2.2. Traditional costing methods
A subsection of Accounting, 9706, through 2. Cost and management accounting (AS Level)
Listing 10 of 533 questions
A company has budgeted the following factory overheads for the next financial year. machining assembly stores total overheads $80 000 $50 000 $10 000 $140 000 Machining and assembly are production departments and stores is the service department. The two production departments issued requisitions to stores as follows. machining assembly total What was the budgeted overhead absorption rate for the machining department based on 4300 budgeted machine hours?
9706_s21_qp_13
MCQ
2021
Paper 1, Variant 3
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T Limited manufactures goods at two factories: Factory A and Factory B. Factory A Factory A has two production departments, Assembly and Finishing; and two service departments, Administration and Canteen. Absorption costing is used at this factory. Budgeted overheads for February 2021 have already been apportioned. The basis for reapportioning the service department overheads is as follows: Production departments Service departments Assembly Finishing Administration Canteen Canteen 50% 40% 10% - Administration 75% 25% - - REQUIRED Prepare a statement showing the reapportionment of service department overheads for February 2021. Production departments Service departments Assembly Finishing Administration Canteen $ $ $ $ Overheads 83 500 70 100 28 300 15 400 Reapportionment of canteen Subtotal Reapportionment of administration Total overheads Additional information Assembly Finishing Direct labour hours per month Machine hours per month Direct labour rate per hour $8.40 $8.20 REQUIRED Calculate the overhead absorption rate for each production department to two decimal places. Assembly department Finishing department Additional information The company received an order from a customer. The following details are available: Direct materials $1880 Direct labour: Assembly department 11.5 hours Finishing department 6.1 hours Machine hours: Assembly department 5.7 hours Finishing department 2.4 hours The company’s policy is to achieve a profit of 40% on selling price. REQUIRED Prepare a statement to show the total selling price that T Limited will quote to the customer. State two possible causes of under absorption of overheads. State what is meant by allocation of overheads apportionment of overheads REQUIRED Calculate the maximum profit per month that can be made if materials were obtained from the overseas supplier and production limited to 7600 units. Advise the directors whether or not they should change the supplier. Justify your advice by considering both financial and non-financial factors.
9706_s21_qp_22
THEORY
2021
Paper 2, Variant 2
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F Limited is a manufacturing company which uses absorption costing at one of its factories. This factory has two production departments and two service departments. Budgeted costs have already been allocated and apportioned. REQUIRED Explain the meaning of each of the following terms: Allocation Apportionment State one benefit of using absorption costing. State one limitation of using absorption costing. Additional information The budgeted costs for April 2022 before reapportionment of the service departments’ overheads are as follows. Production departments Service departments Assembly department Finishing department Stores department Maintenance department $ $ $ $ Total overhead costs 275 000 103 200 19 200 26 700 The service department overheads are apportioned to the production departments on the following basis. Assembly department Finishing department Stores department Maintenance department Maintenance 60% 30% 10% – Stores 75% 25% – – REQUIRED Calculate the total overheads for each production department by reapportioning the service department overheads. Production departments Service departments Assembly department Finishing department Stores department Maintenance department $ $ $ $ Total overhead costs 275 000 103 200 19 200 26 700 Subtotal Total Additional information The following additional monthly budgeted information is available about the production departments. Labour hours Machine hours Assembly department 1 430 Finishing department REQUIRED Calculate the overhead absorption rate for each department to two decimal places. Assembly department Finishing department Additional information In April 2022, production was less than the forecast figure. The Assembly department’s actual overheads were $285 400, actual labour hours were 820 and actual machine hours were 1310. REQUIRED Calculate the under-absorption or over-absorption of overheads for April 2022 for the Assembly department. REQUIRED Calculate the profit to be made in May 2022 for each of the options. Option A Option B Advise the directors which option they should choose. Justify your answer by discussing both financial and non-financial factors.
9706_s22_qp_22
THEORY
2022
Paper 2, Variant 2
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A business has two production departments: machining and assembly. The budgeted direct labour hours for each department are: machining assembly 16 000. The business has calculated overhead absorption rates as: machining $12 per direct machining hour assembly $7.70 per direct labour hour. Insurance of $4800 relating to the assembly department was incorrectly omitted when making the calculations. What is the correct overhead absorption rate for the assembly department?
9706_s23_qp_11
MCQ
2023
Paper 1, Variant 1
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Questions Discovered
533