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4 marksActivity-Based Costing (ABC)

CAPE Accounting Unit 2 · 2016 · Paper 2 · Question 2(c)(i)

Janet rents mall stores and uses activity-based costing with four identified activities: Janitorial services, Advertising and marketing, Lighting and air-conditioning, and Maintenance of building.

Suggest an appropriate cost driver for EACH activity.

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Other parts of this question

  1. 2(a)(i)Compute the activity rate for EACH activity in the law firm.[8 marks]
  2. 2(a)(ii)Compute the legal bill for Hope McKay using the activity-based costing (ABC) method, given the direct costs, indirect cost usage, and a profit margin of 33…[14 marks]
  3. 2(b)Briefly outline the FIVE steps involved in preparing the process costing worksheet.[5 marks]
  4. 2(c)(ii)State TWO merits and TWO demerits of the ABC system employed by Janet.[4 marks]

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