Accounting 9706 · AS & A Level · Traditional costing methods

Traditional costing methods — practice question

V Limited is a manufacturing business that applies absorption costing at one of its factories.
(a)[4]

Explain two contrasts between marginal costing and absorption costing.

(b)[4]

Complete the table to show how service department overheads are reapportioned.

(c)[4]

Calculate, to two decimal places, the overhead absorption rates for each department for the year ended 30 September 2025.

(d)[3]

Calculate the over-absorption or under-absorption of overheads for the assembly department for the year ended 30 September 2025.

(e)[5]

Calculate the selling price for the order.

(f)[1]

Calculate the profit or loss made on the order from the overseas customer.

(g)[7]

Advise the directors on whether they ought to accept the order from the overseas customer. Support your answer by weighing up both the advantages and disadvantages of taking the order.

(h)[2]

Explain the core principle of the just in time (JIT) method of inventory control.

Worked solution & mark scheme

This 30-mark question has a full step-by-step worked solution and mark scheme. One marking point: Marginal costing counts only variable costs as product cost

  • Full mark scheme, point by point
  • Step-by-step worked solution
  • Write your answer & get it marked instantly by AI