8 eT iy a la) ets by iit 8.1 The following extract of information is available conceming the four cost centres of EG Limited. Senvice cost Production cost centres centre Machinery Finishing Packing Canteen ‘Number of direct employees 7 6 2 = ‘Number of indirect employees 3 2 i 4 Overhead allocated and apportioned $28,500 $18,300 $8,960 $8,400 ‘The overhead cost ofthe canteen is to be re-apportioned to the production cost centres on the basis of the number of employees in each production cost centre. After the re-apportionment, what is the total overhead cost of the packing department, to the nearest $7 A $1,200 B $9,968 © $10,080 D $10,160 (2 marks) The following information relates to questions 8.2 and 8.3. ‘Budgeted information relating to two departments in a company for the next period is as follows. Production Direct Direct Direct Machine Department ‘overhead material cost labour cost labour hours ‘hours s $ $ 1 27,000 67,500 13,500 2,700 45,000 2 18,000 36,000 100,000 25/000 ‘300 {Individual direct labour employees within each department eam differing rates of pay, according to their skills, ‘grade and experience. ‘8.2. What is the most appropriate production overhead absorption rate for department 1? ‘A 40% of direct material cost B 200% of direct labour cost © $10 per direct labour hour $0.60 per machine hour (2 marks) ‘8.3 What isthe most appropriate production overhead absorption rate for department 2? ‘A 50% of direct material cost B 18% of direct labour cost © $0.72 per direct labour hour D $60 per machine hour (2 marks) ‘8.4 Which of the following statements about predetermined overhead absorption rates are true? (0) Using a predetermined absorption rate avoids fluctuations in unit costs caused by abnormally thigh or low overhead expenditure or activity levels (ii) Using a predetermined absorption rate offers the administrative convenience of being able to record full production costs sooner (ii) Using a predetermined absorption rate avoids problems of undedover absorption of overheads because a constant overhead rate is available. ‘A Gand (i only B Gand Cid only © Givand (i) only D — Allof them (2 marks) Scanned with CamScannerLTE Edit Co & @ X 85 Overateorbed overheads occur when ‘A Absorbed overheats exceed stl overheads 1B Atseed vernon exceed badd overheads © Aetuaovrhnadexcend absorbed ovrtnads D Actual owteads excead budgeted veheads (mats) ‘The following information relates to questions 8.6 and 8.7. ‘A company haste following actusl and budgeted data for yer 4 uaget Acta Preucton 8.000 units 9,000 units Vafale production overex per unit 33 3 Fed production overheads $360,000 $432,000 Sales 6.000 units 8,000 units ‘Overheads ae store using 2 ate per unt, based on budgeted utp and expen 18.6 What wat the fous producton owetead acorbed amount during year 47 A $384,000 B $405,000 © $432,000 D_$489;000 man) 18.7 By how much was the fied peducton overhead under or over absorbed? ‘A under absorbed by $27,000 Bude absorbed by $72,000 © under atsorted by $76,000, Dover abeorbes by $27,000 (2 mart) 8.8 Which ofthe following would be the most appropriate bass or approning machinery insurance cots Aocost centres within afectory? [A The pub of machinws in each ot centre 1B The floor ares occupa bythe machinery in each cost centre ©The vale ofthe machinery ineach cost centre The operating hous ofthe machinery in each cost ene (2 mars) {89 Factory overhaacs can be absorbed by which fhe flowing maths? (Diet abou tours Machine nour (i) Asa percantage of prime cost GW) Seperunit A, 60, Ga are Go) 8 Wandtionly ©, inand id only D Wetland (wont eis 838 GB gs GQ Scanned with CamScanner8:53 LTE ‘uesrions £8.10 The pruction overhead contol account for Limited atthe ea the prod looks ike this PRODUCTION OVERHEAD CONTROL ACCOUNT s s ‘Stores contol 22,800 Workin progress 404,800 ‘Wages contol 180,400 Profitand css 8400 apense credo 210,000, 15.200, 5200 Wich of he fotoing statements are cect? Inccect mate esed rm inventory was $22,800 ‘ernad absorbed curing the porod was $210,000 (varhead forthe period was over absovbad by $8,400, Inet wages cost Incued were $180,400 ©, @) ana ©, ip and Gana cin ‘et them @ mars) 1.11. Which of he fotoing i caret when considering the alecation,apperionment and eappocionmeat et ‘overhead in an absorption costing situation? (Only production relsted cots shouldbe consiered ‘location isthe station where par ofan overhead is signed toa cost contro ‘Cets may enly be rcapporicnad from production centres to sence centres ‘ny overhesds signed oa single department shold be lgnored @ mans) 1.12 A company has overascrbedfhed practi overheads forthe paid by $6,000. The sd Production overhead absorption ate was $8 per unit and is based onthe renal eel of acy of 5,000 units. Actual pratcton was 4,500 unis, What was the actual fed producton ovreads incured fete peod? +$30,000 $336,000, 40,000 $42,000 @ mars) {8.13 