track what is actually examinable.
How should I use these flashcards?
Read the syllabus first so you know the shape of the subject, then drill the deck. Examius schedules each card with spaced repetition, so cards you keep missing come back sooner and ones you know drift further apart.