Answers

ACCA Certified Accounting Technician Examination Paper T4

Accounting for Costs

December 2010 Answers

Section A
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

B
B
C
B
B
C
C
B
A
B
A
D
B
C
B
C
A
D
B
D

Workings:
10 (25,500 085)

13 (650/630 x 100)

16 [176,000 (36 x 04)]

17 [(1022 1) x 100]

18 (300,000 100,000)

13

Section B
1

(a)

(i)

5,000 leaflets
Preparation costs:
Artwork
Machine set-up
Manufacturing costs:
Materials
Labour
Other variable
Fixed overhead (12 hrs x $25)

(ii)

560
320

Costs
Cost per unit

880

880

1,230 x 8,000

10,000

= 984

$1,864

$/leaflet
$1,864 8,000 = $0233

Direct materials
Equivalent units:
Output completed
Closing work-in-progress

$ total

690
180
60
300

1,230 x 5,000 = 615

10,000
$1,495

$/leaflet
$1,495 5,000 = $0299

(b)

8,000 leaflets
$ total

Conversion costs

24,600 units
3,200 units

27,800 units

24,600 units
2,400 units

27,000 units

$77,840

$28,350

$280

$105

(3,200 x 075)

Total $385

Assembly
$61,320 8,400 lab hrs
= $730 per direct labour hour

Finishing
$27,280 1,760 m/c hrs
= $1550 per machine hour

Overhead absorbed

8,760 lab hrs x $730/hr

= $63,948

1,690 m/c hrs x $1550/hr

= $26,195

(c)

Over/under absorption

$62,130 $63,948
= $1,818 over absorbed

$26,860 $26,195
$665 under absorbed

(a)

Relevant costs:

(a)

Absorption rate

(b)

Raw materials
Direct labour
Overheads

(b)

$
8,762
6,690
1,075

16,527

[$5,720 + (180 kg x $1690/kg)]

[(430 hrs x $11/hr) + $1,960]
(430 direct labour hours x $250/hr)

(i)

Sunk costs:
Costs that have been incurred or committed prior to a decision point.

(ii)

Avoidable costs:
Costs that would not be incurred if the activity to which they relate did not exist.

14

(a)

Marginal costing profit statement:

Sales
Variable cost of sales
Contribution
Fixed overheads
Net profit

(b)

$000
2952
1353

1599
1200

399

(12,300 units x $24/unit)

[12,300 units x ($560 + 420 + 070 + 050/unit)]
(12,300 units x $13/unit)
($78,000 + $42,000)

Difference in profit between absorption costing and marginal costing:

Change in inventory (units) x fixed production overhead absorption rate (per unit)
= 500 units (12,300 11,800) x $650/unit
= $3,250 (absorption costing profit lower by this amount because inventory has reduced).

15

ACCA Certified Accounting Technician Examination Paper T4

Accounting for Costs

December 2010 Marking Scheme

Marks

(a)

(i)

(ii)
(b)

(a)

(b)

(c)

(a)

(b)

(a)

(b)

Preparation costs
Variable manufacturing costs for 10,000 leaflets
Fixed overheads for 10,000 leaflets
Total manufacturing costs for 10,000 leaflets
Total manufacturing costs for 5,000 leaflets
Total manufacturing costs for 8,000 leaflets

2
1
1
1
1
1

Cost per leaflet (1 for each)

Equivalent units:
Direct materials
Conversion costs
Cost per unit:
Direct materials
Conversion costs

1
2
1
1

Absorption rates:
Assembly
Finishing
Overheads absorbed:
Assembly
Finishing
Over/under absorption:
Assembly
Finishing

Sunk costs

(ii)

Avoidable costs

18

1
1

2
2

3
3

Raw materials
Direct labour
Overhead
(i)

3
3
3

13

10
2
2

14

Sales
Variable cost of sales
Contribution
Fixed overheads
Net profit

1
2
2
2
2

Formula
Amount
Absorption profit lower

2
2
2

17

15