Costing Techniques – Page 2

MI – Nov 2014 – L1 – SA – Q17 – Costing Methods

This question asks about the appropriate method for allocating overhead costs in product costing.

Question

A method of product costing which aims to include, in the total cost of a product, an appropriate share of the organisation’s total overhead is:
A. Marginal costing
B. Activity-based costing
C. Differential costing
D. Absorption costing
E. Product costing

Answer

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Tags: Absorption Costing, Activity-Based Costing, Costing Techniques, Product costing
Level: Level 1

Topic: Costing Methods
Series: NOV 2014

MI – May 2017 – L1 – SA – Q6 – Costing Techniques

Identify the costing technique where variable costs are charged to cost units.

Question

In which costing technique are variable costs charged to cost units and period costs written off against contribution?
A. Contract costing
B. Activity-based costing
C. Process costing
D. Marginal costing
E. Batch costing

Answer

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Tags: Costing Techniques, Marginal Costing, Variable Cost
Level: Level 1

Topic: Costing Techniques
Series: MAY 2017

MI – Mar-Jul 2020 – L1 – SB – Q2b – Costing Techniques

Prepare ledger accounts for a backflush accounting system based on the given data for production and sales.

Question

XYZ operates a backflush accounting system with the following standard costs:

Raw materials (5Kg per unit) @ N230 per Kg
Personnel cost @ N300 per unit
Overheads @ N750 per unit

During a period, the following was achieved:

Raw materials purchased: 24,500 Kg
Production: 4,800 units
Sales: 4,600 units

There was no opening stock, and the triggers used for initiating accounting entries are:

Purchase of raw materials;
Sale of finished goods.

Required:

Prepare the following ledger accounts:

i. Combined raw materials and work-in-progress (WIP)
ii. Conversion cost
iii. Cost of goods sold
iv. Period expenses

Answer

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Tags: Backflush Accounting, Cost Management, Costing Techniques, Ledger Preparation
Level: Level 1

Topic: Costing Techniques
Series: MAR/JULY 2020

MI – Mar-Jul 2020 – L1 – SB – Q2a – Costing Techniques

List the characteristics of a Just-In-Time (JIT) environment in manufacturing.

Question

The aim of the just-in-time system is to produce the required items with high quality and at the exact time required.

i. List FIVE characteristics of the just-in-time environment. (5 Marks)
ii. List FIVE benefits from the just-in-time system. (5 Marks)

Answer

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Tags: Cost Management, Costing Techniques, Inventory Management, Just-in-Time, Lean Production
Level: Level 1

Topic: Costing Techniques
Series: MAR/JULY 2020

MI – Mar-Jul 2020 – L1 – SA – Q12 – Costing Techniques

Identify the type of standard that assumes imperfect conditions.

Question

The standard set on the assumption of conditions that recognise an element of imperfection is known as:

A. Ideal standard
B. Basic standard
C. Current standard
D. Attainable standard
E. Favourable standard

Answer

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Tags: Cost Control, Costing Techniques, Standard Costing, Variance Analysis
Level: Level 1

Topic: Costing Techniques
Series: MAR/JULY 2020

MI – Mar-Jul 2020 – L1 – SA – Q5 – Costing Techniques

Identify the effect of increasing automation that is not related to costing.

Question

Which of the following is NOT an effect of increasing automation from a costing viewpoint?

A. Reduction in direct labour costs per unit
B. Reduction in overhead cost
C. Change in cost structures
D. Makes labour hours increasingly unsuitable as an overhead absorption base
E. Fewer production workers and more support staff

Answer:

Answer

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Tags: Automation, Cost Management, Costing Techniques, Overhead Costs
Level: Level 1

Topic: Costing Techniques
Series: MAR/JULY 2020

MI – Mar-Jul 2020 – L1 – SA – Q4 – Costing Techniques

Identify the cost that does not arise as a result of labour turnover.

Question

Labour turnover is the ratio of the number of employees leaving a company to the total number on the payroll in that period. Which of the following costs does not arise as a result of labour turnover?

A. Redundancy Cost
B. Separation Cost
C. Replacement Cost
D. Training Cost
E. Learning Cost

Answer

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Tags: Cost Management, Costing Techniques, Human Resources, Labour Turnover
Level: Level 1

Topic: Costing Techniques
Series: MAR/JULY 2020

MI – May 2024 – L1 – SA – Q6 – Costing Techniques

Calculates the fixed cost based on total cost and activity levels.

Question

The following data were extracted from UVW Limited for a single product V: Activity (units) Total Cost (N) 144,000 3,624,000 842,000 12,000,000 Calculate the value of fixed cost.

A. N8,376,000
B. N6,200,000
C. N3,264,000
D. N1,896,500
E. N1,896,000

Answer

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Tags: Costing Techniques, Fixed Costs, Marginal Costing, Total Cost
Level: Level 1

Topic: Costing Techniques
Series: MAY 2024

MA – Aug 2022 – L2 – Q5b – Decision making techniques

This question calculates the monthly expected profit of running a canteen service using demand and variable cost probabilities

Question

Aunty Dede Caterers runs a canteen service at a University and the following estimated information is available for the sale of lunch packs:

Monthly Demand	Probability	Variable Cost per Pack (GH¢)	Probability
2,000 packs	0.3	GH¢30	0.5
2,500 packs	0.5	GH¢15	0.4
3,000 packs	0.2	GH¢20	0.1

The probabilities of demand and the probabilities of variable cost are mutually exclusive. The selling price of a lunch pack is GH¢50, and the University charges a monthly fee of GH¢1,200 for the usage of the cafeteria.

