- Overheads do not relate to particular units of, output in the same way as direct costs, such as
materials and labour, do. If a re-organisation has cost centres then it will need to ensure that its
costs are fully covered by its income.
- Allocation and apportionment is used by organisations as a way of collecting overheads in the
relevant cost centres. Costs that belong entirely in one cost centre will be allocated. Cash that
belongs to more than one cost centre will be apportioned.
marto answered the question on February 15, 2019 at 10:09
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Explain the meaning of the following terms in the context of cost accounting:
i) Overtime premium.
(Solved)
Explain the meaning of the following terms in the context of cost accounting:
i) Overtime premium.
Date posted:
February 15, 2019
.
Answers (1)
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Gemini Ltd. Manufactures a product branded "Bora” that uses two inputs of raw materials; Exe
and Wye. As a newly appointed cost accountant of Gemini Ltd.,...
(Solved)
Gemini Ltd. Manufactures a product branded "Bora” that uses two inputs of raw materials; Exe
and Wye. As a newly appointed cost accountant of Gemini Ltd., you have obtained the following
information:
1. Annual demand for the finished product is 64,000 units.
2. Each unit of "Bora" requires 3 kgs and I kg of material Exe and Wye respectively.
3. The production loss for material Exe is 5% of input.
4. It is not planned to change the stockholding of the finished product for the financial period
ahead, reduction of 6,000 kgs in the stock of material Exe is planned.
5. The ordering and holding costs are as follows:
6. A safety stock of 580 kgs of material Wye is held.
7. On average lead time is 2 weeks.
Assume 50 weeks in a year
Required;-
(i) Quantity of material Exe to be purchased.
(ii) Economic order quantity for materials Wye.
(iii) Re-order level for material Wye.
(iv) Annual ordering cost of material Wye.
(v) Annual holding cost of material Wye.
Date posted:
February 15, 2019
.
Answers (1)
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Lengo Ltd. manufactures three products: A. B and C. There has been a proposal to change the
current convectional product costing system to an activity based...
(Solved)
Lengo Ltd. manufactures three products: A. B and C. There has been a proposal to change the current convectional product costing system to an activity based costing (ABC) system.
The following information relates to the month of September 2012.
Date posted:
February 15, 2019
.
Answers (1)
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Amdany Ltd. uses a part branded "Maxi" whose demand tends to be constant at an annual rate of 4.4
million units. The cost per unit for...
(Solved)
Amdany Ltd. uses a part branded 'Maxi' whose demand tends to be constant at an annual rate of 4.4
million units. The cost per unit for this part is Sh.220 and the cost of placing an order is Sh.550.
Amdany Ltd. estimates that the annual inventory carrying cost of the part expressed as a percentage of
cost of average inventory is 20%.
Required:
i) Compute the economic order quantity (EOQ).
ii) Compute the annual number of orders.
iii) Calculate the reorder point. Assume that lead time is 11 days and the company works for 330
days in a year.
Date posted:
February 15, 2019
.
Answers (1)
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Copytech Ltd. sells and services photocopying machines. The company's sales department sells
the photocopying machines and consumables while the service department provides an after sale
service to...
(Solved)
Copytech Ltd. sells and services photocopying machines. The company's sales department sells
the photocopying machines and consumables while the service department provides an after sale
service to customers.
Currently, Copytech Ltd. uses a single overhead absorption rate to charge overheads based on total
sales revenue from copy charges. However, the service manager has proposed to change to activity
based costing (ABC) system and the following information has been obtained
Date posted:
February 15, 2019
.
Answers (1)
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Distinguish between 'cost allocation' and 'cost absorption
(Solved)
Distinguish between 'cost allocation and 'cost absorption
Date posted:
February 15, 2019
.
Answers (1)
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Jumbo Ltd. operates an incentive scheme where bonus hours are credited to the employees at the
rate of 20% of the time saved. During the first...
(Solved)
Jumbo Ltd. operates an incentive scheme where bonus hours are credited to the employees at the
rate of 20% of the time saved. During the first week of the month of May 2014, the following data
was recorded in relation to Mary Masumbi, a casual employee of Jambo Ltd.:
Additional information:
1. Bonus computations are based on accepted output.
2. The normal working hours in a week are 45 hours.
3. Overtime is paid at one and a half times the normal hourly rate.
4. The basic rate of pay is Sh.50 per hour.
Required:
Showing clearly the amounts earned for bonus and overtime, compute the total pay for Mary
Masumbi.
