Assignment
Extra questions for Chapter 3 Cost assignment
3.1 Intermediate: Job cost calculation
A printing and publishing company has been asked to provide an estimate for the production of 100 000 catalogues, of 64 pages (32 sheets of paper) each, for a potential customer. Four operations are involved in the production process: photography, set-up, printing and binding. Each page of the catalogue requires a separate photographic session. Each session costs
£150.
Set-up would require a plate to be made for each page of the catalogue. Each plate requires 4 hours of labour at £7 per hour and £35 of materials. Overheads are absorbed on the basis of labour hours at an hourly rate of £9.50.
In printing, paper costs £12 per thousand sheets. Material losses are expected to be 2% of input. Other printing materials will cost £7 per 500 catalogues. 1000 catalogues are printed per hour of machine time. Labour and overhead costs incurred in printing are absorbed at a rate of £62 per machine hour.
Binding costs are recovered at a rate per machine hour. The rate is £43 per hour and
2500 catalogues are bound per hour of machine time.
A profit margin of 10% of selling price is required.
You are required to:
(a) determine the total amount that should be quoted for the catalogue job by the printing and publishing company.
(11 marks)
(b) calculate the additional costs that would be charged to the job if the labour efficiency ratio achieved versus estimate in set-up is 90%.
(4 marks)
(Total 15 marks)
ACCA Foundation Stage Paper 3
3.2 Intermediate: Reapportionment of service department overheads and a calculation of under/over-recovery of overheads
An organization has budgeted for the following production overheads for its production and service cost centres for the coming year:
Cost centre
Machining
Assembly
Paint shop
Engineering shop
Stores
Canteen
£
180 000
160 000
130 000
84 000
52 000
75 000
The product passes through the machining, assembly and paint shop cost centres and the
following
3.1 Intermediate: Job cost calculation
A printing and publishing company has been asked to provide an estimate for the production of 100 000 catalogues, of 64 pages (32 sheets of paper) each, for a potential customer. Four operations are involved in the production process: photography, set-up, printing and binding. Each page of the catalogue requires a separate photographic session. Each session costs
£150.
Set-up would require a plate to be made for each page of the catalogue. Each plate requires 4 hours of labour at £7 per hour and £35 of materials. Overheads are absorbed on the basis of labour hours at an hourly rate of £9.50.
In printing, paper costs £12 per thousand sheets. Material losses are expected to be 2% of input. Other printing materials will cost £7 per 500 catalogues. 1000 catalogues are printed per hour of machine time. Labour and overhead costs incurred in printing are absorbed at a rate of £62 per machine hour.
Binding costs are recovered at a rate per machine hour. The rate is £43 per hour and
2500 catalogues are bound per hour of machine time.
A profit margin of 10% of selling price is required.
You are required to:
(a) determine the total amount that should be quoted for the catalogue job by the printing and publishing company.
(11 marks)
(b) calculate the additional costs that would be charged to the job if the labour efficiency ratio achieved versus estimate in set-up is 90%.
(4 marks)
(Total 15 marks)
ACCA Foundation Stage Paper 3
3.2 Intermediate: Reapportionment of service department overheads and a calculation of under/over-recovery of overheads
An organization has budgeted for the following production overheads for its production and service cost centres for the coming year:
Cost centre
Machining
Assembly
Paint shop
Engineering shop
Stores
Canteen
£
180 000
160 000
130 000
84 000
52 000
75 000
The product passes through the machining, assembly and paint shop cost centres and the
following