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Which of the following attributes support overhead to products using the activities which give rise to the cost?
A. Activity based costing
B. Absorption costing
C. Marginal costing
D. Standard costing
E. Activity based budgeting
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In which of the following will the profit of marginal costing equal absorption costing?
A. There is only closing stock
B. There is only opening stock
C. There is both opening and closing stock
D. There is no change in stock levels
E. There are lower fixed costs
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Find Related Questions by Tags, levels, etc.
A company calculates the prices of jobs by adding overheads to prime cost and adding 30% to total costs as profit margin. A job was sold for N1,690,000 and incurred overheads of N694,000. The prime cost of the job is:
A. N489,000
B. N606,000
C. N996,000
D. N1,300,000
E. N1,400,000
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XYZ Limited has just designed a new consumer product – XEE, which is expected to have a ten-year life cycle. Based on its market research, XYZ Limited’s Management has determined that the new product should be packaged in a 5kg-polymer sack with a selling price of N150 in the first four years, N120 in the next four years, and N90 per unit during the last two years.
Sales in units are expected as follows:
| Year | Units |
|---|---|
| 1 | 400,000 |
| 2 | 500,000 |
| 3 | 600,000 |
| 4 | 800,000 |
| 5 | 1,000,000 |
| 6 | 1,200,000 |
| 7 | 900,000 |
| 8 | 600,000 |
| 9 | 500,000 |
| 10 | 300,000 |
Variable selling costs are expected to be N10 per package throughout the product’s life. Annual fixed selling and administrative costs are estimated to be N1,200,000. XYZ Limited’s management desires a 25% profit margin on the selling price.
Required:
a. Compute the life cycle target cost of manufacturing the product (round up to the nearest kobo). (14 Marks)
b. If XYZ Limited anticipated that the new product will cost N90.50 per unit to manufacture in the first year, what are the maximum manufacturing costs in the following nine years? (3 Marks)
c. Suppose that the outcome of the market research indicates that expected manufacturing cost per unit over the product life cycle is N89.90, what actions would the company take to reduce this cost? (3 Marks)
(Total 20 Marks)
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Use the high-low method to calculate the Fixed Cost (FC) and Variable Cost (VC) elements of the
A. VC = N0.08/unit, FC = N1,120/unit
B. VC = N0.88/unit, FC = N1,020/unit
C. VC = N0.80/unit, FC = N1,220/unit
D. VC = N0.82/unit, FC = N1,320/unit
E. VC = N0.85/unit, FC = N1,330/unit
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The Management of Tejuosho Shopping Mall incurred a certain amount of money as joint security cost for the month of October 2014. What will be the most appropriate basis of apportioning this cost amongst the individual shop owners in the mall?
A. Value of inventory held in each store/shop
B. Cost of equipment in each shop
C. Number of workers in each shop
D. Floor area occupied by each shop
E. Turnover recorded by each shop
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A company manufactures and sells a single product. During the month of November 2014, the budgeted total production cost was N210,000 including budgeted fixed production overheads of N55,000. Budgeted sales was 8,750 units at N30.
If the company applies marginal costing principles, what would be the budgeted contribution for the month?
A. N 52,500
B. N 77,500
C. N 97,500
D. N107,500
E. N117,500
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
Which of the following attributes support overhead to products using the activities which give rise to the cost?
A. Activity based costing
B. Absorption costing
C. Marginal costing
D. Standard costing
E. Activity based budgeting
Find Related Questions by Tags, levels, etc.
In which of the following will the profit of marginal costing equal absorption costing?
A. There is only closing stock
B. There is only opening stock
C. There is both opening and closing stock
D. There is no change in stock levels
E. There are lower fixed costs
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
A company calculates the prices of jobs by adding overheads to prime cost and adding 30% to total costs as profit margin. A job was sold for N1,690,000 and incurred overheads of N694,000. The prime cost of the job is:
A. N489,000
B. N606,000
C. N996,000
D. N1,300,000
E. N1,400,000
Find Related Questions by Tags, levels, etc.
XYZ Limited has just designed a new consumer product – XEE, which is expected to have a ten-year life cycle. Based on its market research, XYZ Limited’s Management has determined that the new product should be packaged in a 5kg-polymer sack with a selling price of N150 in the first four years, N120 in the next four years, and N90 per unit during the last two years.
Sales in units are expected as follows:
| Year | Units |
|---|---|
| 1 | 400,000 |
| 2 | 500,000 |
| 3 | 600,000 |
| 4 | 800,000 |
| 5 | 1,000,000 |
| 6 | 1,200,000 |
| 7 | 900,000 |
| 8 | 600,000 |
| 9 | 500,000 |
| 10 | 300,000 |
Variable selling costs are expected to be N10 per package throughout the product’s life. Annual fixed selling and administrative costs are estimated to be N1,200,000. XYZ Limited’s management desires a 25% profit margin on the selling price.
Required:
a. Compute the life cycle target cost of manufacturing the product (round up to the nearest kobo). (14 Marks)
b. If XYZ Limited anticipated that the new product will cost N90.50 per unit to manufacture in the first year, what are the maximum manufacturing costs in the following nine years? (3 Marks)
c. Suppose that the outcome of the market research indicates that expected manufacturing cost per unit over the product life cycle is N89.90, what actions would the company take to reduce this cost? (3 Marks)
(Total 20 Marks)
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Use the high-low method to calculate the Fixed Cost (FC) and Variable Cost (VC) elements of the
A. VC = N0.08/unit, FC = N1,120/unit
B. VC = N0.88/unit, FC = N1,020/unit
C. VC = N0.80/unit, FC = N1,220/unit
D. VC = N0.82/unit, FC = N1,320/unit
E. VC = N0.85/unit, FC = N1,330/unit
Find Related Questions by Tags, levels, etc.
The Management of Tejuosho Shopping Mall incurred a certain amount of money as joint security cost for the month of October 2014. What will be the most appropriate basis of apportioning this cost amongst the individual shop owners in the mall?
A. Value of inventory held in each store/shop
B. Cost of equipment in each shop
C. Number of workers in each shop
D. Floor area occupied by each shop
E. Turnover recorded by each shop
Find Related Questions by Tags, levels, etc.
A company manufactures and sells a single product. During the month of November 2014, the budgeted total production cost was N210,000 including budgeted fixed production overheads of N55,000. Budgeted sales was 8,750 units at N30.
If the company applies marginal costing principles, what would be the budgeted contribution for the month?
A. N 52,500
B. N 77,500
C. N 97,500
D. N107,500
E. N117,500
Find Related Questions by Tags, levels, etc.
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