2.1. Costs and cost behaviour
A subsection of Accounting, 9706, through 2. Cost and management accounting (AS Level)
Listing 10 of 370 questions
Jessie is a manufacturer and uses a single raw material to make her product. The following table shows inventory transactions for the month of March 2019. Date Kilos Per kilo $ March 1 Opening balance 1.90 Receipts 1.92 Receipts 1.95 Receipts 2.00 Jessie uses the First In First Out (FIFO) method to value her inventory. The following issues to production took place. Date Kilos March 5 REQUIRED Calculate the following in dollars: the value of issues to production on 5 March the value of issues to production on 23 March the value of closing inventory at 31 March. State two advantages to a business of using the FIFO method of inventory valuation. Additional information The business has two production cost centres: machining and assembly, and one service cost centre: stores. The following budgeted information is available for the year ending 31 December 2019. Budgeted overheads $ Basis of apportionment Depreciation 9 760 Non-current asset at cost Heat and light 13 850 Kilowatt hours Machinery maintenance 6 500 Machine hours The following budgeted information is also available. Production cost centres Service cost centre Machining Assembly Stores Kilowatt hours 4 200 2 100 Non-current assets at cost ($) 91 000 28 000 21 000 Stores requisitions Direct labour hours 2 700 6 300 Machine hours 13 400 3 350 REQUIRED Complete the following table to show the apportionment of budgeted overhead costs for the year ending 31 December 2019. Total $ Production cost centres Service cost centre Machining $ Assembly $ Stores $ Depreciation Heat and light Machinery maintenance Total overheads apportioned Re-apportionment of stores Total overheads cost Calculate, to two decimal places, an overhead absorption rate for each production cost centre, using a suitable basis. . Additional information On 1 April 2019 a customer asked Jessie to quote for an order of 200 units of her product. Each unit requires the following: Direct labour 2.5 hours at $4 per hour Direct material 3 kilos Overheads Machining department 1.5 machine hours 0.8 direct labour hours Assembly department 1.0 machine hour 2.0 direct labour hours Jessie marks up all orders by 25%. REQUIRED Prepare a statement to show the total selling price that Jessie will quote to the customer. Additional information The same customer offers to pay Jessie the quoted price less a 10% discount. Jessie’s factory has spare capacity. REQUIRED Advise Jessie whether or not she should accept the offer. Justify your answer.
9706_s19_qp_22
THEORY
2019
Paper 2, Variant 2
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Questions Discovered
370