Fixed Overheads – NBC Institute

MI – May 2021 – L1 – SA – Q11 – Costing Techniques

Calculate profit difference between marginal and absorption costing methods.

Question

Last month when a company had an opening inventory of 16,500 units and closing inventory of 18,000 units, the profit using absorption costing was ₦40,000. The fixed production overhead rate was ₦10 per unit. Using marginal costing, the profit for last month would be:

A. ₦75,000
B. ₦65,000
C. ₦55,000
D. ₦25,000
E. ₦15,000

Answer

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Tags: Absorption Costing, Fixed Overheads, Marginal Costing, Profit Calculation
Level: Level 1

Topic: Costing Techniques
Series: MAY 2021

MI – May 2015 – L1 – SB – Q3 – Costing Methods

Analyze a make or buy decision for MOP heads production.

Question

Tripple Company Limited manufactures “MOP Heads” for use in its various offices across the country. The Cost Accountant has the following costs per unit produced:

A nearby company, Dusters Nigeria Enterprises, has offered to sell 10,000 units of these MOP Heads to Tripple Company Limited for N135 per unit. If Tripple Company Limited accepts the offer, some of the facilities presently in use to manufacture MOP Heads could be rented out to a third party at an annual rent of N195,000. In addition, N18 per unit of the fixed overhead cost applied to the production of MOP Heads would be totally eliminated. The Cost Accountant has also established that 75% of the overhead is fixed.

You are required to:

a. Advise the Chief Executive Officer of Tripple Company Limited whether the company should accept the offer of Dusters Nigeria Enterprises or not. (15 Marks)

b. State FIVE other qualitative factors that the Chief Executive Officer of Tripple Company Limited should consider in making a decision in (a) above. (5 Marks)

Answer

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Tags: Costing, Fixed Overheads, Make or buy decisions, Qualitative Factors, Relevant Costing
Level: Level 1

Topic: Costing Methods
Series: MAY 2015

MA – May 2018 – L2 – Q3a – Standard Costing and Variance Analysis

Prepare profit statements for April and May using standard costing and absorption costing methods.

Question

a) Resol Ltd commenced trading on 1 April 2011 making the product Resol. The standard cost sheet for Resol is as follows:

The fixed production overhead figure has been calculated on the basis of a budgeted normal output of 24,000 units per annum. Fixed Sales and Administration costs are estimated at GH¢24,000 per annum. You may assume that all budgeted fixed expenses are incurred evenly over the year.

The sales price is GH¢35.00 and the actual number of units produced and sold was as follows:

	April	May
Production – units	2,000	2,500
Sales – units	1,500	3,000

Required:
Prepare a profit statement for each of the months April and May using:

Standard costing
Absorption costing

Answer

Find Related Questions by Tags, levels, etc.

Tags: Fixed Overheads, Profit Statement, Standard Costing, Variable Costs, Variance Analysis
Level: Level 2

Topic: Standard Costing and Variance Analysis
Series: MAY 2018

MI – May 2021 – L1 – SA – Q11 – Costing Techniques

Calculate profit difference between marginal and absorption costing methods.

Question

A. ₦75,000
B. ₦65,000
C. ₦55,000
D. ₦25,000
E. ₦15,000

Answer

Find Related Questions by Tags, levels, etc.

Tags: Absorption Costing, Fixed Overheads, Marginal Costing, Profit Calculation
Level: Level 1

Topic: Costing Techniques
Series: MAY 2021

MI – May 2015 – L1 – SB – Q3 – Costing Methods

Analyze a make or buy decision for MOP heads production.

Question

Tripple Company Limited manufactures “MOP Heads” for use in its various offices across the country. The Cost Accountant has the following costs per unit produced:

You are required to:

a. Advise the Chief Executive Officer of Tripple Company Limited whether the company should accept the offer of Dusters Nigeria Enterprises or not. (15 Marks)

b. State FIVE other qualitative factors that the Chief Executive Officer of Tripple Company Limited should consider in making a decision in (a) above. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Costing, Fixed Overheads, Make or buy decisions, Qualitative Factors, Relevant Costing
Level: Level 1

Topic: Costing Methods
Series: MAY 2015

MA – May 2018 – L2 – Q3a – Standard Costing and Variance Analysis

Prepare profit statements for April and May using standard costing and absorption costing methods.

Question

a) Resol Ltd commenced trading on 1 April 2011 making the product Resol. The standard cost sheet for Resol is as follows:

The sales price is GH¢35.00 and the actual number of units produced and sold was as follows:

	April	May
Production – units	2,000	2,500
Sales – units	1,500	3,000

Required:
Prepare a profit statement for each of the months April and May using:

Standard costing
Absorption costing

Answer

Find Related Questions by Tags, levels, etc.

Tags: Fixed Overheads, Profit Statement, Standard Costing, Variable Costs, Variance Analysis
Level: Level 2

Topic: Standard Costing and Variance Analysis
Series: MAY 2018

Question Tag: Fixed Overheads

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MI – May 2021 – L1 – SA – Q11 – Costing Techniques

Calculate profit difference between marginal and absorption costing methods.

MI – May 2015 – L1 – SB – Q3 – Costing Methods

Analyze a make or buy decision for MOP heads production.

MA – May 2018 – L2 – Q3a – Standard Costing and Variance Analysis

Prepare profit statements for April and May using standard costing and absorption costing methods.

MI – May 2021 – L1 – SA – Q11 – Costing Techniques

Calculate profit difference between marginal and absorption costing methods.

MI – May 2015 – L1 – SB – Q3 – Costing Methods

Analyze a make or buy decision for MOP heads production.

MA – May 2018 – L2 – Q3a – Standard Costing and Variance Analysis

Prepare profit statements for April and May using standard costing and absorption costing methods.

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MI – May 2021 – L1 – SA – Q11 – Costing Techniques

Calculate profit difference between marginal and absorption costing methods.

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MI – May 2015 – L1 – SB – Q3 – Costing Methods

Analyze a make or buy decision for MOP heads production.

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MA – May 2018 – L2 – Q3a – Standard Costing and Variance Analysis

Prepare profit statements for April and May using standard costing and absorption costing methods.

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MI – May 2021 – L1 – SA – Q11 – Costing Techniques

Calculate profit difference between marginal and absorption costing methods.

You're reporting an error for "MI – May 2021 – L1 – SA – Q11 – Costing Techniques"

MI – May 2015 – L1 – SB – Q3 – Costing Methods

Analyze a make or buy decision for MOP heads production.

You're reporting an error for "MI – May 2015 – L1 – SB – Q3 – Costing Methods"

MA – May 2018 – L2 – Q3a – Standard Costing and Variance Analysis

Prepare profit statements for April and May using standard costing and absorption costing methods.

You're reporting an error for "MA – May 2018 – L2 – Q3a – Standard Costing and Variance Analysis"

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