Scribd Logo
Upload

Welcome to Scribd!

  • 14 views

    Costing

    Uploaded by

    Paul
    1. The document contains 3 questions regarding cost and management accounting concepts. Question 1 provides data on output, quantities, and costs for various cost centers and calculates total costs. Question 2 defines cost centers, revenue centers, and overheads. Question 3 shows an income statement using marginal costing and variances for direct materials. 2. Cost centers collect costs that are later analyzed and traced to cost units. Revenue centers are accountable for revenues only and aim to maximize sales. Overheads are absorbed based on a percentage markup. 3. The marginal costing income statement shows contribution after deducting variable costs from sales. Fixed costs are then deducted to calculate net profit. It also calculates direct material variances based on standard

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Costing

    Uploaded by

    Paul
    14 views4 pages
    1. The document contains 3 questions regarding cost and management accounting concepts. Question 1 provides data on output, quantities, and costs for various cost centers and calculates total costs. Question 2 defines cost centers, revenue centers, and overheads. Question 3 shows an income statement using marginal costing and variances for direct materials. 2. Cost centers collect costs that are later analyzed and traced to cost units. Revenue centers are accountable for revenues only and aim to maximize sales. Overheads are absorbed based on a percentage markup. 3. The marginal costing income statement shows contribution after deducting variable costs from sales. Fixed costs are then deducted to calculate net profit. It also calculates direct material variances based on standard

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    1. The document contains 3 questions regarding cost and management accounting concepts. Question 1 provides data on output, quantities, and costs for various cost centers and calculates total costs. Question 2 defines cost centers, revenue centers, and overheads. Question 3 shows an income statement using marginal costing and variances for direct materials. 2. Cost centers collect costs that are later analyzed and traced to cost units. Revenue centers are accountable for revenues only and aim to maximize sales. Overheads are absorbed based on a percentage markup. 3. The marginal costing income statement shows contribution after deducting variable costs from sales. Fixed costs are then deducted to calculate net profit. It also calculates direct material variances based on standard

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    14 views4 pages

    Costing

    Uploaded by

    Paul
    1. The document contains 3 questions regarding cost and management accounting concepts. Question 1 provides data on output, quantities, and costs for various cost centers and calculates total costs. Question 2 defines cost centers, revenue centers, and overheads. Question 3 shows an income statement using marginal costing and variances for direct materials. 2. Cost centers collect costs that are later analyzed and traced to cost units. Revenue centers are accountable for revenues only and aim to maximize sales. Overheads are absorbed based on a percentage markup. 3. The marginal costing income statement shows contribution after deducting variable costs from sales. Fixed costs are then deducted to calculate net profit. It also calculates direct material variances based on standard

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    You are on page 1of 4

    Question 1

    Statement of Equivalent Units

        M   L   O/H  
    Outpu Quantit Quantit Quantit
    Item t % y % y % y
    FG 5500 100 5500 100 5500 100 5500
    NL 800 - - - - - -
    WIP 1400 100 1400 50 700 40 560
    AL 300 100 300 100 300 100 300
      8000   7200   6500   6360

    Statement of Cost

      $ $ $
    Input cost 32000 16250 6996
    Less scrap sale value of
    NL -1400    
      30600 16250 6996
    Equivalent units 7200 6500 6360
    Cost per equivalent
    unit 4.25 2.5 1.1

    Statement of Evaluation

    $ $
    Finished Goods (4.25+2.5+1.1)5500 43175
    W-I-P (4.25*1400)+ (2.5*700) + 8316
    (1.1*560}
    AL (4.25+2.5+1.1)300 2355
    Question 2

    a) Cost centre is a collecting places for costs before they are further analysed. Costs are
    further analysed into cost units once they have been traced to cost centres. Cost centres
    may include the following.
     A department
     A machine, or group of machines
     A project for example the installation of a new computer system
     Overhead costs for example rent, rates, electricity which may then be allocated to
    departments or projects.

    Cost centres are an essential building block of a costing system. They are the starting
    point for the following. (a) The classification of actual costs incurred (b) The preparation
    of budgets of planned costs (c) The comparison of actual costs and budgeted costs
    (management control)

    b) Revenue centre is similar to cost centre and profit centres but are accountable for
    revenues only. Revenue centre managers should normally have control over how
    revenues are raised. A revenue centre manager is not accountable for costs. They will be
    aiming purely to maximise sales revenue. They will want information on markets and
    new products and they will look closely at pricing and the sales performance of
    competitors – in addition to monitoring revenue figures.
    c)

      $
    Overheads absorbed
    (52465*1.8) 94437
    257078
    Actual overheads 5
    247634
    Under absorbed 8

    Question 3
    a) Income statement using Marginal Costing

      $ $
    Sales (15000*10)   150000
    Less Marginal cost    
    Variable manufacturing
    costs 99000  
    Less Closing
    stock(1500*6) -9600  
      89400  
    Add variable selling 6000 -95400
    Contribution   54600
    Less Fixed cost    
    Manufactutring costs 33000  
    Selling and Administration 7500 -40500
    Net Profit   14100

    b)

    $
    Should have cost (84000*20) 1680000
    Did cost (84000*22.5) 1890000
    Direct Material Price
    variance 210000
       
    Should have used in kgs 90000
    Did use in kgs 84000
    Variance in kgs 6000 (F)
    At standard price $ 20
    Direct Material usage 120000
    variance $ (F)
    References

    1 T lucey 7th edition 1985

    2 BPP ACCA F2 2018

    3 BPP ACCA F5 2015

    4 BPP ACCA P5 2017

    5 Render, B, Stair and Hanna, M,E. (2012) Qualitative Analysis for Management (11th edition)

    6 Hillier,F and Lieberman,G,T. (1995) Introductions to Operations Research (6th edition)

    You might also like