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7.5 marksCost Elements, Classification and Cost Curves

CAPE Accounting Unit 2 · 2010 · Paper 2 · Question 1(a)(i)

A list of 16 various business costs is given. Costs must be classified by cost behaviour and function.

Classify EACH of the listed costs (items 2 to 16) as either variable or fixed with respect to volume or activity level.

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Other parts of this question

  1. 1(a)(ii)Classify EACH of the listed costs (items 2 to 16) as either a selling and administrative cost or a product cost.[7.5 marks]
  2. 1(b)(i)Assuming the employee is idle for 5 hours due to machine breakdowns and 4 hours due to material shortages in a 40-hour week with no overtime, allocate the…[3 marks]
  3. 1(b)(ii)Assuming the employee works 48 hours in the following week with no idle time, allocate the wages between direct labour cost and manufacturing overhead cost.[3 marks]
  4. 1(b)(iii)Explain TWO ways the company could classify the cost of fringe benefits for direct labour workers in its cost records.[4 marks]
  5. 1(c)Calculate the total service department costs that should be allocated to EACH production department using the direct method.[10 marks]

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