A company manufactur to products, X and , ina acon died nto two production cost cents, Primary and Frshing. Th fling budgeted dita are avaliable: Costeente Primary Fishing ‘Mocated and apportioned ted overhead costs $96,000 $82,500, ‘Bet labour minutes peut product x 36 2 product ¥ 8 55 Budgeted production i 6,000 unis of product X and 7,500 units of product Y. Fad overhead cots ae tobe ateorted on 8 dest abou hour bese, Wats the budgeted fixed overhead ent per uit for rout? sun siz sia 15 @ mans) A 8 c D a 8.14 Acompany wes an ovrheod absorption ato $350 per machine ou, based on 32.000 budgrted ‘ochine tours forte period Ding the sme prod he ec tal overhead expend amounted to {$108,875 and 30,000 machine hours were recorded onsets production. ‘By how much was the tl everhead unter or oer aeorbed forte period? A Under absorbed by $3,675 18 Under absorbed by $7,000 © One at Of i Scanned with CamScanner8:53 at LTE 8.14 A company uses an cveead absorption rte ot $3.50 por machine our, based on 32,000 busts ‘machine tours forthe peed. During Ue Same period the atu! total overhead expenditure amounted 0 ‘$108,875 and 30,000 machine hows were recone on actual production. ‘By how ach was te total overhead uncer or over absorb forte pero? ‘A Under absorbed by $3,875 ‘8 Unger absorbed by $7,000 © Over absorod ty $3,875 D_Overateores by $7,000 (mans) 1.15 A factery consists of two production cost centres (P and Q) and two sence cost cents (X and ¥. The total allocated and apportioned overead foreach sf r a x y $95,000 ‘382,000 46000 $30,000 eas bee estimates that ch serves cot cave does work fe the ota cost centres nthe flowing roparons: P a x y Porcenlage cf senicecostcenteXto 40 40 . 20 Porcontg ofsanicecosteente Yio 30 60 10 > ‘Ate the reaportonment of sence cst centre cote has been caries out ung 2 meth tat uly ‘recognises te respocs cence sangement nthe factory, what she ttl overhead fr poston cost ene P? A $122,400 8 si2476 © $126,000 D__ $127,000, mans) {8.16 Tho lowing datas avaabe for a pant department forthe lst parc ‘Budgeted production overhead ‘$180,000 ‘Actual production ove ‘$150,000 ‘Budgeted machine hours 160,000 ‘Actus machine tous. 55,000 ‘Which of te flowing statements is corect? ‘A. There was rounder or over absrtlon of everhend 1B Overhead was $13,636 ovr absorbed © Overhead was $12,500 ovr absorbed 1D Overhead was $12,500 uncer absorbed (2mans) ‘8.17 Actual overheads ‘$496,980 ‘eta machin hous 16.566 ‘Buried overheads $475,200 ‘Based onthe date above, end assuming thatthe budgeted overhead absorption rate was $32 per hour, wat were the budgsed number of hous (othe nearest hour budgted tobe worked? A 14850 B 15531 © 16,565 Daas (2 marks) @ uestions aie ‘ugets evernends 690,480 ‘uses machine hours 15384 ‘etal machine hous 14128, ‘etal overheads $679,850 ‘Based onthe dats above, whats the machine our absorption ate (othe nearest 8)? A 4 permactne hour B45 per mice bf Scanned with CamScanner8:54 ue) ais ‘ucgted overends 690,480 ‘Busgeed machine hours 15344 ‘Aetul machine hous 14128 ‘etal overhenes, 679/550 [Bzead onthe dats above, what the machine hour abeorton ate (othe naret§)? 44 permactine hour B45 permactine hour © 48 permactine nour D 49pm machine how (mars) 18.19 A-company absotbs owsheads on machine hus. Ina pera, actul machine hous were 22.435, ‘2ctal overheads wee $496,500 and there was over absorption of $64,375. ‘What was the butgeted overhead abserption rate per machine hou (tothe nearest 8)? a a 2 c 2 me (2marks) 18.20 A company stsobs fxed production oveads In ore ofits departments onthe basis of machine hous. “There were 100,000 bucgeted machine hour for he fetcoming patio. The fed predation oer absorption rte was $2.50 per machine hou. uring the pare, the oboming actual results wer recoded ‘Standard machine hou 120,000 Fd preducton overheads $300,000 ‘What was the aa production vethead under absorption amount? ‘A Ove absorbed by $28,000 1B Under absorbed by $50,000 © Over abworod ty $50,000 D _Underasorbed by $26,000 (mans) 8.21. Consider the flowing statements, regding the eeppotionment of service cost ene overheads to ‘reduction cost centres, wharercipcalsenices ext: 1, The det method resuts in costs beng reepportoned between service cost centres 2. the cect method Is used, the erin which the sarc cost centre owreads are apportioned is irevant 13, Thestep down metre resus in costs boing eappooned betweon saree cst contr 4. the stp down method is used, the order in which the sence cost centre overheads ae ‘apportioned is ratevant Which statements are correct? A 2and4 B 13am4 © Zen D 2nd3 mara) ari a 8.22 CTF Cohas two sence conve serving two production departments. Overhead costs apportoned to ‘each department areas follows. Prosuetion seroe epartmonts cones ising. Stiring Stores Canteen Fel, AT lS, ‘Alcated and apportioned ovrneads 216,400 78800 181,600 47,200 i Scanned with CamScanner8:54 ue) ais ‘gta overbends 690,480 ‘usted machine hours 15344 ‘etl mecine hous 14128 ‘etal overhenes 679/550 [Bzcad onthe dats above, what the machine hour absorption ate (othe naret§)? 