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9 marksOverheads and Manufacturing Accounts

CAPE Accounting Unit 2 · 2021 · Paper 2 · Question 1(d)

Topps Manufacturing Corporation has two production departments (blending and packing) and two service departments (canteen and warehouse). Service department costs are allocated using the step-down method, first canteen (based on total number of employees) then warehouse (based on number of orders).

Calculate the amount of overhead cost that will be assigned to EACH production department.

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Other parts of this question

  1. 1(a)(i)Outline THREE differences between the FIFO and the LIFO inventory valuation methods.[6 marks]
  2. 1(a)(ii)Compute EACH of the following costs at 30 May 2019 using the FIFO method: • Ending inventory cost • Cost of goods sold[8 marks]
  3. 1(a)(iii)Compute the gross profit for Trelawney Inc. using the FIFO method if the items sold during May were at a sales price of $11 per unit.[4 marks]
  4. 1(b)Compare the impact on the gross profit of an enterprise using the FIFO and LIFO methods during periods of inflation.[4 marks]
  5. 1(c)Outline the TWO main differences between 'cost allocation' and 'cost apportionment'.[4 marks]

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