2.2. Traditional costing methods
A subsection of Accounting, 9706, through 2. Cost and management accounting (AS Level)
Listing 10 of 533 questions
Javid manufactures a single product. He currently uses a system of absorption costing but is considering changing to marginal costing. The following budgeted information is available for one unit of the product. $ Selling price Direct material Direct labour Budgeted production 12 000 units per month Budgeted fixed overheads $36 000 per month At 1 August, Javid held no inventory. The following actual results are available. August September Sales 8 000 12 000 Production 10 000 10 000 Fixed overheads $36 000 $36 000 Prepare a profit statement for each of the months August and September using absorption costing. Javid Absorption cost profit statement August September $ $ $ $ Prepare a profit statement for each of the months August and September using marginal costing. Javid Marginal cost profit statement August September $ $ $ $ Prepare a statement reconciling the absorption cost profit for August with the marginal cost profit for August. Advise Javid whether or not he should change from absorption costing to marginal costing. Justify your answer. State two possible causes of over-absorption of overheads. Explain one difference between a cost centre and a cost unit. State how closing inventory is valued using each method of inventory valuation: first in first out (FIFO) weighted average cost (AVCO). Additional information Javid is investigating the just in time (JIT) method of inventory management. Explain a principle of the JIT method of inventory management.
9706_w23_qp_21
THEORY
2023
Paper 2, Variant 1
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Miu owns a manufacturing business making a single product. REQUIRED State the difference between a cost unit and a cost centre. State the difference between a production cost centre and a service cost centre. State what is meant by contribution. REQUIRED Prepare a budgeted profit statement for each of the two months, January and February, using marginal costing. Clearly show the opening and closing inventories each month. Budgeted Profit Statement January February $ $ $ $ Additional information Miu is considering using absorption costing to value her inventory. REQUIRED Calculate the production overhead absorption rate per unit. Prepare a budgeted profit statement for each of the two months, January and February, using absorption costing. Clearly show the opening and closing inventories each month. Budgeted Profit Statement January February $ $ $ $ Reconcile the difference in budgeted profit figures in parts and . January February $ $ Advise Miu whether or not she should change from marginal costing to absorption costing. Give reasons to justify your answer.
9706_m17_qp_22
THEORY
2017
Paper 2, Variant 2
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Questions Discovered
533