44 permactine hour B45 permactine hour © 48 permactine nour D 49pm machine hour 18.19 A company absorbs owsheads on machine hous. r ‘actual overheads wee $496,500 and there was over absorption of $64,375. ‘What was the butgeted overhead absorption rate pr machine hou (tothe nearest 8)? a a 2 c 8 0 27 (2marks) 18.20 A company steats fxed production ovreads In ore ofits depertments onthe basis of machine hous. “There were 100,000 budgeted machine hour for he fetcoming patio. The fed predation oer absorption rte was $2.50 per machine hou. uring the pare, the oboming actual results wer recoded: ‘Standard machine hou 120,000 Fhid preducton overheads $300,000 ‘What was the ka production vehead under absorption amount? 1A Ove absorbed by $26,000 1B Under absorbed by $50,000 © Over abworod by $50,000 D_Under asorbed by $26,000, (mans) 18.21. Consider the flowing sttements, regarding the eeppotionment of service cost ene overheads to ‘reduction cost centres, wharercipcalsenices ext: 1, The det method resuts in costs beng reepportoned betwen service cost centres 2, the cect method Is used, the rer in which te sence cost contre owed are reaportioned is irdwvant 13, Thestep down metre results in costs boing eappotioned between saree cst centres ‘4. tthe stp down method is used, the order in which the sence cost centre overheads ae ‘apportioned is ratevant Wich statements ire correct? A 2andé B 13am6 © en, D 2end3 mara) ars rT 8.22 CTF Cohas two sence conve serving two production departments. Overhead costs apportoned to ‘cach department areas follows. Prosution Senos epartmonts cones ising. tiring Stores Canteen $a ke TIS, ‘Alcated and apportioned overneads 216,400 78800 181,600 47,200 ine Scanned with CamScanner8:54 all LTE Preduton sence eparments cere ing String Stas.” Carton ss ss ‘Alcted ant apptored vcheads 216,400 76/800 161,600. 47,200, Estimates werk dora iy he sence cates othe ceparments| ‘Store ox ke 20% Cenen ae OK isk ‘he bsness uses the Sect method apprtonment ‘tec toe spprtinmet othe sere centres tothe poucton Sparen’, what wl tet Cvethend cont ef the mig depart? A $328.440 8 ssizpat c sssiai6 D sa54ge8 mans) "823 HUT Co has Wo sence centres sevng two proction departnens.Orerhed casts apprtioned | ‘exch cepariment ras lows. Predation sence departments certs Mang. Sleieg Staes.” Coreen ober mar as ‘Mice and aopotared vrheats 216,400 78,800 181,600 47,200, Estimates work done by he sence ‘ate rte ceparnens “Sort ox 30x 20% Cane Se aoe lk ‘The snes uss the step dn method of apportionment ‘Ate: the sopartinent othe sence ents tothe production Sparen’, what wl te tl ‘reread cost be fre mang depart? A $325,968 8 ss4a7ee © sasiais D 3354388 mans) 3 fotewing question is taken um the June 2012 exam paper. ‘company uses andar absepion extn to vale inventory Ii ed overeat absorption rats ‘12 perlatour how and each ui cf pedo sould be fout hous Ina ecet prod where ee ‘was no opening inven fish gods, 20,000 unis wor produced ung 100,000 labour neu. 18}000 wt wee £6” The ssl prot was $468,000. Wet pe wou have ben eared unde a standard marginal ong stem? az : 3 +560,000 mans) (Total = 48 mark) eg Fee ns 19.1 Theflonng datas able er ped 9. Opesingimeior 10,000 nts OCeaee ieee —_—_—_— Scanned with CamScannerLE 5 ‘Absorption and marginal costing Cee 9.1 Thefetowing ata avaliable for psd 9, ‘What woul be the pot peo 9 srg margnal cst? ‘A $278,000 B $280000 $282,000 tmp to cleat witht more lfomation mas) 92 Thecvetead absorption a fr post Ts $8 permachinetour, Fach wit oT reques 3 machine ous Imentors of prooc Tat ped were nts ‘Operirglvertoy 2,400 (Cosinginventon, 2.700 ‘Comore wth the argialcosing prof th pet, he absorp costing prot fr product T wll bewhicn othe tong? @mans) opering Inverts were 15,000 units and cling nventin were 20,000 uit & fim ha a prot ot $130,000 ung absorption cosing I the fed verina absopson ae was 88 per Ut, e pet sig margral casting woud be whieh he awn? 28 A $20,000 5 $130000 $170,000 1D impose to cleat wast mere inforston mats) The following information relates to questions 9.4 and 9.5. (Costa sein ice deta or oatut Zr 8 ows Spruit Dict materits 00 Diet abou 750 Variable ves 250 Fund ovrend absorption ate 5.00 2100 Pett 3.00 Seng rice 200 ‘Budgeted production forthe month was 5.000 wis ataugh te company manaped rede 5 800 M6, selng 5,200 of fe and incur hed overhead ass of $27 400. 