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5 marksJob and Batch Costing

CAPE Accounting Unit 2 · 2008 · Paper 2 · Question 2(a)(iii)

Williams and Associates is a law firm using a job order costing system. Budgeted client billings and costs for 2007 are provided, with percentages indicating directly traceable costs. The predetermined overhead application base is total direct costs.

Calculate the amount of over- or under-applied overhead (non-traceable) costs for Williams and Associates for 2007.

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Other parts of this question

  1. 2(a)(i)Calculate the firm's pre-determined overhead application rate.[4 marks]
  2. 2(a)(ii)Prepare a job cost sheet for the Eldon Company job completed in March, showing clearly the traceable and non-traceable costs for the job.[7 marks]
  3. 2(b)(i)a)Compute the unit product cost assuming that Eldon Company uses absorption costing.[3 marks]
  4. 2(b)(i)b)Compute the unit product cost assuming that Eldon Company uses variable costing.[2 marks]
  5. 2(b)(ii)Prepare a variable costing income statement for the company.[5 marks]
  6. 2(b)(iii)Prepare an absorption costing income statement for the company.[5 marks]
  7. 2(b)(iv)Reconcile the difference between the net operating income computed under variable costing and that computed under absorption costing.[2 marks]
  8. 2(c)Outline ONE way in which activity-based costing differs from traditional costing methods.[2 marks]

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