Required:
Calculate the monthly expected profit of running the canteen.

Answer

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Tags: Costing Techniques, Decision Making, Expected Profit, Probability Analysis
Level: Level 2

Topic: Decision making techniques
Series: AUG 2022

MA – Aug 2022 – L2 – Q2a – Activity-based costing

This question asks for the calculation of activity rates and the cost per unit of product X using activity-based costing.

Question

The details of unit cost of products X, Y, and Z have been provided below:

Product	X	Y	Z
Demand (units)	1,200	2,800	3,000
GH¢	GH¢	GH¢	GH¢
Direct Material	70	55	40
Direct Labour	65	60	38
Variable Overheads	11	8	7
Fixed Overhead	32	24	20

Additional information:

The fixed overheads were absorbed at the rate of GH¢8 per machine hour.
The budgeted fixed overheads of GH¢165,600 can be analysed into the following cost pools with their respective percentages for apportionment:

Cost Pool Percentages (%)

Batch 20

Machinery 45

Customer service 25

Deliveries 10
The following also relates to the activities of the company:

Cost Pool	Percentages (%)
Batch	20
Machinery	45
Customer service	25
Deliveries	10

Product	X	Y	Z
Units in a batch	120	140	200
Quantities per delivery	100	280	250
Number of customers	50	180	220

Required:
i) Calculate the activity rates per batch, machine hour, customer service, and delivery.
(12 marks)

ii) Calculate the total cost of a unit of product X.
(3 marks)

Answer

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Tags: Activity-Based Costing, Cost Pools, Costing Techniques, Overhead Absorption, Unit Cost Calculation
Level: Level 2

Topic: Activity-based costing
Series: AUG 2022

MA – Nov 2020 – L2 – Q2a – Introduction to Management Accounting

Distinguish between Target Costing and Kaizen Costing in cost management.

Question

a) In cost management, Target costing and Kaizen costing play key roles. Distinguish between these two cost techniques.

Answer

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Tags: Cost Management, Costing Techniques, Kaizen, Target costing
Level: Level 2

Topic: Introduction to management accounting
Series: NOV 2020

Question Tag: Costing Techniques

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MI – Nov 2014 – L1 – SA – Q17 – Costing Methods

This question asks about the appropriate method for allocating overhead costs in product costing.

MI – May 2017 – L1 – SA – Q6 – Costing Techniques

Identify the costing technique where variable costs are charged to cost units.

MI – Mar-Jul 2020 – L1 – SB – Q2b – Costing Techniques

Prepare ledger accounts for a backflush accounting system based on the given data for production and sales.

MI – Mar-Jul 2020 – L1 – SB – Q2a – Costing Techniques

List the characteristics of a Just-In-Time (JIT) environment in manufacturing.

MI – Mar-Jul 2020 – L1 – SA – Q12 – Costing Techniques

Identify the type of standard that assumes imperfect conditions.

MI – Mar-Jul 2020 – L1 – SA – Q5 – Costing Techniques

Identify the effect of increasing automation that is not related to costing.

MI – Mar-Jul 2020 – L1 – SA – Q4 – Costing Techniques

Identify the cost that does not arise as a result of labour turnover.

MI – May 2024 – L1 – SA – Q6 – Costing Techniques

Calculates the fixed cost based on total cost and activity levels.

MA – Aug 2022 – L2 – Q5b – Decision making techniques

This question calculates the monthly expected profit of running a canteen service using demand and variable cost probabilities

MA – Aug 2022 – L2 – Q2a – Activity-based costing

This question asks for the calculation of activity rates and the cost per unit of product X using activity-based costing.

MA – Nov 2020 – L2 – Q2a – Introduction to Management Accounting

Distinguish between Target Costing and Kaizen Costing in cost management.

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MI – Nov 2014 – L1 – SA – Q17 – Costing Methods

This question asks about the appropriate method for allocating overhead costs in product costing.

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MI – May 2017 – L1 – SA – Q6 – Costing Techniques

Identify the costing technique where variable costs are charged to cost units.

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MI – Mar-Jul 2020 – L1 – SB – Q2b – Costing Techniques

Prepare ledger accounts for a backflush accounting system based on the given data for production and sales.

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MI – Mar-Jul 2020 – L1 – SB – Q2a – Costing Techniques

List the characteristics of a Just-In-Time (JIT) environment in manufacturing.

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MI – Mar-Jul 2020 – L1 – SA – Q12 – Costing Techniques

Identify the type of standard that assumes imperfect conditions.

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MI – Mar-Jul 2020 – L1 – SA – Q5 – Costing Techniques

Identify the effect of increasing automation that is not related to costing.

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MI – Mar-Jul 2020 – L1 – SA – Q4 – Costing Techniques

Identify the cost that does not arise as a result of labour turnover.

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MI – May 2024 – L1 – SA – Q6 – Costing Techniques

Calculates the fixed cost based on total cost and activity levels.

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MA – Aug 2022 – L2 – Q5b – Decision making techniques

This question calculates the monthly expected profit of running a canteen service using demand and variable cost probabilities

You're reporting an error for "MA – Aug 2022 – L2 – Q5b – Decision making techniques"

MA – Aug 2022 – L2 – Q2a – Activity-based costing

This question asks for the calculation of activity rates and the cost per unit of product X using activity-based costing.

You're reporting an error for "MA – Aug 2022 – L2 – Q2a – Activity-based costing"

MA – Nov 2020 – L2 – Q2a – Introduction to Management Accounting

Distinguish between Target Costing and Kaizen Costing in cost management.

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