9.4 Whats the marginal easing prot othe month? A $45,400 8 ste800 © ssa800 0 $7280 mans a) 1.8 Whats the absorption casting pect othe martn? A 5200 ¢ $46,800 8 45400 $48,400 mas) ‘96 12 perio,a company had opening invertor 31,000 unis and cling invert of 34,000 wits. ‘rots based on marginal asing wer $880,500 and on bsrsen costing were $955,500. te buted tet fae costs forthe company was $1,837,500, what was he budgeted eto ehaty noms? ‘A 32800 ¢ 65,000 8 52500 D__105,000 mans) 9.7 Reompany had eperirg invertor of 48,500 units ad cing invert of 45,500 unis. Presses Shmeroel eihdiiiadaiy $228,250, atte fect a Scanned with CamScanner8:55 atl LTE 9.5. Whatis the absorption costing profit for the month? A $45,200 $46,800 B $45,400 D $48,400 (2 marks) 2.6 Ina period, a company had opening inventory of 31.000 units and closing inventory of 34,000 units. Profits based on marginal costing were $850,500 and on absorption costing were $955,500. {tthe budgeted total fixed costs forthe company was $1,837,500, what was the budgeted level of activity in units? A 32,500 65,000 B 52,500 D 105,000 (2 marks) 9.7. Acompany had opening inventory of 48,500 units and closing inventory of 45,500 units, Profits based ‘on marginal costing were $315,250 and on absorption costing were $288,250, What is the fied ‘overhead absorption rate per uit? A $598 $6.0 = B $634 -D $9.00 mak) 9.8 Which ofthe following are acceptable bases for absorbing production overheads? (Direct labour hours (ii) Machine hours (iid. AS percentage ofthe prime cost iv) Perunit A Methods (and (9 only B Methods (i) and (iv) only Methods (), (i, i) and Cv) 1D Methods (i, (i) oF il) only (2 marks) 19.9 Absorption costing is concerned with which of the following? ‘A Direct materials B Direct labour © Ford costs D Variable and fixed costs (2 marks) 9.10 Accompany has established a marginal costing profit f $72,300. Opening inventory was 300 units and closing inventory is 750 units. The fixed production overhead absorption rate has been calculated as ‘Sunt What was the profit under absorption costing? A $67,050 B $70,050 c $74,550 D $77,550 (2 marks) 911 ‘A company produces and sells a single product whose variable cost is $6 per unit. Flzed costs have been absorbed over the normal level of activity of 200,000 units and have been ccaleulated as $2 per unit ‘The current selling price is $10 per unit How much profitis made under marginal costing if the company sells 250,000 units? ‘A $500,000 B $600,000 © $900,000 D $1,000,000 (2 marks) wo tt Scanned with CamScanner8:56 LTE 9.12 A compary which uses mara cating tas a prot of $37,500 fr a pred. Opesing inventory was 100 unts an clsing van was 350 units. ‘The fed production averted absorption ree $4 per unit. “Wate the ft under absrton costing?” A $35,700 8 $35,300 © $3800 DB _ $39,300 mans) 9.13. A company manufactures and sls singe produc. For this morn the Budsted fined praductin ‘overheads ee 8,000, bidet profuctian fs 12.000 uits end budeted sees ae 11,720 ents ‘The company curert!/uss abseptoncestng {the company asad mara costing pris instead of absorption costing fer ts month, what wuld be tect onthe pees prt? A $1,120 ghee B $1120 over © $31820 her DB $3,92010We @ mans) 9.14 company operates award margral costing stern, Last marth ts actual fed overhead ‘expeetare wes 10% abe but resulting a faed wrethead epee vance of $36,000. ‘What waste actual expert on Ret overhead ast month? A $324,000 8 $360,000 © $395,000 B _s400000 @ mats) 9.18 Last month, when a company had an opening imate of 16,500 unis anda casing invent 18,000 unis, th pst wing absorption costing was $40,000, Te fed proscton overhead rate was ‘$10 perunit Wat wou! he pai frat orth have bean sing marginal cong? A $15,000 8 $25,000 $55,000 D $65,000 2 mais) 9.16. ast month a manufacturing company’s prof was $2,000, clatd using absorption cosa ‘inp. maria sting pple hasbeen used, ass of $3,000 would Rave ocured, The ‘companys fund pect costs $2 per unit. Sales ast meth were 10,000 units ‘mat was last month's reduction Gai? A 7800 8 9800 © 10800 12,800 man) @ 2 9.17 HME Co pocues a sng posit Te bug fed potution ovens fhe pred 2 ‘$500,000. The buts cutter the ped is 2,500 uns. Opening inventay a the stat ofthe Der consisted of 9UD uns and tos invertor at the end of te paid carted of 300 units. Stsaplon eating principles were appa, te pri rhe paved eorpae be marginal Sting [ott woud be atch of he atoning? ‘A $125,000 ghar 8 $125000 over © $120000 higher 5120000 ane 2 mais) ‘he folowing cwstion aan a ure OL aaa Scanned with CamScanner+233 20 555 9865 now PIUS 4 NUGS IRS =f) i SATURDAY, 13TH MAY, 20235 = ‘$125,000 Higher $125000 lover $120000 rigner 3120000 lover (mans 12.18 Thefotowing question Is taken Rom the June 2013 exam pape. ‘A company has the folowing bused cots and everuts Sper uit Sas price 0 Vanabeprogecton cost 18 Fred peductoncost. 