Page 273 - P1 Integrated Workbook STUDENT 2018

Supplementary objective test questions

1.4 A small business advisor offers three services with the following details:
Pension Investments Property
planning management
Budgeted services 800 400 60

Budgeted labour hours per service 2 4 6
Average number of legal checks per 1 4 8
service

The budgeted activity cost for performing legal checks is $864,000.

If an ABC system is used by the business advisor, the amount of the legal
checks cost is attached to each property management service is
$_________________

(Your answer should be rounded down to the nearest $)

1.5 A company manufactures four products. The products use a series of different
machines but there is a common machine, PPP, which causes a bottleneck.

The standard selling price and standard cost per unit for each product for the
forthcoming year are as follows:
A B C D
$ $ $ $
Selling price 50 80 100 140
Cost:
Direct materials 18 40 40 90
Labour 12 10 20 15
Variable overheads 6 8 12 6
Fixed overheads 3 2 4 3
–––– –––– –––– ––––
Profit 11 20 24 26
–––– –––– –––– ––––
Machine PPP – hours per unit 0.5 1.5 1 2
–––– –––– –––– ––––

Direct material costs are the only unit-level manufacturing cost.

Using a throughput accounting approach, rank the products in order to
optimise the production plan.
Rank Product

1st
2nd
3rd
4th

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