Traditional costing methods — Accounting 9706 AS & A Level Question & Worked Solution

(a(i))[1]

Name the accounting term for dividing a service department's costs according to stores requisitions.

(a(ii))[2]

Explain the way in which direct materials cost is charged to each production department.

(b(i))[1]

State the basis the company may have used to divide factory rent between the two departments.

(b(ii))[1]

State the basis the company may have used to split factory machinery depreciation between the two departments.

(c(i))[1]

Calculate the inventory value of one bicycle made by Department A using marginal costing.

(c(ii))[1]

Calculate the inventory value of one bicycle made by Department A under absorption costing.

(d(i))[4]

Calculate the budgeted profit earned by one bicycle.

(d(ii))[4]

Calculate the budgeted profit earned by one scooter.

(e)[7]

Advise the directors whether they should go ahead with this suggestion or not. Support your answer with both financial and non-financial factors.

(f)[3]

Calculate the overhead absorption rate for one direct labour hour in Department A.

(g)[5]

Calculate whether Department A had under-absorption or over-absorption of overheads in January 2018.

Traditional costing methods — practice question