10 In tho ost oor poi, 2,00 unis wore producod ad 1,000 units were so eta aes prc, Varah pict cost er unt a! el aed production costs were aw bite. Fed prouticn (us were verte! by $4,000. There ws no pering venir rt ped Wat woul! othe ecucton in pet forthe petite company has used manjnal costing rater than absoson costing? a 4000 5 6000 © 10,000 14000 (mais) (otal = 36 mak auesti0Ns ‘Check that you can ili the blanks In the tates blew before yu attempt any questions Hin out, you shou ge Back to your BPP Interactive Test and eve ist “+ Proves cot cot meth wed whee it not possible to ent separate ants of ration aly because of he continues nate ol he poduconpccesses invoned . os the bss expected during a process and tino ven a cost. thas aserap ate ihenitisvalced at is anourt . los fhe eta os resulting when acts! ls is rstr than the los anaes iene ca. “+ tas may havea sr va, Revenue fram normal sap frente as reduction nos + When es es ilaiaiidatiise®27 19 claae te Scanned with CamScanner8:56 a LTE 10.5 rat was the approdmate value of sig weksn-pogess at he eo he ped? A ssa.575 8 s10i.67s © 217323 DO s227675 ma 10.6 The fowing items maybe wed a costing batches. 1 Actual mati ost 2 ‘etal malactrngoverends 3 Rsotbed mantctrirg overheads ‘etal abo est Which ofthe above we cerainad inten Batch cst? A L,2and deny @ mde ony © LSand deny D112, 3mae mats) 10.7. We of the folowing would be appropriate cost uns fora pasenger con company? (0 Vrie cost per parsngeiometre (@)Foeleadt reach vie par ames (Fe cost per Moree @ony 8 Wana.cdeny —C Gand Gidonty 04 and any mans) 10.8 The folowing infomation s vaole fora Reel company fr he net hit ey ped. ‘Namba of roms avaiable ar ight 0 Percentage cospanoy achieves ro oom serdcing cost cir $3800 iat was the oom sricing cost per cup room Ist por Be nearest cent? A $3.25 B $5.00 © $9750 © $150.00 mats) 108 Aone isto stupa smal hakressing business at ame. She antpaes wong a out week an {aking fou weeks bla er yee, Her expenses or mae and crerheeds er exgected tobe ‘5,000 per yar, ana she has se hala twp prot of $18,000 fr tha it yr ‘Assuming tha ony 90% of har working Sve wb chargsbi telat, what pce shoul he cha fora Calor and ea whlch would tke 3 hows? A $1389 8 $3571 © $3780 D sai67 mans) 10.10 Wie ofthe folowing nota characte of serie cating? 1A Hi elo rect cor a proportion ol al costs 1B tangbity of outpt © Use ot compose cet unis 1D Can be wed for ral srdces 8 wl a external services mans) a PP 10.11 We othe fotiowing ae elf use sevice costing? Aeatege Gh Aho (i) Apumber A 0. and) B waraay © Weny BG and Gn only mans) 10:12 vie ofthe owing woul be considered arene nash? (Anse company i) Atsiay comsry Ao iil Scanned with CamScanner8:57 LTE aaa 10.1 Wich of he stewing we te to us sve cota? ©) Acatege Aro io Apunber A cvcand oa B (i) and (ii) ten dD Gd and (HD only, (2 marks), {0.18 WE he flowng wane cred spas ea? pa cirn coneeey isiway soneeny A firm of accountants Chana tony thang ti ony th thant on GD and (id only: (2 marks), 10.13 The following information relates to 2 management consultancy organisation: a ‘Salary cost per hour for senior consultants 40 ‘Salary cost per hour for junior consultants 25 ‘Overhead absorption rate per hour applied to all hours 20 ‘The exganisation adds 40% to ttal cost to arrive at the final fee to be charged to a cent. ‘Assignment number 789 took 54 hours ofa senior consultants ie and 110 hours of junior corsutants' ‘ime. ‘What isthe final foe to be charged for Assignment 789? A $6,874 c $11,466 B $10,696 D $12,642 (2 marks) 10.14 A company operates a job costing system. Job number 1012 requires $45 of direct materials and $30 Of direct labour. Direct labour is pald at the rate of $7.50 per hour. Production overheads are absorbed Sta rate of $12.50 per direct labour hour and non-production overheads are absorbed at a rate of 60% ‘of prime cost. ‘What isthe total cost of job number 1012? A $170 B $195, ¢ $200 D $240 (2 mas) 10.15 Last year, Bryan Air carried excess baggage of 250,000kg over a distance of 7,500 km at a cost of $3,750,000 forthe extra fuel. ‘What isthe cost per ke-km? ‘A $0,002 per ke-km B $2.00 perkekm © $33.33 perkekm 1D $500.00 per kg-km (2 marks) BPP a9 Scanned with CamScannerIAI? MANAGEMENT Ene 10.16 The following question is taken from the December 2012 exam paper. ‘A truck delivered sand to two customers in a week. The following details are available. Customer _ Weightof goods Distance covered Delivered (kilograms) (kilometres) x 500 "200, Y 180 1,200 680 The truck cost $3,060 to operate in the week. Each customer delivery was caried out separately, ond the truck made no other deliveries inthe week. What is the cost per kilogranvkilometre of sand delivered in the week (to the nearest $0.001)? A $0,003 B $0,010 cc ($2.186 D $4,500 (2 marks) (Total = 32 marks) Process costing TTT 11.1 A chemical process has a normal wastage of 10% of input, In @ period, 2,500 kgs of material were Input and there was an abnormal loss of 75 kgs. ‘What quantity of good production was achieved? A 2175 Kgs B 2.250 kes © 2,325 kes D 2,425 kes (2 marks) The following information relates to questions 11.2 and 11.3. ‘A.company manufactures Chemical X ina single process. At the start ofthe month there was no work-in= progress. During the month 300 lites of raw material were input into the process at a total ces at $6,000. Conversion costs during the month amounted to $4,500. At the end of the month 250 litres of Chemical X were transferred to finished goods inventory. The remaining work-in-progress was 100% complete with respect {o-materials and 50% complete with respect to conversion casts. There were no losses inthe process and there 1 no scrap value available during months when losses occur. 