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6 marksCost Elements, Classification and Cost Curves

CAPE Accounting Unit 2 · 2016 · Paper 2 · Question 1(c)(i)

Soca Engineering Company manufactures Component ABC and Product XYZ with provided unit costs and fixed overhead conditions.

Advise management whether it would be profitable to make or buy Component ABC.

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Other parts of this question

  1. 1(a)State the classification for EACH of the 10 listed cost items.[10 marks]
  2. 1(b)(i)Explain what happens to the cost of material issued.[2 marks]
  3. 1(b)(ii)Explain what happens to the value of closing inventory.[2 marks]
  4. 1(b)(iii)Explain what happens to profit.[2 marks]
  5. 1(c)(ii)Advise management whether to accept a special offer of $1750 per unit from an outside company for Product XYZ, providing justification.[9 marks]
  6. 1(d)(i)Compute the predetermined production overhead rate for 2015.[2 marks]
  7. 1(d)(ii)Calculate the over/under applied overhead for December 2015.[2 marks]

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