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5 marksCost Elements, Classification and Cost Curves

CAPE Accounting Unit 2 · 2002 · Paper 2 · Question 1(b)(iv)

Due to spare capacity, 9 workers are currently not engaged in productive work but remain on full pay for 5 weeks at 8 per hour for 40 hours a week. Two special orders/inquiries have been received: Portland Growers Inc. (maximum price 15,500) and Westmoreland Orchids Ltd (maximum price $16,000). The administrative assistant has estimated the costs for each job.

Discuss TWO additional factors which the company should consider in deciding whether to accept or reject these jobs.

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Other parts of this question

  1. 1(a)(i)Prepare a schedule of cost of goods manufactured, taking into account the information contained in the income statement and the additional information provided.[17 marks]
  2. 1(b)(i)Calculate the total relevant costs of EACH job.[7 marks]
  3. 1(b)(ii)Calculate the incremental profit or loss associated with the acceptance of the Portland job.[3 marks]
  4. 1(b)(iii)Calculate the incremental profit or loss associated with the acceptance of the Westmoreland job.[3 marks]

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