11.2. What are the equivalent units for closing work-in-progress at the end of the month? Material Conversion costs A 25 lites 25 litres 8 25iitres 50 lites C50 titres 25 litres D 50litres 50 lites (2 marks) 111.3 If there had been a normal process loss of 10% of input during the month what would the value of this loss have been? A Nt B $450 c $600 D $1,050 (2 marks) o boo ”@ Scanned with CamScanner8:59 oul! LTE Es Process costing Ene | 1A Achemical process ha normal wasp of 10% of pu na prog, 2,500 he of mater were Input and ere was a ater oso 73s. Wat quantity of god roti was ached? A 2u75Ms 8 2280 C82 2.25 @mans) ‘The following information relates to questions 11.2 and 11.3. ‘Acompany manutctrs CharieaX, na sngle pes. Ate art of teenth there was no Woda ‘pores. Dring the month 300 Ibe fw material were put to the process aa tal east of $5,000 ‘Connon cos ding the month amounted to $8,500 lhe er ft morh 250 rs af Chemica ‘were varseed i insted gods inertory. The renaning wotinpropess was 100% conpke wah respect {omaterls and 50% complet wth eect to comerion cat, There wee o ores athe proces and ee 1m serap vale aval ug marin when loses ecu. 11.2 What ar te eqalent units er cosing wornproges tbe ed ofthe mont? tent ‘Conese costs A sites 2 htes 8 dees Sones © Soles 25 hes 0 SOs 0 tes @mans) 11.3 tere had teen «roms proces tos 10% of pat dg he month what would te vl of hs les ve bee?” , ww 8 $0 c $600 ° $1,050 @mas) "Ol 114 ne potiaar proces, the lng fo the peo wes 2,000 units. Ther ware no nvr a the epg or en of re process. Normals 65 por eno put. In wrich of bwin ‘Seumtancs fee an ateorna gan? (deus outa = 1,800 nts (i) deus outa = 1,950 ants (Geta outa = 23000 nts A Gory 8 tony © Wand terly Gand id only @ mans) 11.5 taprces aunt, ow ae stool ses vale? A Aetmirseap ye 1B Thesame as pod protuctin © Nv cont otrow manent 1 Thesame a nna ses mans) 11.6 A company nes fo produce 340 Ives cf Chemica X. There fa nema os ot 10% othe materi Inpro te rooms. Darng 9 yea month the eompany de procice 340 eso aed production, ‘thaugn ee wes a abnormal os o£ of fe motel Input to he process, ow many res of material were into the proces during the month? A357 tes 2 374 mes © 391 Kes © 400 ives mars) ‘The following information relates to questions 11.7 and 11.8. ‘Acompany prodees a cern food tem 9 maulscng peer On 1 Nowe, ther watt oping Invert of ert npc. Ding Nowra, 00 ants of atest were pute Be process, with acest $9,000, Dre labour cot in November were $3140, Prouetn ore absorbed athe ate of 200% ‘of drect tour cots. Cotng vatoy on 30 Noverer const of 100 ws wich were 10D% compet {Stomatol and 80% compete so labow and overhead. There was roles nore 17 What ste hi rodamamahaimamaininenintainsions? Scanned with CamScannereat! LTE 114 napatiar proces, he npt forthe pet wes 2,000 units. here were no invnois atthe {ening oe ofthe process arma es 85 per ent ol nut which othe elon Chreumataces theres sooem gan? (0) etal ouput 1,800 nts (0) etal uu = 1.950 ants (i) ‘etal tut = 2,000 nts A only Bony © Gare a onty D Ganda only (maria) 115 apres ccunt, ow ae abroral ses vale A Atileseap vate 8 Tha same a god pcton © Ate cont fron mars D__Thessme as noma! bsses mais) 116 Acampany neo rose 340 tres ef Chama X. Ther fa neal os ot 10% ef te maton Input be process. Dung a gen month the company dd produce 340 kes of pod production, ‘hough thr nara soeomal os 5% of Be mate npn the proces. ow many tvs of mata wee input no the process ring te monty? 1257 Wes 5 374 mes © 381 tes © aootives (maa) ‘The following information relates to questions 11.7 and 11.8. ‘A compary produces a cern ed tem a manutacig process. On 1 Nove, there was ro oping Invent of work in process. Dring Novemter, 800 units of mate were palo pocess, wih aco of '$9,000, Dec Isour ants in November were $3840. Producto overead absorbed at he rate 200% ‘of drect stew eats. Closing verry on 30 Novemter conse of 160 us which wee 100% complete ts tomaeals and 80% complet 2s oIatowr ard overhead, There was noloss in preces. 11.7 Whats the fl pout east ofeompletn unis dng Hover? 