2.2. Traditional costing methods
A subsection of Accounting, 9706, through 2. Cost and management accounting (AS Level)
Listing 10 of 533 questions
Quango Ltd produces four types of lamp – Platinum, Gold, Silver and Bronze. Unit selling prices and costs are as follows: Product Platinum Gold Silver Bronze $ $ $ $ Selling price Costs Direct materials Direct labour Overheads Direct material and Direct labour are variable costs. Overheads are 40% variable and 60% fixed. Quango’s intention was to produce and sell the following quantities during the year ended 31 May 2005. Product Quantity Platinum Gold Silver Bronze REQUIRED A statement, in marginal costing format, of profitability for each product, and in total. Use It was then discovered that fixed overheads were likely to rise by 8% and the total amount available to pay overheads could not be increased. REQUIRED A statement, taking into account the possibility of the increase in fixed overheads, and maximising profit, showing the quantity of each product to be produced. A statement in marginal costing format of profitability for each product and in total, based on your answer to .
9706_s05_qp_2
THEORY
2005
Paper 2, Variant 0
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Examiner's Use Hoi Poloi plc makes 3 types of filing cabinet, four-drawer, three-drawer and two-drawer. The business uses general purpose machines which are equally suitable to be used in the manufacture of all three products. Data for the year ended 30 April 2005 was as follows: four three two drawer drawer drawer $ $ $ Total sales 410 400 123 900 427 500 Total variable costs 304 000 88 500 285 000 Allocated fixed costs 98 000 48 000 135 000 Profit (Loss) 8 400 (12 600) 7 500 It had been proposed that the three-drawer cabinet be discontinued, as it was making a loss. REQUIRED State whether this proposal should have been agreed, giving your reasons. Sales and cost data for the year ended 30 April 2006 were as follows: four three two drawer drawer drawer Sales in units 15 000 6 000 30 000 Raw materials $12 $8 $4 Variable overheads $3 $2 $2 Unit contribution $7 $6 $5 Machine hours per unit 0.5 0.5 0.4 Machine operators are paid $10 per hour. Allocation of fixed costs $98 000 $48 000 $135 000 For Examiner's Use REQUIRED Calculate the selling price per unit for each product. Calculate for each product the break-even point in both units and sales value. For Examiner's Use Calculate for each product the profit or loss for the year ended 30 April 2006. For Examiner's Use To try to improve profits for the year ending 30 April 2007, it has been suggested that a better quality, more easily worked, raw material be purchased. This would increase the cost of raw materials by five percent (5 %) but would offer savings of ten percent (10 %) on labour. Sales and other costs would remain unchanged. REQUIRED Calculate for each product and in total the profit or loss if this suggestion is put into effect.
9706_s06_qp_2
THEORY
2006
Paper 2, Variant 0
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For Examiner's Use Aloysius Dixon of Dixon's Tableworks anticipates that in 2009 he will be able to sell 10 000 tables at $1100 each. However, his works manager has already produced the following figures for 2009 based on the factory's current production of 8000 tables per annum. $ $ Sales (8000 x $1100) 8 800 000 Direct materials 1 024 000 Direct wages 5 000 000 Production overhead 640 000 Sales overhead 480 000 7 144 000 Profit 1 656 000 All overheads are 50 % fixed, 50 % variable. 250 000 labour hours are worked. There are 3 options under consideration which allow sales to increase to 10 000 tables. Option 1 Purchase 2000 tables from another manufacturer at $920 each. Option 2 Lease new and improved machinery at a cost of $260 000 for the year. This would allow production of 10 000 tables per annum with no change in unit variable costs. This was previously under consideration and $40 000 had been spent on a feasibility study. Option 3 Using the existing machinery, introduce an evening shift thus providing an additional 62 500 labour hours. Wage rates for this shift would have to increase by 15 % to take into account unsocial hours to be worked. Also the additional staff needed would have to be trained at a cost of $50 000 - this cost to be absorbed in 2009. REQUIRED Calculate the original unit contribution. For Examiner's Use Prepare financial statements showing in detail the calculations for the additional profits or losses arising from each of the three options. For Examiner's Use State which option should be accepted, giving one advantage and one disadvantage, of that option.
9706_s08_qp_2
THEORY
2008
Paper 2, Variant 0
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Questions Discovered
533