2. Cost and management accounting (AS Level)
A section of Accounting, 9706
Listing 10 of 903 questions
Alberto owns a manufacturing business. Define each term: cost centre cost unit direct cost indirect cost. Additional information Alberto’s business operates a system of absorption costing. There are two production departments, Machining and Finishing, and two service departments, Stores and Canteen. The budgeted information for the year ended 30 September 2024 is available. Production departments Service departments Machining $ Finishing $ Stores $ Canteen $ Number of employees - Floor area (square metres) 3 000 5 000 1 500 Stores requisitions 3 600 5 400 – – Direct labour hours 14 300 18 500 – – Machine hours 28 900 3 600 – – The following indirect overheads have not yet been apportioned. $ Light and heat 12 800 Production supervisors’ wages 42 000 Complete the table to apportion costs to the production departments. Total $ Production departments Service departments Machining $ Finishing $ Stores $ Canteen $ Allocated overheads 512 100 195 200 234 700 66 400 15 800 Light and heat 12 800 Production supervisors’ wages 42 000 Total overheads 566 900 Reapportion Canteen Reapportion Stores Calculate, to two decimal places, a suitable overhead absorption rate for each production department. Additional information The actual results for the year ended 30 September 2024 were as follows: Machining Finishing Total overheads $249 200 $320 400 Direct labour hours 14 220 18 650 Machine hours 26 880 3 910 Calculate the over-absorption or under-absorption of overheads for each production department. Additional information Alberto has been asked to prepare a quotation for a new customer to supply 12 units of a product. Each unit would require the following: Direct material 4 metres at $3.85 per metre Direct labour Machining department – 0.75 hours Finishing department – 1.5 hours Overheads Machining department 0.5 direct labour hours 0.5 machine hours Overheads Finishing department 1 direct labour hour 0.75 machine hours The budgeted hours for the year ending 30 September 2025 will remain unchanged from the previous year. The total direct labour budget for the year is as follows: $ Machining department 127 270 Finishing department 183 150 Alberto wishes to achieve a gross margin of 40% on the work. Calculate the budgeted hourly direct labour rate for each department. Prepare a statement to show the total selling price that Alberto should quote the customer. Additional information Alberto is aware that the factory is not currently working at full capacity. In order to secure the work, he has quoted a very competitive price. The new customer has agreed to accept the quotation only if Alberto agrees to allow a 20% discount for immediate settlement on delivery. Advise Alberto whether or not he should accept the proposed terms offered by the customer. Justify your advice by discussing both financial and non-financial matters.
9706_w24_qp_21
THEORY
2024
Paper 2, Variant 1
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Questions Discovered
903