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Cost Accounting

Instructions:Attempt all three (3) questions

Question1

Thefollowingcosts werereported byXYZCompany.

Period	Unitsproduced	Costs ($)
1	340	2260
2	300	2160
3	400	2300
4	420	2400
5	360	2266

1. UsetheHigh-lowMethodtocalculatethefixedcostspermonthandthevariablecostsperunit. 10 marks

1. Thefollowingcostswereobservedoverseveral periodsinamanufacturingcompany.

	Production level(units)	Totalcosts($)
Period1	8	112
Period2	10	124
Period3	14	160
Period4	14	144
Period5	18	176
Period6	20	188

Required

UsingtheLeastSquareMethodofLinearRegression,determinethe:

1. variablecostperunitsandtotalfixedcost 5 marks

1. Totalcostatanestimatedproductionlevelof22unitsand24units. 5 marks

Question 2

Huge Black Monster Limited uses machine hour rate of overhead recovery in its machinery department and direct labour hour rate of recovery in its assembly department. The budgeted overheads in the machinery department and the assembly department are $40,000 and $64,000 respectively.

	Machining Department	Assembly Department
Budgeted machine hours	10,000	0
Budgeted direct labour hours	25,000	25,600

Job # 627 costs $400 in direct materials and $600 in direct labour. It requires 20 machine hours (80 direct labour hours) in the machining department and 200 hours in the assembly department.

Required:

1. Calculate the full cost of job 627 using the current bases of overhead absorption

7 marks

1. Calculate the full cost of job 627 if the absorption rate is in the machining department is changed to direct labour hour rate. 8 marks

Question 3

Bookal Ltd has the following data:

	Prod 1	Prod 2	Stores dept	Maintenance dept
Overhead costs $	24,000	16,000	10,000	8,000
Cost of material requisitions	40,000	35,000	-	15,000
M'nance hours needed (hrs)	8,000	4,500	1,500

Required:

a) Use the repeated distribution method to apportion the overhead costs of the two service centres 8 marks

b) Ascertain the total overhead costs of the production departments 7 marks

c) Compare the overall cost of the production departments using the repeated distribution method and the traditional overhead absorption method. 3 marks

d) Comment on the benefits or drawbacks of using the repeated distribution method of overhead absorption 2 marks

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