Differentiate with suitable examples the traditional costing systems and activity-based costing. Explain how ABC is used in manufacturing by providing a numerical example.

Accounting by Geoffrey

Assignment Question(s):                                                    (Marks 15)

Q1. Differentiate with suitable examples the traditional costing systems and activity-based costing. Explain how ABC is used in manufacturing by providing a numerical example.

                                     (3 Marks)

Note: Your answer must include suitable numerical examples. You are required to assume values of your own and they should not be copied from any sources.                              (Week 7, Chapter 7)                                                                                                                           

Q2. RCR has two support departments, X1 and X2, and two operating departments, Z1 and Z2. RCR has decided to use the direct method and allocate variable X1 dept. costs based on the number of transactions and fixed X1 dept. costs based on the number of employees. X2 dept. variable costs will be allocated based on the number of service requests and fixed costs will be allocated based on the number of computers.  The following information is provided:                       (Week 9, Chapter 8)                                                                                                                 (4 Marks)                                                                                                       

 

  Support Departments Operating Departments
  X1 X2 Z1 Z2
Total Department variable costs 12,500 15,000 95,000 52,500
Total department fixed costs 14,500 27,500 105,000 45,000
Number of transactions 38 45 175 112
Number of employees 14 18 38 30
Number of service requests 30 18 38 25
Number of computers 15 20 25 30

 

You are required to allocate the variable and fixed costs.                                           

Q3. Provide a numerical example of special order decisions and make or buy decisions and explain how these decisions are backed by quantitative and qualitative considerations.

(4 Marks)

Note: Your answer must include suitable numerical examples. You are required to assume values of your own and they should not be copied from any sources.                                                                                                            

                                                                                                                                  (Week 8, Chapter 4)

 

Q4. K&C Ltd. is working on a budget for the current year. The following information is linked to budget preparation:                                                                                                            (4 Marks)

(Week 10, Chapter 10)

Budgeted selling price per unit           =          SAR 450 per unit

Total fixed costs                                 =          SAR 275,000

Variable costs                                     =          SAR 150 per unit

Required:

You are required to prepare a flexible budget for 1,000, 1,500, 2,000, and 2,500 units.