1. Answer any ten of the following questions:
a) Cost and costing differ in that cost refers to the amount spent on producing or acquiring something, while costing refers to the process of determining that cost.
b) Opportunity cost is the value of the next best alternative that is given up when a choice is made.
c) The elements of cost are materials, labor, and overhead.
d) Chargeable expenses are costs that can be directly attributed to a specific product, job, or customer.
e) A Goods Received Note is a document used to record the receipt of goods into inventory.
f) A key difference between Bin Card and Stores Ledger is that Bin Card is a document used to record the movement of inventory, while Stores Ledger is an account that tracks the quantity and value of inventory.
g) Perpetual inventory system is a method of inventory management where the inventory balance is continuously updated in real-time.
h) Danger Stock Level is the minimum level of inventory that must be maintained to avoid stockouts.
i) Two mechanical methods of Time Keeping are time clocks and time sheets.
j) The main theme of Taylor's Differential Wage Rate is to provide a wage system that rewards workers based on their individual productivity.
k) Overtime work is work performed beyond the normal working hours.
l) Overhead can be classified according to function, such as production, administration, and sales.
m) A key difference between allocation and apportionment of overhead is that allocation involves assigning overhead costs directly to a specific product or department, while apportionment involves distributing overhead costs to multiple products or departments based on a predetermined ratio.
n) The basic assumption underlying the step method of redistribution of service department costs is that service departments provide services to production departments in a specific sequence.
o) Integral Accounting is a method of accounting that combines financial and cost accounting into a single system.
2. Answer any four of the following questions:
a) The objectives of Cost Accounting include determining the cost of products, identifying areas for cost reduction, and providing information for decision-making.
b) Factors to consider when selecting a method of pricing issue of materials include the type of material, the level of inventory, and the production process.
c) The necessities for preparing a reconciliation statement between profit/loss as per financial accounts and cost accounts include identifying the differences between the two sets of accounts and reconciling the differences.
d) To calculate the Re-order Level, Minimum stock level, and Maximum stock level, we need to use the given data, such as the economic order quantity, re-order period, and consumption rates.
e) To prepare the Overhead application rates, we need to use the given data, such as the factory overhead, direct labor hours, direct labor cost, and machine hours.
f) To calculate the Labour Turnover Rates, we need to use the given data, such as the number of workers on the payroll, the number of workers who left or were discharged, and the number of workers recruited.
3. Answer any two of the following questions:
a) The causes of creation of Idle Time include machine breakdowns, power outages, and lack of materials. Idle time wages are shown in cost accounts as a separate expense.
b) To prepare a cost statement, we need to use the given data, such as the stock levels, raw materials purchased, freight, machine hour rate, and chargeable expenses.
c) To allocate service department costs to production departments, we need to use the given data, such as the overhead expenses, direct materials, direct labor, floor space occupied, and value of assets.
