QUESTION: 77

A company produces three products D, E and F. The statement below shows the selling price and product costs per unit for each product, based on a traditional absorption costing system.

Each of the products is produced using Process A which has a maximum capacity of 2,500 hours per period.

If a throughput accounting approach is used, the ranking of products, in order of priority, for the profit maximizing product mix will be:

D, E, F
E, D, F
F, D, E
D, F, E

Answer(s): C

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QUESTION: 78

A company produces a product that requires two materials, Material A and Material B. Details of the material quantities and costs for August are given in the table below.

Budgeted and actual output of the product for August was 12,000 units.

The material yield variance for August is:

$1,340 A
$1,590 A
$1,740 A
$1,340 F
$1,840 A

Answer(s): C

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QUESTION: 79

CORRECT TEXT
A company currently uses a rate of $32 per machine hour to absorb its total production overheads of $960,000.

Using this system the production overhead cost per unit of product X is $160.

An activity based costing exercise has revealed that only $345,000 of the production overhead is driven by machine hours. The remainder is driven by the number of machine set ups, at a rate of $9.60 per set up.

Product X requires 3 set ups per unit.

Calculate the total production overhead cost per unit of product X using an activity based costing system.

Give your answer to two decimal places.

$86.30
$86.00

Answer(s): A

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QUESTION: 80

A company manufactures headphones.

70% of production costs are prime costs. Production overhead costs are driven by the number of headphones produced.

Which costing system would be most appropriate for product profitablilty analysis?

Absorption costing
Marginal costing
Activity based costing
Relevant costing

Answer(s): A

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QUESTION: 80