4 $10,400 8 si6.a16 cs mais) ‘The following information relates to questions 11.9 and 11.10. ‘company makes 8 prod nto proces. The flowing datas vata forte aes pr, for proces 1. (pening wan ropes 200 urs was veld fons. Maes 2.400 Uatour $1,200 Owens loses occur inthe process. "@ 4 Units ade and cass ncured ing the pit: Maia $6,000 800 unt tateur $350) Omens $1490 Closing work in pages of 100 units hat reach the lowing dees of compen: Maat 100% (stew 50% Owen 308 ‘The company wes te weigtad average netod of invent vation, 11.9 How many sasalet unt re wed when caluatingthe cos per unk nesta to overeat? —————— Scanned with CamScanner8:59 atl) LTE ©) Units added and costs incurred during the period: Material {$6,000 (500 units) Labour $3,350 Overhead $1,490 (Closing work in progress of 100 units had reached the following degrees of completior Material 100% Labour 50% Overhead 30% ‘The company uses the weighted average method of inventory valuation. 11.9 How many equivalent units are used when calculating the cost per unt in relation to overhead? A 500 B 600 © 630 D 700 (2 marks) 111.10 What is the value ofthe units transferred to process 2? A $7,200 B $13,200 © $14,840 D $15,400 (2 marks) 11.11 A company uses process costing to establish the cost per unit fits output. ‘The following information was available forthe last month: Input units 10,000 Output units 9,850 Opening inventory 300 units, 100% complete for materials and 70% complete for conversion costs Closing inventory ‘450 units, 100% complete for materials and 30% complete for conversion costs ‘The company uses the weighted average method of valuing inventory. What were the equivalent units for conversion costs? A 9,508 units B 9,715 units © 9,775 units D 9,985 units (2 marks) 11.12 A company uses process costing to value its output. The following was recorded forthe period; {Input materials 2,000 units at $4.50 per unit Cenversion costs 13,340 Normal loss '5% of input valued at $3 per unit Actual loss 150 units ‘There were no opening or closing inventories. What was the valuation of one unt of output to one decimal place? A sie BSE © $12 Dd sno (2 marks) 11.13 A company operates a continuous process into which 3,000 units of material costing $9,000 was input in a period. Conversion costs for this period were $11,970 and losses, which have a scrap value of {$1.50, are expected ata rate of 10% of input. There were no opening or closing inventories and output for the period was 2,900 units. von EG Scanned with CamScannerWhat was the output valuation? A $20,271 B $20,520 c $20,970 D $22,040 (2 marks) 11.14 The following information relates to @ company's polishing process for the previous period. Output to finished goods 5,408 units valued at $29,744 Normal loss 276 units ‘Actual loss 112 units All losses have a scrap value of $2.50 per unit and there was no opening or closing work in progress. ‘What was the value of the input during the period? A $28,842 B $29,532 Cc $29,744 D $30,434 (2 marks) 11.15 Which of the following statements about process losses are correct? Units of normal loss should be valued at full cost per unit. Gi) Units of abnormal loss should be valued at their scrap value. ‘A Glonly B ii) only © —_Bothot them D Neither of them: (2 marks) ‘(Total = 30 marks) Process costing, joint products and by-products 17 mins The following data relates to questions 12.1 and 12.2. ‘Acompany manufactures two joint products, P and R, in @ common process. Data for June are as follows. $ Opening inventory 1,000 Direct materials added 10,000 Conversion costs 12,000 Closing inventory 3,000 Production Sales Sales price ‘Units Units $ per unit ¥ 4,000 5,000 5 R 6,000 5,000 10 12.1. costs are apportioned between joint products on a sales value basis, what was the cost per unit of Product R in June? A $1.25 8B $2.22 c $2.50 o $2.75 (2 marks) Bpp Scanned with CamScannera LTE oe eae ns The following data relates to questions 12.1 and 12.2. ‘Acampany manuactures Mo eet products, P and Ri earmon proce, Caaf ine ar ‘slows s Opening iver 11000 Direct materials ase 10000 Conenion costs 12900 csi mento ‘3000 Proseton Soles Sales price ‘Unis Units per unit e 4,000 ‘5,000 5 R 6.000 5,000 10 12.1 costs ar apportioned betneen et proses ona sales valu basis what was the cs par tof prove Rin ne? A 125 8 3222 © $280 D $275, @ mars) 122 Meese ae apportioned tetwen int produets oa physcal uit as, what was the total ost ‘oduct Ppreduton in Jone? ‘A $8,000 8 $8800 © $10,000 © $1200 @ mans) 123 Which of he oowing satomerts Ware covet? )Abppratuctis a pratuc pruced athe same tne a ther pructs which hs 8 lately ow ‘elome compare wth the ober res. (6) Sine type islet tm it shoud be sopra cst the proces accent, ‘shoud aber some the process coms, (0 Costs ncues prior othe pat cf separation ae snow as common ot casts. A Omar mana 8 Wand D Weay mans) 12.4. Reampany manuactre two eet products and one by-prafuctinesnge process. Oat for November en low, s aw mati ioput 216,000 Comarion ests 72,000 “hare were ro roves a the bghing ond ef the pt Sates pice S$ perunt et profi 18 Sekt product 10 Byredt 2 By pdhet sts revenue ceed othe proces acount Jon cost ar partons on & ‘ns. What were he ful production costs of predict la Noventer (tothe nearest 5? A sia2aes 8 $103273 © siong27 B $180727 @ mars) 125 Acompany