2. Cost and management accounting (AS Level)
A section of Accounting, 9706
Listing 10 of 903 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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Questions Discovered
903