Accounting 9706 · AS & A Level · Traditional costing methods

Traditional costing methods — practice question

K Limited applies absorption costing at one of its factories. The product made there passes through two production departments: the cutting department and the finishing department.
(a)[5]

Set out a statement showing the total selling price for the customer’s order.

(b)[4]

For the year ending 31 December 2023, calculate the over-absorption or under-absorption of overheads in each production department.

(c)[2]

Work out both the total monthly contribution and the total monthly profit currently generated in this factory.

(d(i))[6]

Option A is correct.

(d(ii))[6]

Option B is correct.

(e)[7]

Advise the directors on which option to select. Support your advice by considering both financial and non-financial factors.

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