Discuss two examples of cost in each of the following classification. (10 marks)

2. Classification according to behavior
4. Classification according to time
6. Classification according to traceability

iv. Classification according to value addition

b) Write short notes on the followings;

2. The industrial Engineering approach (2 marks)
4. Linear Regression Analysis ( 2 marks)
6. Period cost ( 2 marks)
8. Opportunity cost (2 marks)

c) Compare and contrast the following method of production costing systems. (i.e. Job-order costing system and process costing system) giving relevant examples. (6marks).

QUESTION TWO

1. ABC Company packaging department has the following data for the month of December 2013.

• 20,000 units in work in process as at 1st December: Shs. 20,000 direct materials and shs. 40,000 for conversion costs (i.e. Shs.100,000 direct labour and shs. 30,000 manufacturing overheads).100% of direct materials cost and 40% of the conversion cost have been incurred in the last period on this units.
• 200, 000 units transferred in from production department during the month at a total cost of shs. 555,000.
• Costs added included: direct materials of shs.22, 000 and conversion costs of shs. 20,000.
• 180,000 units transferred to finished goods.
• 40,000 units in work in process as at 31 December: 100% complete as to cost transferred in, 80% complete as to materials and 50% as to conversion costs.

Required

Using FIFO method prepare the following

2. The quantity schedules ( 4 marks)
4. The equivalent units (4 marks)
6. The cost per equivalent unit ( 4 marks)
8. The cost of units transferred out ( 4marks)
10. The cost of work in progress as at 31 December (4 marks)

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Answer a Discuss two examples of cost in each of the following classification i Classification according to behavior 1 Variable costs Examples are direct materials and direct labor 2 Fixed costs Examp... View the full answer