Advanced

(a) Overtime premiums and shift allowances can be traced to specific batches, jobs or products and should be considered to be direct labour rather than indirect labour.

You are required to discuss the above state¬ ment. (12 marks)

(b) Your managing director, after hearing a talk at a branch meeting on just-in-time (JIT) manu¬ facturing would like the management to consider introducing JIT at your unit which manufactures typewriters and also keyboards for computing systems.

You are required as the assistant manage¬ ment accountant, to prepare a discussion paper for circulation to the directors and senior management, describing just-in-time manufacturing, the likely benefits which would follow its introduction and the effect its introduction would probably have on the cost accounting system. (13 marks)

(Total 25 marks) CIMA Stage 2 Cost Accounting