BIZ201 Module 5 Topic 10 Concept Checking Activity PDF

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BIZ201 Module 5 Topic 10 Concept Checking Activity...

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Activity 1. What do we mean by a cost object? 2. How would you define a direct cost? Give three examples. 3. How would you define an indirect cost? Give three examples. What could be an issue with allocating indirect cost? 4. What is the difference between product and period cost? 5. What type of organisation would use Job-order costing system and how the cost is traced using this system? 6. What type of organisation would use Process costing system and how the cost is traced using this system? 7. Explain how cost is assigned under functional-based costing system. 8. Explain how cost is assigned under activity-based costing system and explain why this costing system is considered more accurate than the functional-based costing system. 9. Blue Device Pty Ltd produces electronic mapping devices for luxury cars and uses a functional-based costing system. We have the following data for 2015: Budgeted Overhead $800,000 Machine hours 40,000 hrs Direct labour hours 160,000 hrs Actual Units produced 120,000 Overheads $895,000 Direct Costs $1,450,000 Machine hours 37,800 hrs Direct labour hours 127,500 hrs Overhead is applied on the basis of direct labour hours. a. Calculate predetermined overhead rate. b. Calculate total overhead absorbed (applied). c. Was overhead over-applied or under-applied? 10. For each activity below, assign a cost driver that could be used to assign activity costs to products. Engineering design Machine setup

BIZ201_Concept Checking Activity_M5_Topic 10

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Quality inspections Delivery to customers Supervising Ordering and receiving material Packaging 11. Henrich Industries has employed a new accountant, Nick Gee, who has expressed concerns about the cost of the products. To further understand the costs, Nick has undertaken an activity analysis of the indirect costs. His findings are as follows. Activity

Cost

Cost Driver

Receipt of materials

$100,000

Material receipts

Machining

300,000

Machine hours

Deliveries

50,000

Number of deliveries

Machine set-up

100,000

Machine set-ups

Engineering

150,000

Engineering advice slips

Packaging

100,000

Cartons packed

Cost Driver Material receipts Machine hours Number of deliveries Machine set-ups Engineering advice slips Cartons packed

Standard 200 50,000 500 200 100 400

Specialised 500 25,000 1 000 750 150 600

Required: a. Calculate the activity cost rate for each activity. b. Calculate the product cost based on the activity analysis.

BIZ201_Concept Checking Activity_M5_Topic 10

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