2. Cost and management accounting (AS Level)
A section of Accounting, 9706
Listing 10 of 903 questions
Y Limited manufactures three products, Exe, Wye and Zed. The following budgeted information is available for the month of July 2017: Per unit Exe Wye Zed Selling price $96.00 $128.00 $140.00 Direct material at $4 per kilo 7 kilos 9 kilos 15 kilos Direct labour at $8 per hour 3 hours 4 hours 4 hours Machine hours 1.00 2.50 5.00 Variable overhead $2.40 $3.20 $3.20 Fixed overhead $10.00 $25.00 $50.00 Maximum monthly demand 100 units 120 units 60 units Fixed overheads are forecast to be $7000 per month. Y Limited has enough resources and capacity to meet the maximum monthly demand. REQUIRED Calculate the contribution per unit for each product. Prepare a statement to show the maximum contribution and maximum profit that Y Limited can earn for the month of July 2017. Calculate the total machine hours required to meet maximum demand for the month of July 2017. Additional information Due to a machine breakdown, only 500 machine hours will be available for July 2017 production. REQUIRED Calculate the maximum contribution and the maximum profit for the month of July 2017, taking into account the limited machine hours available. Additional information The directors of Y Limited have been told that they could hire a replacement machine for the month of July 2017 at a cost of $2500. REQUIRED Advise the directors whether or not they should hire the replacement machine. Justify your answer by considering both advantages and disadvantages of hiring the replacement machine. State three short-term decisions, other than limiting factor decisions, where marginal costing would be useful. Additional information The following information is available for another division of Y Limited. The division operates a system of absorption costing with two production departments. Department 1 Department 2 Budgeted overheads $560 000 $304 000 Actual overheads $533 000 $294 000 Budgeted labour hours 140 000 hrs 46 000 hrs Actual labour hours 124 000 hrs 54 000 hrs Budgeted machine hours 27 000 hrs 160 000 hrs Actual machine hours 33 000 hrs 151 000 hrs REQUIRED Calculate to two decimal places an appropriate overhead absorption rate for each department. Calculate the over absorption or under absorption of overheads for each department.
9706_s17_qp_23
THEORY
2017
Paper 2, Variant 3
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G Limited manufactures cakes for celebrations. The company uses absorption costing. REQUIRED Explain three benefits to a business of using absorption costing. REQUIRED Complete the table to show the apportionment of overheads and the reapportionment of the service department overheads using suitable bases. Total Baking department Decoration department Stores department Maintenance department $ $ $ $ $ Budgeted overheads already allocated 57 620 38 530 14 150 2 800 2 140 Machinery depreciation 33 600 Power 45 500 Lighting and heating 18 000 Total overheads 154 720 Reapportionment of first service department overheads Subtotal Reapportionment of second service department overheads Total overheads Calculate the overhead absorption rate, to two decimal places, for each production department using an appropriate basis. Baking department Decoration department State two possible reasons why overheads may be under absorbed. Additional information D Limited, a competitor of G Limited, makes a single product. The factory has the capacity to make 850 units per month. Overtime working is not available at this factory. The following information is available for each unit of production and is based on operating at full capacity. $ Selling price Direct labour Direct materials Fixed costs In April 2020 the factory was planned to operate at 80% capacity. The directors of D Limited have received an offer from Wendy to supply 280 units at $45 per unit. Wendy stated that the offer would depend on the entire order of 280 units being supplied. REQUIRED Calculate the profit for the month of April if the offer from Wendy is accepted. Advise the directors whether or not they should accept the offer from Wendy. Justify your answer.
9706_s20_qp_21
THEORY
2020
Paper 2, Variant 1
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Questions Discovered
903