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8 marksActivity-Based Costing (ABC)

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

Brown, Smith and Williams Law Firm provides overhead costs and cost driver quantities for four activities, along with direct and indirect cost details for client Hope McKay.

Compute the activity rate for EACH activity in the law firm.

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Other parts of this question

  1. 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]
  2. 2(b)Briefly outline the FIVE steps involved in preparing the process costing worksheet.[5 marks]
  3. 2(c)(i)Suggest an appropriate cost driver for EACH activity.[4 marks]
  4. 2(c)(ii)State TWO merits and TWO demerits of the ABC system employed by Janet.[4 marks]

More practice: the rest of this paper · more Activity-Based Costing (ABC) questions · all CAPE Accounting Unit 2 past papers