Product costing – NBC Institute

MI – Nov 2014 – L1 – SA – Q17 – Costing Methods

This question asks about the appropriate method for allocating overhead costs in product costing.

Question

A method of product costing which aims to include, in the total cost of a product, an appropriate share of the organisation’s total overhead is:
A. Marginal costing
B. Activity-based costing
C. Differential costing
D. Absorption costing
E. Product costing

Answer

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Tags: Absorption Costing, Activity-Based Costing, Costing Techniques, Product costing
Level: Level 1

Topic: Costing Methods
Series: NOV 2014

MA – May 2018 – L2 – Q3c – Activity-Based Costing

Calculate the total overhead absorbed per unit using Activity-Based Costing and identify three types of cost controls.

Question

Dunning Limited has recently introduced an Activity Based Costing System and has
provided the following details for the month of January:

During the month, 500 units of Product Y were produced. This production run required
100 parts and 150 maintenance hours; 5 material requisitions were made and 10
employees worked on the units.
Required:
i) Using Activity Based Costing, calculate the total amount of overhead absorbed by each
unit of Product Y. (7 marks)
ii) Identify THREE different types of controls and explain how activity based costing assists
in the control of costs?

Answer

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Tags: Activity-Based Costing, Cost Control, Cost Pools, Overhead Absorption, Product costing
Level: Level 2

Topic: Activity-based costing
Series: MAY 2018

MA – May 2021 – L2 – Q3a – Activity-based costing

Calculate the product unit costs for Santo's product lines using activity-based costing.

Question

a) Santo has three product lines: P1, P2, and P3. Since its inception, the company has been using a single direct labour cost percentage to assign overhead costs to products. Despite P3 being a relatively new product line, it is attracting additional business. However, increasing overhead costs have resulted in loss-making in recent times. P2 particularly has been a significant product line since its inception. However, it has lost considerable market share due to an increase in overhead cost in recent times and a consequent increase in price per unit. Management is, therefore, convinced that the costing system needs some review. A team led by the management accountant was put together to develop an improved system of costing based on activities. The team spent several weeks collecting data for the different activities and products.

Below is data on Santo’s three product lines and overhead costs for the current accounting period:

	P1	P2	P3
Production volume (units)	7,500	12,500	4,000
Selling price per unit (GH¢)	47	80	68
Material cost per unit (GH¢)	18	25	16
Direct labour cost per unit (GH¢)	4	8	6.4
Materials movements (in total)	4	25	50
Machine hours per unit	0.5	0.5	0.2
Set-ups (in total)	1	5	10
The proportion of engineering work	30%	20%	50%
Orders packed (in total)	1	7	22

Activities overhead cost:

Machine maintenance and depreciation: GH¢390,000
Material receiving and handling: GH¢150,000
Engineering: GH¢100,000
Packing: GH¢60,000
Set-up labour: GH¢18,688
Total: GH¢718,688

Required: Identify for each overhead activity, an appropriate cost driver from the information supplied, and then calculate the product unit costs using a system that assigns overheads based on the use of activities. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Activity-Based Costing, Cost Drivers, Overhead Allocation, Product costing
Level: Level 2

Topic: Activity-based costing
Series: MAY 2021

MI – Nov 2014 – L1 – SA – Q17 – Costing Methods

This question asks about the appropriate method for allocating overhead costs in product costing.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Absorption Costing, Activity-Based Costing, Costing Techniques, Product costing
Level: Level 1

Topic: Costing Methods
Series: NOV 2014

MA – May 2018 – L2 – Q3c – Activity-Based Costing

Calculate the total overhead absorbed per unit using Activity-Based Costing and identify three types of cost controls.

Question

Dunning Limited has recently introduced an Activity Based Costing System and has
provided the following details for the month of January:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Activity-Based Costing, Cost Control, Cost Pools, Overhead Absorption, Product costing
Level: Level 2

Topic: Activity-based costing
Series: MAY 2018

MA – May 2021 – L2 – Q3a – Activity-based costing

Calculate the product unit costs for Santo's product lines using activity-based costing.

Question

Below is data on Santo’s three product lines and overhead costs for the current accounting period:

	P1	P2	P3
Production volume (units)	7,500	12,500	4,000
Selling price per unit (GH¢)	47	80	68
Material cost per unit (GH¢)	18	25	16
Direct labour cost per unit (GH¢)	4	8	6.4
Materials movements (in total)	4	25	50
Machine hours per unit	0.5	0.5	0.2
Set-ups (in total)	1	5	10
The proportion of engineering work	30%	20%	50%
Orders packed (in total)	1	7	22

Activities overhead cost:

Machine maintenance and depreciation: GH¢390,000
Material receiving and handling: GH¢150,000
Engineering: GH¢100,000
Packing: GH¢60,000
Set-up labour: GH¢18,688
Total: GH¢718,688

Answer

Find Related Questions by Tags, levels, etc.

Tags: Activity-Based Costing, Cost Drivers, Overhead Allocation, Product costing
Level: Level 2

Topic: Activity-based costing
Series: MAY 2021

Question Tag: Product costing

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MI – Nov 2014 – L1 – SA – Q17 – Costing Methods

This question asks about the appropriate method for allocating overhead costs in product costing.

MA – May 2018 – L2 – Q3c – Activity-Based Costing

Calculate the total overhead absorbed per unit using Activity-Based Costing and identify three types of cost controls.

MA – May 2021 – L2 – Q3a – Activity-based costing

Calculate the product unit costs for Santo's product lines using activity-based costing.

MI – Nov 2014 – L1 – SA – Q17 – Costing Methods

This question asks about the appropriate method for allocating overhead costs in product costing.

MA – May 2018 – L2 – Q3c – Activity-Based Costing

Calculate the total overhead absorbed per unit using Activity-Based Costing and identify three types of cost controls.

MA – May 2021 – L2 – Q3a – Activity-based costing

Calculate the product unit costs for Santo's product lines using activity-based costing.

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MI – Nov 2014 – L1 – SA – Q17 – Costing Methods

This question asks about the appropriate method for allocating overhead costs in product costing.

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MA – May 2018 – L2 – Q3c – Activity-Based Costing

Calculate the total overhead absorbed per unit using Activity-Based Costing and identify three types of cost controls.

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MA – May 2021 – L2 – Q3a – Activity-based costing

Calculate the product unit costs for Santo's product lines using activity-based costing.

You're reporting an error for "MA – May 2021 – L2 – Q3a – Activity-based costing"

MI – Nov 2014 – L1 – SA – Q17 – Costing Methods

This question asks about the appropriate method for allocating overhead costs in product costing.

You're reporting an error for "MI – Nov 2014 – L1 – SA – Q17 – Costing Methods"

MA – May 2018 – L2 – Q3c – Activity-Based Costing

Calculate the total overhead absorbed per unit using Activity-Based Costing and identify three types of cost controls.

You're reporting an error for "MA – May 2018 – L2 – Q3c – Activity-Based Costing"

MA – May 2021 – L2 – Q3a – Activity-based costing

Calculate the product unit costs for Santo's product lines using activity-based costing.

You're reporting an error for "MA – May 2021 – L2 – Q3a – Activity-based costing"

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