manlactures the ont prosits acl one by grodict rom a singe proces Data foray ae a flows. Oper ans cosas, Scanned with CamScanner7:55 all LTE &%)» 126 4 tadpnscinets 2080+ 28en0 Teno sites oor Patet = ZIRE note sak ane fetes stienew Tovetcteratssti —“Aocbom 6158500 = $295.0 Cag ienmyeimreact = 282 5 ne 80 12D tin tnc pein wt dagooaen> sostz0en0 GBS Nz ‘i pcoelimered y ee Bee ah ene soatomeenree Sony onan = 76602 = 88080 intone ney» 2 S08 80 78 mnie 131.6 ABCisan start oti! liebe met nt pacton ead oat am af wnton eng bennett avheus ores baa ‘oan ADC uns cs wh eget ahs ote ten a roe eck ‘Sat eect evr ool pet er serice ABC ca eer cn nec nn spas 122 ty. Dang ts pei peated ft tps ein ig dogo sk ware 123 © Geum Ourgae pou pee erate! bps wae «ps This de emis Sisaetengracied os weed coord Pe patos 124 8 Taptent mens «pee est erate cried bystmaing desi pt mage fo 8 ‘Somat mnt pce 125A Gown Tapas Hee sag canbe seid bs: edict, Sse guy, kw canton eh pontine ‘cave ste nestion uty Met compte sg, paterson rtp emp ew mas (eo: at gna be eri 136 © Stent Lieto. Mie sce fd a a nied sc et of mane a (Serosnort asta tronb set Shien? ase, abd pay pets fe, Rahat extn pie aS. The coat hom atings pote seg wiry OSE M42 A y= 20-025 YF 20-o2saz= 17% 1430 @ Acoreson tent en +1 f= aaa tng rn ela betwen X NT Ie mpessonequten bomb mae ise bree (8) Wong ah eurberal ena ce ds pn says ah es {Ret snrom sor cepee tae nebecsed b erahes suh reson uo omening ta vse rg te ag tes beable (Sires fecuon Poe mone etesoma eps tons hat Sore (o)Theogesen eon nein nes fey gates ie 0 usgek pois amp sano row me pe (9 ati omane he ait oowang 144A The butt te comin contre oie ere Tee oes br Pring vcton we Scanned with CamScanner9:00 LTE &%) 12.2 If costs are apportioned between joint products on @ physical unit basis, what was the total cost of product production in une? A $8,000 8 $8,800 Cc $10,000 0 $12,000 (2 marks) 12.3. Which of the following slatomentsifare carect?™ ()_Aby-product is a product produced at the same time as other products which has a relatively low ‘volume compared with the other products. (ii) Sincea by-product is a saleable item it should be separately costed in the process account, and ‘should absorb some of the process costs. (ii) Costs incurred prior to the point of separation are known as common or joint costs. Gana ci D Gil) onty (2 marks) 124 ‘Acompany manufactures two joint products and one by-product in a single process. Data for November are a5 follows. s Raw material input 216,000 ‘Conversion costs 72,000 ‘There were no inventories at the beginning or end of the period. Output Sales price Units $ per unit int product E 21,000 15 Joint product Q 18,000 10 By-product X 2,000 2 By-product sales revenue is credited to the process account. Joint costs are apportioned on a sales value basis. What were the full production costs of product @ in November (to the nearest $)? A $102,445 B $103273 c $104,727 D $180,727 (2 marks) 12.5. A company manufactures three joint products and one by-product from a single process. Data for May are as follows. Opening and closing inventories Nit Raw materials input $180,000 Conversion costs $50,000 Output Sales price Units per unit Joint product 3,000 32 M 2,000 42 N ‘4,000 38 By-product R 1,000 2 By-product sales revenue is credited to the sales account. Joint costs are apportioned on a sales value basis. Scanned with CamScanner9:00 out! LTE Wat wer the ful predation costs product M in Mayo terest $1? A 357687 ‘57848 © $5893 $6520 mans) 1266 Two peduts Gare W ae create Hom aon proces. G can bo sol Inmet afer split. requester recesig before its salto condon Thee ae no epeing verte ard ro ‘warn ropes. The folowing data ar alle ls eid s “ata jit producto cots 384,000 Furie processing costs (rac 4) 189,600 Prosuet ‘Soting price sate Proseton ‘peru Unis ‘Unie 3 oat 400,000 4121000 4 S12 200,000, 228,000 Using he pty uit the! or appatring in prsuctin costs, what was the cst value ft oing veer of product Hi fo st perid? 1» $36,400 8 $37,520 © sos D $45,181 @ 12.7 Two pedue (Wand X) ae crete Yom 8 pnt prcess. Both produc cn be ld mst ater Sita, There 3 opening vetoes or worn pres, The folowing norman aaa last pect Tous jar pedusion xts $776,160 Pretuet Producten units Sates units Sling pie per unit w 2000 10,000 ‘so x 10000 ‘8000 312 Using te sales value metodo appatoning at postion css, what ws the ve ofthe ong Iver ot pout Kast per? A ssioscs —w $388080 © c 185232 877616 mans) (otal = 14 mas) Uy FE} Alternative costing principle 13.1 Wen of he fatoeng tteens srt cone? ‘Atty tas cots an serait value tases cote mato ‘ety based eons provide an approximatonetlongun vafdble unk cots ‘ety basa cost cannot be wed weal sees ‘etn based cong ea em of action costing mans) 132 A product inthe stag ft fe je which spied by fling pices Bt god pret mages eto ‘igh welures, Wha sag tin? 8 Mauty © keaton D becine mans) "@ 4 Scanned with CamScanner