Page 254 - BA2 Integrated Workbook - Student 2017
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Fundamentals of Management Accounting
4.4 The total overhead to be apportioned to department F is $284,750.
Q = 140,000 + 0.3M (1)
M = 113,000 + 0.2Q (2)
Substitute (1) in equation (2):
M = 113,000 + 0.2 (140,000 + 0.3M)
M = 113,000 + 28,000 + 0.06M
0.94M = 141,000
M=150,000
Substituting this into equation (1)
Q = 140,000 + 0.3(150,000) = 185,000
The total overhead for department F is $160,000 + (0.35 × 185,000) + (0.4 ×
150,000) = $284,750.
CHAPTER 5 – MARGINAL AND ABSORPTION COSTING
5.1 The cost-plus selling price of one unit of product G should be $36.80
Required annual profit = $435,000 × 20% = $87,000
Profit as a percentage of total cost = $87,000/$580,000 = 15%
Required cost-plus selling price = $32 + (15% × $32) = $36.80
5.2 B
If gross profit is 50%, unit cost is 50% of the sales price. If unit cost is $50 and
selling price is $100, then it has been marked up by a factor of 100%.
5.3 C
Increase in inventory = 5,000 units
Overhead absorption rate =
Fixed overhead absorption rate = ($90,000 ÷ 75,000) = $1.20 per unit
Difference between marginal and absorption costing profits will be 5,000 ×
$1.20 = $6,000.
As inventory levels are increasing, absorption costing will be higher.
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