Which of the following will be completed by a production department requiring new materials to be obtained from suppliers?
Which of the following procedures are carried out to minimise losses from inventory?(i) use of standard costs for purchases(ii) restricted access to stores(iii) regular stocktaking
Fill in the blanks in the statements about marginal costing and absorption costing below.
(a) If inventory levels _____________ between the beginning and end of a period, absorptioncosting will report the higher profit.
(b) If inventory levels decrease, _____________costing will report the lower profit.
The following statements have been made about ABC and cost drivers.
(1) A cost driver is any factor that causes a change in the cost of an activity.
(2) For long-term variable overhead costs, the cost driver will be the volume of activity.
(3) Traditional absorption costing tends to under-allocate overhead costs to low-volume products.
Which of the above statements is/are true?
The following statements have been made in relation to activity-based costing:
(1) A cost pool is an activity which consumes resources and for which overhead costs are identified and allocated.
(2) The overhead absorption rate (OAR) is calculated in the same way as the absorption costing OAR, and the same OAR will be calculated for each activity.
Which of the above statements is/are true?
The ABC Company manufactures two products, Product Alpha and Product Beta. Both are produced in a very labour-intensive environment and use similar processes. Alpha and Beta differ by volume. Beta is a high-volume product, while Alpha is a low-volume product. Details of product inputs, outputs and the costs of activities are as follows:
Fixed overhead costs amount to a total of $420,000 and have been analysed as follows:
$
Volume-related 100,000
Purchasing related 145,000
Set-up related 175,000
Using a traditional method of overhead absorption based on labour hours, what is the overhead cost per unit for each unit of product Beta?
The ABC Company manufactures two products, Product Alpha and Product Beta. Both are produced in a very labour-intensive environment and use similar processes. Alpha and Beta differ by volume. Beta is a high-volume product, while Alpha is a low-volume product. Details of product inputs, outputs and the costs of activities are as follows:
Fixed overhead costs amount to a total of $420,000 and have been analysed as follows:
$
Volume-related 100,000
Purchasing related 145,000
Set-up related 175,000
Using Activity Based Costing as method of overhead absorption, what is the overhead cost per unit for each unit of product Alpha?
A company makes two products using the same type of materials and skilled workers. The following information is available:
Product A Product B
Budgeted volume (units) 1,000 2,000
Material per unit ($) 10 20
Labour per unit ($) 5 20
Fixed costs relating to material handling amount to $100,000. The cost driver for these costs is the volume of material purchased.
General fixed costs, absorbed on the basis of labour hours, amount to $180,000.
Using activity-based costing, what is the total fixed overhead amount to be absorbed into each unit of product B (to the nearest whole $)?
A company is changing its costing system from traditional absorption costing based on labour hours to Activity Based Costing. It has overheads of $156,000 which are related to taking material deliveries.
The delivery information about each product is below.
Product: X Y Z
Total units required 1,000 2,000 3,000
Delivery size 200 400 1,000
Total labour costs are $360,000 for 45,000 hours. Each unit of each product takes the same number of direct hours.
Assuming that the company uses the number of deliveries as its cost driver, what is the increase or decrease in unit costs for Z arising from the change from Absorption Costing to Activity Based Costing?
DRP Ltd has recently introduced an ABC system. It manufactures three products, details of which are set out below:
Product: D R P
Budgeted annual production (units) 100,000 100,000 50,000
Batch size (units) 100 50 25
Machine set-ups per batch 3 4 6
Purchase orders per batch 2 1 1
Processing time per unit (minutes) 2 3 3
Three cost pools have been identified. Their budgeted costs for the year ending 30 June 2003 are as follows:
Machine set-up costs $150,000
Purchasing of materials $70,000
Processing $80,000
What is the budgeted machine set-up cost per unit of product R?