Date posted:
February 15, 2019
.
Answers (1)
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Sneb Ltd. manufactures a single product branded 'BXL'. One of the components required to
manufacture product 'BXL' is 'RD'.
(Solved)
Sneb Ltd. manufactures a single product branded 'BXL'. One of the components required to
manufacture product 'BXL' is 'RD'.
Date posted:
February 15, 2019
.
Answers (1)
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Lenga Juu Ltd. has three production departments and two service departments. The following are
the total production overhead costs which have been charged to the departments:
(Solved)
Lenga Juu Ltd. has three production departments and two service departments. The following are
the total production overhead costs which have been charged to the departments:
Date posted:
February 15, 2019
.
Answers (1)
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Kenya Auto Assemblers Ltd assembles cars from imported knocked-down-kits. The company
has been operating at 60% capacity, assembling 3,000 cars per year.
The following information relates to...
(Solved)
Kenya Auto Assemblers Ltd assembles cars from imported knocked-down-kits. The company
has been operating at 60% capacity, assembling 3,000 cars per year.
The following information relates to the company‟s operations at two different levels of capacity.
Date posted:
February 15, 2019
.
Answers (1)
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In practice there is no cost that can be described as, entirely and always variable or fixed.'
Comment on the above statement.
(Solved)
In practice there is no cost that can be described as, entirely and always variable or fixed.'
Comment on the above statement.
Date posted:
February 15, 2019
.
Answers (1)
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The information given below relates to Wasp Ltd. which manufactures a single type of
chemical. Overhead processing costs for the last thirteen accounting months (of four...
(Solved)
The information given below relates to Wasp Ltd. which manufactures a single type of
chemical. Overhead processing costs for the last thirteen accounting months (of four weeks
each) have been as follows:
Date posted:
February 15, 2019
.
Answers (1)
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Central Machinery Ltd ,Is preparing its budget for the year ending 30 June 2004.For the fuel
expenses consumption it is decided to estimate an equation of...
(Solved)
Central Machinery Ltd ,Is preparing its budget for the year ending 30 June 2004.For the fuel expenses consumption it is decided to estimate an equation of the form ,y=a + b x, where y is the total expense at an activity level x, a is the fixed expense and b is the rate of variable cost.
Date posted:
February 15, 2019
.
Answers (1)
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Explain the advantage and disadvantages of high-low method of cost estimation.
(Solved)
Explain the advantage and disadvantages of high-low method of cost estimation.
Date posted:
February 15, 2019
.
Answers (1)
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The management of Limuru processing Company Ltd. Wishes to obtain better cost estimates to
evaluate the company's operations more effectively
(Solved)
The management of Limuru processing Company Ltd. Wishes to obtain better cost estimates to
evaluate the company's operations more effectively
Date posted:
February 15, 2019
.
Answers (1)
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State three disadvantages of using the high – low method for estimating costs
(Solved)
State three disadvantages of using the high – low method for estimating costs
Date posted:
February 15, 2019
.
Answers (1)
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Briefly explain the following cost estimation methods:
(i). High-low method.
(ii). Simple regression method.
(Solved)
Briefly explain the following cost estimation methods:
(i). High-low method.
(ii). Simple regression method.
.
Date posted:
February 15, 2019
.
Answers (1)
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Jitegemee Company Ltd. Carries on its operations in Isiolo. In the recent, the Company has been
experiencing trading difficulties and is currently operating at 50% production...
(Solved)
Jitegemee Company Ltd. Carries on its operations in Isiolo. In the recent, the Company has been
experiencing trading difficulties and is currently operating at 50% production capacity. For the
year ending 31 January 2007, the company expects to achieve a revenue amount of Sh.24,
750,000 at 50% production capacity.
Date posted:
February 15, 2019
.
Answers (1)
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ABC Dental Clinic outsources specialized dental surgeons from private hospitals. The following
relates to the total labour hours and indirect labour costs for the year ended...
(Solved)
ABC Dental Clinic outsources specialized dental surgeons from private hospitals. The following relates to the total labour hours and indirect labour costs for the year ended 31 October 2010.
Date posted:
February 15, 2019
.
Answers (1)
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Explain the methods of cost estimation
(Solved)
Explain the methods of cost estimation
Date posted:
February 15, 2019
.
Answers (1)