Quelpr
4 marksActivity-Based Costing (ABC)

CAPE Accounting Unit 2 · 2014 · Paper 2 · Question 2(a)(ii)

Gayle Ltd produces basic and multi-feature cell phones. Overhead of 1,500,000 was incurred on 1,350,000 basic and 650,000 multi-feature units. Direct materials: Basic 550,000, Multi-feature 825,000. Direct labour: Basic 1,012,500, Multi-feature 737,500. Activity centres and drivers: Set up (750,000; 300 basic, 450 multi-feature), Quality control test (300,000; 125 basic, 250 multi-feature), Orders processed (450,000; 100 basic, 200 multi-feature).

Compute the total overhead cost assigned to EACH product using activity-based costing.

This question uses a figure or table from the paper — you'll see it when you practise.

The mark scheme is shown once you've answered.

Practise this question

Other parts of this question

  1. 2(a)(i)Compute the activity application rate for EACH activity centre for Gayle Ltd.[3 marks]
  2. 2(a)(iii)Compute the total cost per unit to manufacture EACH product using activity-based costing.[4 marks]
  3. 2(a)(iv)Compute the total overhead cost assigned to EACH product if direct labour cost had been used to allocate overhead (traditional costing approach).[2 marks]
  4. 2(a)(v)Compute the total cost per unit to manufacture EACH product using direct labour cost (traditional costing approach).[4 marks]
  5. 2(b)Prepare a production report for the moulding department for April 2011, showing all workings.[18 marks]

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