2.2. Traditional costing methods
A subsection of Accounting, 9706, through 2. Cost and management accounting (AS Level)
Listing 10 of 533 questions
Tattersall Ltd manufactures a single product. They have two production and two service departments. The following information relates to a four-week period. Production Departments Service Departments Machining Assembly Maintenance Canteen Overheads $143 500 $154 700 $165 800 $176 900 Direct machine hours 18 845 14 050 – – Direct labour hours 6 065 20 350 – – The service departments’ overheads are apportioned to the production departments on the following basis: Machining Assembly Canteen Maintenance 60% 30% 10% Canteen 40% 60% – REQUIRED Prepare an overhead absorption apportionment table clearly showing the reapportionment of the service departments’ overheads to the appropriate departments for one period. Calculate the overhead absorption rate for each production department. State the bases used. Show your answer to two decimal places. The manager of Tattersall Ltd calculates selling price per unit based on full cost plus a 25% mark-up. The costs per unit are: Materials 3 metres at $4 per metre Labour 7 hours at $8 per hour Each unit takes 3 hours in the machining department and 4 hours in the assembly department. All overheads are fixed. REQUIRED Calculate the full cost per unit. Calculate the selling price per unit. Calculate the number of units Tattersall Limited has to produce and sell in each period to break-even. State two limitations of break-even analysis. [Total 30]
9706_w11_qp_21
THEORY
2011
Paper 2, Variant 1
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For Examiner's Use Argon is a manufacturing business divided into three separate departments, machining, finishing and stores. The total estimated costs for the three months ending 31 October 2013 are as follows: $ Depreciation of plant 6 000 Lighting and heating 4 500 Plant insurance 4 800 Rent 18 000 Supervision 25 000 The following information is available for the three departments: Machining Finishing Stores Floor area (sq metres) Number of employees Value of plant ($000’s) Number of orders from Stores - Budgeted machine hours - Budgeted direct labour hours - REQUIRED Apportion the costs to the three departments using the most suitable basis. Clearly state the basis you have used. For Examiner's Use Re-apportion stores costs to each production department on the basis of the number of orders. Calculate to two decimal places the forecast overhead absorption rate for the machining and finishing departments for the three months ending 31 October 2013. For Examiner's Use Actual figures for the three months ended 31 October 2013 are: Machining Finishing Direct labour hours 1 430 5 000 Machine hours 6 000 Overheads incurred $48 340 $22 780 REQUIRED Calculate the amount of overhead absorbed for each production department for the three months ended 31 October 2013. Calculate the amount of under or over absorption for each production department. For Examiner's Use Explain what is meant by over and under absorption of overheads and how each will arise.
9706_w13_qp_23
THEORY
2013
Paper 2, Variant 3
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Questions Discovered
533